Red Cliffs Corner, LLC v. J.J. Hunan, Inc.

• Citation: 2009 UT App 240,219 P.3d 619
• Decision Date: 03 September 2009
• Docket Number: No. 20070846-CA.,20070846-CA.
• Parties: RED CLIFFS CORNER, LLC, Plaintiff, Appellee, and Cross-appellant, v. J.J. HUNAN, INC. dba J.J. Hunan Sum Fun Food; and R. Alan Knox, Defendants, Appellants, and Cross-appellees.
• Court: Utah Court of Appeals

219 P.3d 619

2009 UT App 240

RED CLIFFS CORNER, LLC, Plaintiff, Appellee, and Cross-appellant, v. J.J. HUNAN, INC. dba J.J. Hunan Sum Fun Food; and R. Alan Knox, Defendants, Appellants, and Cross-appellees.

No. 20070846-CA.

Court of Appeals of Utah.

September 3, 2009.

Russell S. Walker and David R. Williams, Salt Lake City, for Appellants and Cross-appellees.

Russell S. Mitchell, St. George, for Appellee and Cross-appellant.

Before GREENWOOD, P.J., THORNE, Associate P.J., and McHUGH, J.

OPINION

THORNE, Associate Presiding Judge:

¶ 1 Defendants J.J. Hunan, Inc. (Hunan) and R. Alan Knox appeal from the trial court's judgment in favor of Plaintiff Red Cliffs Corner, LLC (RCC). Specifically, Hunan appeals the trial court's interpretation of a lease and determination that RCC was entitled to terminate the lease and that Hunan had waived its claim for breach of lease. Hunan also appeals the trial court's denial of Hunan's motion to amend its counterclaim as well as the early release of RCC's possession bond. RCC cross-appeals the trial court's denial of RCC's request for attorney fees. We affirm in part and reverse and remand in part.

BACKGROUND

¶ 2 RCC is the landlord of a building within the Zion Factory Stores Shopping Center in St. George, Utah. Hunan is a Utah corporation that owns and operates restaurants. RCC, through its leasing director, Rene Daniels, initiated lease negotiations with Hunan, through its agent R. Alan Knox. In November 2003, Hunan and RCC agreed to the final lease terms and conditions and executed the lease. In connection with the lease, at RCC's insistence, Knox signed a personal guaranty of Hunan's lease obligations.

¶ 3 The lease set forth the work that RCC and Hunan each agreed to perform within the premises, at their individual costs, as well as completion deadlines. The lease required that Hunan deliver to RCC for its review and approval, within thirty days of signing the lease, two sets of plans for the improvements Hunan intended to make on the premises. The lease specified that the lease term would commence thirty days after RCC completed its required work and tendered possession of the premises to Hunan.

¶ 4 On June 22, 2004, RCC sent Hunan a notice of tender informing Hunan that the premises would be ready for occupancy by July 1, 2004. According to the terms of the lease, Hunan had thirty days after the notice of tender to present RCC with a punch list of items for RCC to correct. The lease further provided that "Tenant's taking physical possession of the Premises shall be conclusive evidence that Tenant accepts the same and that the Premises are in the condition called for by this Lease."

¶ 5 On September 6, 2004, Hunan took possession of the premises and began working on the obligatory improvements. On September 29, representatives from Hunan and RCC met to discuss concerns Hunan had regarding the premises, among them some holes in the drywall, a leak from the roof, the need for an exhaust fan area located in the roof, the fact that the HVAC system was only a seven-ton as opposed to a ten-ton system, as well as rent commencement date issues. After the meeting, the parties exchanged ongoing correspondence wherein they continued to confer about issues related to the premises. Thereafter, the parties signed an agreement wherein RCC and Hunan agreed to the following:

1. The Commencement Date under the Lease regarding when rent shall commence shall be modified from October 1st, 2004, to November 1st, 2004.

2. Tenant agrees that the only remaining Landlord's Work is as follows:

a. Modify HVAC units to provide 10 ton HVAC;

b. Charge the HVAC and fill with Freon once Tenant has power hooked up;

c. Repair small roof leak coming from duct work; and

d. Obtain acceptable response from Watts Construction regarding a cut through the top plate.

3. Tenant agrees that, other than the items in paragraph 2 above, all of the Landlord's Work is completed, and Tenant accepts the Premises as is and waives any and all claims for further Landlord's Work under the lease.

¶ 6 Hunan did not pay rent on November 1 and made each monthly rent payment from November 2004 through February 2005 late. In a letter dated February 28, 2005, RCC gave Hunan notice of cancellation of the lease, pursuant to paragraph 29 of the lease, informing Hunan that RCC "has exercised its option to terminate the Lease, and this is your three-day written notice of cancellation."

¶ 7 On March 4, 2005, RCC served Hunan with a notice informing Hunan that

[Y]our tenancy at will ... is hereby terminated at the expiration of five (5) days from the date this notice is served. This notice is given pursuant to Utah Code [section] 78-36-3(1)(b)(ii). If you remain in possession of the premises after the date of termination, you will be guilty of an unlawful detainer, and legal action will be initiated against you for restitution of the premises and for three times the damages assessed against you in accordance with Utah Code [section] 78-36-10. ...

Hunan did not vacate the premises within five days, and RCC filed a complaint for eviction and enforcement of the guaranty against Hunan and Knox. Thereafter, Hunan filed an answer and counterclaim asserting a breach of lease agreement claim against RCC.

¶ 8 On April 18, RCC obtained an order from the trial court setting a possession bond for the premises at $5000. RCC filed a cash possession bond and served a notice on Hunan. About a month later, RCC filed a motion and memorandum seeking an order releasing its possession bond. The trial court granted the request and entered an order releasing RCC's possession bond. Hunan filed a motion for relief from the order requesting that the trial court set aside the order because the order was entered before the response deadline. The trial court held a hearing and denied Hunan's motion for relief.

¶ 9 On August 1, Hunan filed a motion to amend its counterclaim. Almost six months later, Hunan filed a request with the court to submit for decision its motion to amend. The trial court held a hearing on that motion in March 2006 and thereafter entered an order denying Hunan's motion to amend the counterclaim, concluding that

1. [Hunan] failed to set forth with any particularity the grounds for [its] Motion to Amend to be granted. ... [Hunan] did not file a separate memorandum outlining any case law to support [its] conclusion that [its] Motion to Amend should be granted.

2. Furthermore, although a Memorandum in Opposition to [its] Motion was timely filed, [Hunan] did not file any reply memorandum contradicting the case law brought out by [RCC] that the failure to set forth particular grounds for relief is fatal to [Hunan's] Motion. ... [Hunan is] silent in any court filings showing any discovery being done that would be consistent with the amended claims [it] sought, nor did [it] amend [its] initial disclosures to address the claims [it] was seeking to add or how the calculation of damages might be set forth. Rather, [Hunan] took no action for approximately six months and at a time well after the Court had already had its final pretrial conference to set a trial date. For all intents and purposes, it appears that [Hunan] decided not to pursue the Amended Counterclaim and acted according to that apparent decision.

. . . .

5. Although [Hunan's] counsel, at the time of the hearing attempted to specify several specific "facts" to support [Hunan's] Motion to Amend, these statements lack foundation, as they were not supported by any affidavit or credible document, and the Court will not consider such statements. ...

6. The claims asserted in [Hunan's] proposed Amended Counterclaim are not based on newly discovered facts brought out through the discovery process, as [Hunan has] not conducted any discovery at any time in this case. ...

7. Because [Hunan] waited for nearly six months to file [its] Request to Submit for Decision, [it has] waived any right to have [its] Motion considered timely filed, and [its] Motion must be treated as though it was more recently filed. Therefore, [Hunan] seek[s] to amend [its] Counterclaim at a time when discovery has concluded several months ago and a pretrial conference was already held six weeks prior to filing the Request and is now before the Court at a time just six weeks prior to trial.

¶ 10 After a bench trial, the trial court issued its findings, ruling in favor of RCC and concluding that (1) Hunan had waived its claim against RCC for breach of lease; (2) RCC was entitled to terminate the lease because Hunan was late with its rent payments for three consecutive months; (3) Hunan was in unlawful detainer of the premises, and RCC was entitled to treble damages; and (4) each party should bear its own attorney fees and costs. RCC filed a rule 52 motion to amend findings of fact and conclusions of law, requesting its attorney fees and costs. The trial court denied RCC's request.

ISSUES AND STANDARDS OF REVIEW

¶ 11 Before we consider the several issues on appeal, we must first determine whether this court has jurisdiction to hear this appeal. Initially, this court considered the case sua sponte for summary disposition on the basis of lack of jurisdiction due to untimely filed notices of appeal and cross-appeal, directing both parties to file a memorandum addressing jurisdiction. Thereafter, this court withdrew the sua sponte motion for summary disposition, and deferred a ruling on the jurisdictional issue pending plenary presentation and consideration of the case. Thus, we first consider the matter to ascertain the timeliness of the notice of appeal in this case. See Serrato v. Utah Transit Auth., 2000 UT App 299, ¶ 7, 13 P.3d 616 ("If an appeal is not timely filed, this court lacks jurisdiction to hear the appeal.").

¶ 12 On appeal, Hunan asserts that the trial court incorrectly interpreted the lease when it held that RCC was entitled to terminate the lease. "We review issues of contract interpretation not...