Airstar v. Keystone Aviation , 2022 UT App 73 ( 2022 )

2022 UT App 73THE UTAH COURT OF APPEALS
AIRSTAR CORPORATION,
Appellant,
v.
KEYSTONE AVIATION LLC AND SALT LAKE CITY CORPORATION,
Appellees.
Opinion
No. 20190847-CA
Filed June 16, 2022
Third District Court, Salt Lake Department
The Honorable Royal I. Hansen
No. 160904929
David J. Jordan, Lauren DiFrancesco, and
Chaunceton Bird, Attorneys for Appellant
Jonathan O. Hafen, Daniel E. Barnett, and Austin J.
Riter, Attorneys for Appellee Keystone Aviation LLC
Catherine L. Brabson and David F. Mull, Attorneys
for Appellee Salt Lake City Corporation
JUDGE RYAN D. TENNEY authored this Opinion, in which
JUDGES GREGORY K. ORME and RYAN M. HARRIS concurred.
TENNEY, Judge:
¶1 This appeal concerns a parcel of real property at the Salt
Lake City International Airport that is used for private hangar
space. Salt Lake City owns the property and leased it to Keystone
Aviation LLC, and Keystone then subleased it to Airstar
Corporation. Airstar’s sublease included a clause under which the
sublease would terminate if Keystone’s lease with Salt Lake City
“terminated for any reason.”
¶2 In 2015, Keystone and Salt Lake City negotiated a
premature termination of Keystone’s lease. When this happened,
Airstar Corp. v. Keystone Aviation
Airstar’s sublease terminated too. Airstar later sued both
Keystone and Salt Lake City, asserting several breach-of-contract-
related claims. But the district court dismissed all of Airstar’s
claims, and it also awarded attorney fees to Keystone.
¶3 On appeal, Airstar challenges both the dismissal of its
claims and the award of attorney fees. For the reasons set forth
below, we affirm on both fronts.
BACKGROUND
The Hudson Sublease and the 1992 FBO Agreement
¶4 Salt Lake City leases real property located at the Salt Lake
City International Airport to Fixed Base Operators (FBOs). An
FBO is a person or entity that provides aircraft services like fuel
sales, terminal services, and hangar space. FBOs provide these
services to the general aviation industry, which is “the sector of
aviation that includes all air operations other than military or
commercial air carriers.”
¶5 In 1986, Hudson General Corporation entered into an FBO
agreement with Salt Lake City. As part of that agreement, Salt
Lake City leased a parcel of land, commonly identified in the
briefing and record as Hangar 16, to Hudson.
¶6 In October 1992, Hudson and Salt Lake City entered into a
new FBO agreement (the 1992 FBO Agreement) that superseded
their original FBO agreement and included additional terms and
conditions. In the 1992 FBO Agreement, the parties included a
provision that the parties have referred to on appeal as the
Attornment Clause.1 The Attornment Clause provided that,
1. “Attornment” refers to a “tenant’s agreement to hold the land
as the tenant of a new landlord.” Attornment, Black’s Law
(continued…)
20190847-CA 2 2022 UT App 73Airstar Corp. v. Keystone Aviation
[s]hould this Agreement be terminated for any
reason, the City shall succeed to the interest of
Tenant under any subleases covering all or any
portion of the Leased Premises or the Facility, and
shall be bound to each subtenant under such
subtenant’s sublease to the same extent as Tenant
was bound as sublandlord, provided that such
subtenant shall attorn to the City and agree to be
bound to the City under the terms and conditions of
such sublease as if the City were the sublandlord
under such sublease. So long as any such subtenant
is not in default under the terms of its sublease, such
sublease shall remain in full force and effect, and
such subtenant’s interest and estate under its
sublease shall not be disturbed because of a default
by Tenant under this Agreement.
(Quotation simplified.)
¶7 Hudson later assigned the 1992 FBO Agreement to a
different entity. In August 2011, that entity assigned the 1992 FBO
Agreement to Keystone.
The Hangar 16 Sublease
¶8 In 1992, Hudson subleased Hangar 16 to Airstar
Corporation (the Hudson Sublease). The Hudson Sublease
terminated in 2012. In June 2012, after the 1992 FBO Agreement
had been assigned to Keystone, Keystone and Airstar entered into
Dictionary (11th ed. 2019). Put differently, attornment occurs
when “a person who holds a leasehold interest . . . agrees to
become the tenant of a stranger who has acquired the fee in the
land” and “acknowledges his obligation to a new landlord.”
Consolidated Realty Group v. Sizzling Platter, Inc., 930 P.2d 268, 269
n.2 (Utah Ct. App. 1996) (quotation simplified).
20190847-CA 3 2022 UT App 73Airstar Corp. v. Keystone Aviation
a new sublease for Hangar 16 (the Hangar 16 Sublease).2 The
Hangar 16 Sublease had an “initial term” of “approximately nine
(9) years,” which meant that it would terminate in 2021.
(Quotation simplified.)
¶9 The Hangar 16 Sublease contained three clauses that are
relevant to this appeal: the Termination Clause, the Notice Clause,
and the Attorney Fees Clause.
¶10 First, the Termination Clause stated that
Airstar agrees that in the event that the FBO
Agreement, or any other agreement or authority to
do business at the Airport is terminated for any
reason other than an exercise of powers of eminent
domain (which shall be addressed in accordance
with Paragraph 11 hereof) or a failure of Keystone
to timely perform its obligations thereunder (which
shall be addressed in accordance with the
provisions of Paragraphs 16 and 17 thereof), and
Keystone is required to give up possession of the
Premises as a result, then this Lease shall terminate as
of the date that Keystone is no longer permitted to
occupy the Premises under such terminated
agreement, without recourse or damages or
compensation of any sort being demanded by
Airstar . . . . Keystone shall give Airstar as much
notice as possible of any situation which may result in
termination of the FBO Agreement or any other
2. In their communications with each other and throughout the
litigation, the parties sometimes referred to this Hangar 16
Sublease as “the Hangar 16 Lease,” “the 2012 Hangar Lease,” or
“the Hangar Lease.” To avoid numerous alterations when quoting
the parties, we’ll generally leave those cited references
unchanged, with the understanding that they all refer to the 2012
sublease between Keystone and Airstar for Hangar 16.
20190847-CA 4 2022 UT App 73Airstar Corp. v. Keystone Aviation
underlying lease, agreement, or authority to do
business at the Airport, including copies of all
notices, communications and information available
to Keystone regarding such pending or threatened
termination.
(Emphases added.)
¶11 Second, the Notice Clause stated that
[a]ll notices and other communications (each a
“notice”) required or permitted to be given
under this Lease shall be in writing and shall be
either (a) personally delivered; (b) sent by
certified mail, return receipt requested, postage
prepaid; or (c) sent by Federal Express or
other nationally recognized air courier, expenses
prepaid, to the address set forth in the opening
paragraph of this Lease for notice of the party to
whom it is to be given. Notice shall be effective upon
receipt by the party or upon refusal of delivery of
the notice at the address provided herein for
such party.
(Quotation simplified.)
¶12 And finally, the Attorney Fees Clause stated that,
[i]n the event of the bringing of any action or suit by
either party hereto by reason of any breach of any of
the covenants or agreements on the part of the other
party arising out of this Lease, then in that event the
prevailing party shall be entitled to have and
recover of and from the other party costs and
expenses of the action or suit, including reasonable
attorneys’ fees.
20190847-CA 5 2022 UT App 73Airstar Corp. v. Keystone Aviation
Amendment 7
¶13 In 2013, Salt Lake City hired a consulting firm to assess the
feasibility of adding another FBO to the airport. Shortly after the
consulting firm completed its study, Salt Lake City reached out to
Keystone to talk about this possibility. In October 2014, Salt Lake
City and Keystone negotiated an agreement that required
Keystone to terminate its Hangar 16 lease before the lease term
expired. In exchange, Salt Lake City agreed to extend the lease
terms on other properties that Keystone leased at the airport. The
parties referred to this as “the Lease Swap Agreement” or “the
Lease Swap.”
¶14 In February 2015, Salt Lake City and Keystone executed
Amendment 7 to the 1992 FBO Agreement. This was done to
facilitate the Lease Swap Agreement, and, in this amendment,
they agreed that the 1992 FBO Agreement would “continue
through March 31, 2016,” and then terminate. This meant that the
1992 FBO Agreement would now end on March 31, 2016, rather
than on May 31, 2021, as the parties had previously contracted.3
Communications Between Keystone and Airstar
¶15 Sometime in the summer of 2015, Airstar’s chief pilot
requested Keystone’s permission for Airstar to resurface Hangar
16’s floor.4 Keystone gave its approval, and in June 2015, Airstar
asked Keystone for permission to place a temporary storage
container near the hangar while it resurfaced the floor. Keystone,
3. The 1992 FBO Agreement was amended six times between 1996
and 2008. In 1998, the parties agreed that the 1992 FBO Agreement
would “continue for a period of twenty eight (28) years and
eleven (11) months from July 1, 1992,” which meant that the 1992
FBO Agreement would terminate on May 31, 2021.
4. The exact scope of the chief pilot’s responsibilities is unclear
from the record, but it appears that he had at least some
administrative responsibilities.
20190847-CA 6 2022 UT App 73Airstar Corp. v. Keystone Aviation
in turn, asked Salt Lake City for permission, and Salt Lake City
approved the request.
¶16 That same month, the Airport Business Development
Manager for Salt Lake City emailed Keystone about the floor
work, saying that it “seems like a rather large investment for
[Airstar] to make given the remaining term of the agreement (9
months).” The Business Development Manager continued,
“[We’re] sure [Keystone is] doing everything [it] can to
accommodate [Airstar] and their future needs, but given the
investment they appear to be making, [we] want to make sure
[Airstar is] aware of the limited amount of time they have in the
building as [we’re] sure they would like to have enough time to
recover their costs.”5
¶17 Keystone forwarded this email to Airstar’s chief pilot,
saying that it was “unsolicited” and that the airport was “just
concerned with the limited Lease Term.” The pilot responded,
I am very concerned! This e-mail trail that [Airstar]
started two weeks ago requesting permission to
place a temp storage unit on the property to help
facilitate the mentioned work, becomes the first
document (after the work has started) that implies
[Keystone] and or the SLC Airport do not intend to
honor our signed lease contract that is valid for the
next 7 years.
¶18 On February 8, 2016, Keystone sent a letter to Airstar’s
headquarters. That letter said,
Pursuant to paragraph 18.2 of the referenced Lease,
notice is hereby given that Keystone Aviation’s FBO
Agreement, as defined in the Lease, for [Hangar 16]
5. An Airstar representative later testified that although he didn’t
“specifically” know how much the resurfacing cost, he thought it
probably ended up costing “somewhere in the low six figures.”
20190847-CA 7 2022 UT App 73Airstar Corp. v. Keystone Aviation
will terminate on March 31, 2016 per Amendment
#7 (attached). As further provided in paragraph
18.2, Airstar and Keystone have agreed that in the
event the FBO Agreement is terminated for any
reason, then the Lease will also terminate.
The letter concluded by requesting that Airstar “surrender
possession of the Premises on or before March 31, 2016.”
¶19 In an emailed response, Airstar invoked the provision in
the Termination Clause that required Keystone to give Airstar “as
much notice as possible of any situation which may result in
termination of the FBO Agreement . . . , including copies of all
notices, communications and information available to Keystone
regarding such pending or threatened termination.” Airstar
asserted that it had not previously corresponded with Keystone
about the lease termination. Airstar also asked if Keystone had
“comparable hangars available for lease to [Airstar], with terms
comparable or better than what was in place for [Hangar 16].”
¶20 In an emailed reply, Keystone claimed that it had
communicated with Airstar’s chief pilot in November 2014 and
January 2015 to talk about the lease termination and “future
hangar options.” Keystone also claimed that during the second
meeting, the chief pilot “indicated” that “Airstar would stay in
Hangar 16 and see how this turns out.”6
The Atlantic Aviation Sublease
¶21 After receiving the February 2016 letter, Airstar met with
Salt Lake City about the soon-to-be terminated sublease. At that
meeting, Salt Lake City “told Airstar that [Hangar 16] had already
6. Keystone later deposed the chief pilot and asked him, “When
was the first time anyone at Keystone told you they planned to
terminate the Hangar 16 lease early?” The chief pilot answered
that he did not know about the early termination until Keystone
sent the February 2016 letter.
20190847-CA 8 2022 UT App 73Airstar Corp. v. Keystone Aviation
been leased to the new FBO, Atlantic Aviation.” Salt Lake City
also “told Airstar that it would need to negotiate a sublease with
Atlantic if it wished to continue to lease the Hangar.”
¶22 Around that time, Airstar began negotiating with both
Atlantic Aviation and Keystone to acquire hangar space.
Keystone showed Airstar alternative spaces that it had available,
but Airstar decided not to lease any of them because they were
“substandard and more expensive” and some of the potential
hangars had not yet been built. Airstar ultimately decided to
continue subleasing Hangar 16 from Atlantic Aviation rather than
moving to a different hangar. But under its new sublease, Airstar
paid “substantially higher rent and fuel costs than it was paying
under the 2012 Sublease” with Keystone.
Airstar’s First Complaint
¶23 After entering into the new sublease with Atlantic
Aviation, Airstar filed a complaint against Keystone. Airstar’s
complaint pleaded several causes of action. As later recognized
by the district court, the causes of action collectively and
essentially “asserted two separate bases for relief.” First—in what
we’ll refer to as the Premature Termination Claims—Airstar
alleged that when Keystone agreed to Amendment 7, it “breached
the Hangar Lease” and the implied covenant of good faith and fair
dealing “by voluntarily shortening the term of the FBO
Agreement.” Second—in what we’ll refer to as the Notice
Claims—Airstar alleged “that Keystone breached both the
Hangar Lease and the implied covenant in failing to timely inform
Airstar of the Lease Swap negotiations.” For these alleged
breaches, Airstar asked for over $1 million in damages.
¶24 After filing an answer and a counterclaim, Keystone
moved for judgment on the pleadings. There, Keystone asked for
relief in the form of a declaration that “the 2012 Hangar Lease
terminated because the FBO Agreement terminated ‘for any
reason’” and that “as a result of termination of the 2012 Hangar
Lease, neither Keystone nor Airstar has any further rights,
20190847-CA 9 2022 UT App 73Airstar Corp. v. Keystone Aviation
obligations, or causes of action under the [2012] Hangar Lease.”
Keystone also argued that it was “irrelevant” whether the 1992
FBO Agreement was voluntarily terminated because “[a]ll that
matters is whether the [1992] FBO Agreement ‘terminated for any
reason.’”7
Dismissal of Premature Termination Claims
¶25 The district court later issued a decision partially granting
Keystone’s motion for judgment on the pleadings. There, the
court ruled that Keystone did not breach the Hangar 16 Sublease
by voluntarily and prematurely terminating the 1992 FBO
Agreement. The court based this ruling on the plain language of
the Hangar 16 Sublease, which provided that the Hangar 16
Sublease would terminate if the 1992 FBO Agreement “terminated
for any reason.” (Emphasis in original.) The court noted that this
provision of the Hangar 16 Sublease included two exceptions—
“eminent domain or a failure of Keystone to timely perform its
obligations under the FBO Agreements.” From this, the court
concluded that the exclusion of voluntary termination from the
listed exceptions “necessarily implie[d]” that premature
termination counted as “any reason.” And the court ascertained
nothing in the Hangar 16 Sublease that prohibited Keystone from
agreeing to a premature termination. The court accordingly
decided that Keystone was “entitled to judgment on the face of
the pleadings themselves with regard to Airstar’s claims for
breach of contract and breach of the implied covenant of good
faith and fair dealing insofar as those claims are based on the
premature termination of the Hangar Lease.” But the court
7. Keystone also filed a third-party complaint against Atlantic
Aviation, asserting that if the Hangar 16 Sublease had not
terminated, then the 1992 FBO Agreement’s Attornment Clause
“provides that [Salt Lake City], and therefore Atlantic, is subject
to the terms of the 2012 Hangar Lease.” The court later dismissed
this claim because it concluded that the Hangar 16 Sublease had
been properly terminated.
20190847-CA 10 2022 UT App 73Airstar Corp. v. Keystone Aviation
determined that Airstar’s Notice Claims were “sufficiently pled”
and allowed those claims to proceed.
Airstar Attempts to Attorn
¶26 In February 2017 (shortly after Keystone filed its motion for
judgment on the pleadings), Airstar sent a letter to Salt Lake City.
In that letter, Airstar noted that, in its prior pleadings, Keystone
had taken the position that if the Hangar 16 Sublease had not
terminated, Airstar’s only available remedy was to attorn to Salt
Lake City. See supra note 7. Airstar continued by stating that “[t]o
put any question of the matter to rest,” it was “informing [Salt
Lake City] that Airstar agrees to attorn to [Salt Lake City] and be
bound to [Salt Lake City] under the terms and conditions of the
Hangar Lease.”
¶27 In response, Salt Lake City informed Airstar that in its
view, the Attornment Clause of the 1992 FBO Agreement had not
been “triggered” and that, even if it had been, the Hangar 16
Sublease terminated along with the 1992 FBO Agreement. Salt
Lake City concluded by stating that “Airstar’s request to attorn
[was] not accepted.”
Airstar’s Amended Complaint
¶28 After the court dismissed Airstar’s Premature Termination
Claims, Airstar filed an amended complaint. In that complaint,
Airstar reasserted the Notice Claims—i.e., it again alleged that
Keystone breached both the Hangar 16 Sublease and the implied
covenant of good faith and fair dealing by giving insufficient
notice of its “communications and negotiations with the SLC
Airport regarding the Lease Swap and possible early termination
of the Hangar 16 Lease.”
¶29 In the amended complaint, Airstar also added Salt Lake
City as a defendant. In conjunction with this addition, Airstar
alleged that, as a subtenant, it was a third-party beneficiary of the
1992 FBO Agreement. Airstar further asserted that because it was
20190847-CA 11 2022 UT App 73Airstar Corp. v. Keystone Aviation
a third-party beneficiary, Keystone and Salt Lake City owed it
certain obligations and that they breached those obligations “by
modifying the [1992] FBO Agreement and entering into the
Seventh Amendment without Airstar’s consent.” Airstar also
alleged that Salt Lake City “breached its obligations to Airstar” as
a third-party beneficiary “by failing to give Airstar an opportunity
to attorn to [Salt Lake City] prior to re-leasing [Hangar 16] to
Atlantic Aviation.”
¶30 The amended complaint also asserted that “Airstar
negotiated a sublease with Atlantic to continue leasing Hangar 16,
but at a substantially higher rent and higher fuel costs.” Thus, the
basis for Airstar’s claimed damages for the Notice Claims was the
cost of resurfacing the hangar floors, the higher rent and fuel
costs, and other costs associated with attempting to mitigate
damages.
Dismissal of Third-Party Beneficiary Claims
¶31 Keystone moved for partial judgment on the pleadings,
asking the court to dismiss the causes of action that were based on
third-party beneficiary rights. Keystone contended that “Airstar
waived any right it had as a third party beneficiary under the
[1992] FBO Agreement” when it “expressly agreed that the
sublease would automatically terminate if the [1992] FBO
Agreement terminated for any reason.”
¶32 Salt Lake City also moved for a dismissal of Airstar’s third-
party beneficiary claims. Like Keystone, Salt Lake City argued
that Airstar waived any third-party rights by agreeing to the
Hangar 16 Sublease.
¶33 The district court issued a written order dismissing the
third-party beneficiary claims. It first determined that Airstar
“was an intended third party beneficiary . . . of the [1992] FBO
Agreement” based on that agreement’s “unambiguous reference
. . . to the rights of sublessees or subtenants.” But the court then
determined that, under the terms of the Hangar 16 Sublease,
20190847-CA 12 2022 UT App 73Airstar Corp. v. Keystone Aviation
“Airstar accepted that its sublease would terminate as of the date
of termination of the [1992] FBO Agreement for any reason other
than an exercise of power of eminent domain or a failure of
Keystone to timely perform its obligations under the FBO
Agreement.” And the court further determined that this was an
“unambiguous written waiver . . . of Airstar’s third party
beneficiary rights under the [1992] FBO Agreement,” which
“preclude[d] Airstar’s reliance on its third party beneficiary status
to pursue its breach of contract claim.” The court thus granted
Keystone’s motion for judgment on the pleadings and Salt Lake
City’s motion to dismiss Airstar’s claims for third-party
beneficiary breach of contract and breach of the implied covenant.
Dismissal of Notice Claims
¶34 At this point, the only claims that remained were Airstar’s
Notice Claims. The parties conducted discovery on those claims
as the case progressed, including deposing various witnesses.
¶35 Of note, Salt Lake City designated its Director of
Administration and Commercial Services at the Salt Lake City
Department of Airports (the Administration Director) as its rule
30(b)(6) designee, and Airstar later deposed him.8 In his
deposition, the Administration Director stated that if Salt Lake
City had known “that the Airstar lease had a term continuing
until 2021,” Salt Lake City’s “approach” to its negotiations with
Keystone “would likely have led to . . . making certain that
Keystone” made “accommodations” for Airstar. But the
Administration Director also said that he didn’t know whether
Salt Lake City would have suggested a “specific accommodation”
8. Under rule 30(b)(6) of the Utah Rules of Civil Procedure, “[a]
party may name as the witness a corporation, a partnership, an
association, or a governmental agency, describe with reasonable
particularity the matters on which questioning is requested, and
direct the organization to designate one or more officers,
directors, managing agents, or other persons to testify on its
behalf.”
20190847-CA 13 2022 UT App 73Airstar Corp. v. Keystone Aviation
and that he thought Salt Lake City’s approach would “likely”
have led to Keystone making “whatever accommodations,
whether financial accommodations or other space
accommodations or some other accommodations, with any other
tenants that have prevailing terms that went beyond.”9
¶36 Keystone also deposed the person who had been the
Director of the Salt Lake City Department of Airports during the
Lease Swap (the Airport Director). The Airport Director testified
that “[w]ith respect to negotiations between the airport and
FBOs,” she did not “believe that the airport should have
concerned itself, in those negotiations, with the terms of
subleases.”
¶37 After discovery concluded, and after the dismissals
described above, the parties filed competing motions for
summary judgment on the Notice Claims. In its motion, Airstar
relied on the plain language of the Hangar 16 Sublease, wherein
the parties agreed that “Keystone shall give Airstar as much
notice as possible of any situation which may result in termination
of the FBO Agreement.” Airstar claimed that it was undisputed
that by February 2015 (when Salt Lake City and Keystone
executed Amendment 7), Keystone was “aware” that the 1992
FBO Agreement was going to terminate prematurely. Airstar also
claimed that it was undisputed that “Keystone did not provide
the required notice of the impending termination until February
2016.” Airstar accordingly asked for summary judgment on the
Notice Claims.
¶38 In its competing motion, Keystone did “not dispute” for
purposes of summary judgment “Airstar’s allegations that
Keystone breached the notice provisions . . . of the 2012 Hangar
Sublease by giving Airstar insufficient notice of the Lease Swap
negotiation.” But Keystone nevertheless argued that Airstar had
not shown “that Keystone’s alleged breach of the sublease’s notice
9. Additional detail regarding the Administration Director’s
testimony is provided below in Part III.
20190847-CA 14 2022 UT App 73Airstar Corp. v. Keystone Aviation
provisions . . . proximately caused Airstar’s purported damage.”
In Keystone’s view, Airstar’s alleged damages consisted of three
components:
1. “the difference in rent and fuel margin between the
2012 Hangar Sublease and the Atlantic Sublease”;
2. “the alleged cost of resurfacing the floors of the leased
airplane hangar”; and
3. “the alleged cost of mitigating Airstar’s damages
resulting from the termination of the 2012 Hangar
Sublease, including Airstar’s attorney fees.”
Keystone then argued that “there is no record evidence that any
of these alleged damages [were] caused by purported untimely
notice by Keystone.” In other words, Keystone argued that Airstar
had not “identified any alternatives to the Atlantic Sublease that
would have been available if Keystone had provided Airstar with
timely notice under the 2012 Hangar Sublease.”
¶39 The district court issued a written decision granting
Keystone’s motion for summary judgment and denying Airstar’s.
The court began by acknowledging that “generally, proximate
cause is determined by an examination of the facts, and questions
of fact are to be decided by the jury.” (Quotation simplified.) But
the court then noted that “proximate cause issues can be decided
as a matter of law when the proximate cause of damages is left to
speculation so that the claims fail as a matter of law.” (Quotation
simplified.)
¶40 Here, the court determined that Airstar’s “sole support for
the causation element of its claims for breach of contract and
breach of the implied covenant” was the Administration
Director’s deposition testimony. But the court concluded that his
testimony was speculative and did not establish causation for
purposes of damages. When coupled with the Airport Director’s
testimony that ran contrary to Airstar’s claims on this, the court
20190847-CA 15 2022 UT App 73Airstar Corp. v. Keystone Aviation
determined that the evidence “unambiguously provide[d] that
the City would not have concerned itself with the negotiation of
rental rates between” Airstar and Keystone. The court thus
determined that Airstar “failed to present any non-speculative
evidence in support of its assertion that, had [Airstar] been
apprised of the lease swap negotiations at an earlier date, [Airstar]
could have ensured that the rent and associated costs of renting
the hangar space would not increase.” This left no “genuine issue
of material fact regarding an essential element” of Airstar’s Notice
Claims, and the court granted Keystone’s motion for summary
judgment. By doing so, the court disposed of the only remaining
claims.
Award of Attorney Fees
¶41 After the court dismissed Airstar’s Notice Claims,
Keystone filed a motion for attorney fees based on the Attorney
Fees Clause in the Hangar 16 Sublease. In response, Airstar
requested that Keystone’s motion for attorney fees “be denied in
its entirety.” Airstar first argued that the amount of fees that
Keystone had requested was unreasonable. But more importantly
for purposes of this appeal, Airstar also argued that Keystone
“failed to allocate its attorney fees or costs between the distinct
claims or parties in this case” as required by Eggett v. Wasatch
Energy Corp., 2004 UT 28, 94 P.3d 193. Specifically, Airstar argued
that work associated with the third-party beneficiary claims was
noncompensable because those claims were based on the 1992
FBO Agreement, which does not have an attorney fees clause.
And although it conceded that the Hangar 16 Sublease included
an attorney fees clause, Airstar contended that work associated
with claims based on the Hangar 16 Sublease should not be
compensable “[b]ecause Keystone failed to allocate its requested
costs and expenses among the claims or parties.”
¶42 In a written decision, the court determined that the
Attorney Fees Clause in the Hangar 16 Sublease “unambiguously
establishes the prevailing party in this action may recover
attorney fees and costs incurred in litigating a claim relating to the
20190847-CA 16 2022 UT App 73Airstar Corp. v. Keystone Aviation
Hangar Lease.” The court also concluded that Keystone was the
prevailing party and that Keystone had requested reasonable
attorney fees.
¶43 The court next rejected Airstar’s claim that Keystone’s
failure to allocate its fees among compensable and
noncompensable claims meant that it was not entitled to attorney
fees. Although the court acknowledged that a party must
typically allocate fees, it concluded that where legal work
performed in litigating a compensable claim is “inextricably
intertwined with the legal work associated with” a
noncompensable claim, the fees related to the noncompensable
claim are “appropriately included in the fee calculation.”
(Quotation simplified.) Applying that principle, the court
determined that “the noncompensable claims—those related to
Salt Lake City Corporation, Atlantic Aviation and the [1992] FBO
Agreement—are inextricably intertwined with the compensable
claims asserted in this action—those related to the Hangar Lease.”
The court then concluded that “each of the issues for which
Keystone would not have been entitled to an award of attorney
fees related directly to Airstar’s claim for breach of the Hangar
Lease.”
¶44 The court accordingly denied “Airstar’s request to reduce
Keystone’s overall fee award by the amounts attributable to
[those] claims.” It did, however, limit Keystone’s recovery to costs
“incurred during litigation,” meaning Keystone could not recover
pre-litigation attorney fees.
¶45 After the court’s ruling on the attorney fees issue, Airstar
timely appealed.
ISSUES AND STANDARDS OF REVIEW
¶46 Airstar raises four issues on appeal.
¶47 First, Airstar argues that the district court erred in
dismissing its Premature Termination Claims. We “review[] a
20190847-CA 17 2022 UT App 73Airstar Corp. v. Keystone Aviation
decision on a motion for judgment on the pleadings de novo,
giving no deference to the district court’s analysis.” Latham v.
Office of Recovery Services, 2019 UT 51, ¶ 17, 448 P.3d 1241.
¶48 Second, Airstar argues that the court “erred in ruling
that Airstar impliedly waived its attornment rights as a third-
party beneficiary under the 1992 [FBO] Agreement by
entering into the 2012 Hangar 16 Sublease.” (Quotation
simplified.) This ruling was part of the court’s order granting
Keystone’s motion for judgment on the pleadings and Salt Lake
City’s motion to dismiss, so we review this decision de novo. See
id.; see also Van Leeuwen v. Bank of Am. NA, 2016 UT App 212, ¶ 6,
387 P.3d 521.
¶49 Third, Airstar argues that the court erred in finding
that “Airstar failed to present any non-speculative evidence in
support of its breach of contract cause of action.” When
reviewing a district court’s grant of summary judgment, we
view “the facts and all reasonable inferences drawn therefrom . . .
in the light most favorable to the nonmoving party, while
the district court’s legal conclusions and ultimate grant or
denial of summary judgment are reviewed for correctness.”
Massey v. Griffiths, 2007 UT 10, ¶ 8, 152 P.3d 312 (quotation
simplified).
¶50 Finally, Airstar argues that “the district court erred when
it determined that non-compensable claims based on the [1992]
FBO Agreement were inextricably intertwined with the
compensable claims based on the Hangar 16 Sublease.” Airstar
asserts that we should review this question “for correctness,” but
Keystone contends that we review the question for “patent error
or clear abuse of discretion.” (Quotation simplified.) As explained
below, however, we need not decide which standard of review
applies here because the standard of review does not prove to be
outcome determinative.
20190847-CA 18 2022 UT App 73Airstar Corp. v. Keystone Aviation
ANALYSIS
I. Premature Termination Claims
¶51 In the Premature Termination Claims, Airstar asserted that
Keystone breached both the Hangar 16 Sublease and the implied
covenant of good faith and fair dealing when it agreed to
Amendment 7 (which, again, caused the premature termination
of the Hangar 16 Sublease). The district court dismissed both
claims, and Airstar now challenges both rulings.
A. Breach of the Hangar 16 Sublease
¶52 Airstar first argues that Keystone breached the Hangar 16
Sublease by agreeing to Amendment 7. We disagree.
¶53 “When we interpret a contract, we start with its plain
language.” Willow Creek Assocs. of Grantsville LLC v. Hy Barr Inc.,
2021 UT App 116, ¶ 41, 501 P.3d 1179 (quotation simplified). “If
the language within the four corners of the contract is
unambiguous, the parties’ intentions are determined from the
plain meaning of the contractual language, and the contract may
be interpreted as a matter of law.” Brady v. Park, 2019 UT 16, ¶ 53,
445 P.3d 395 (quotation simplified). Our interpretation “is guided
by the ordinary and usual meaning of the words,” and “we often
look to standard, non-legal dictionaries” for assistance. Willow
Creek, 2021 UT App 116, ¶ 42 (quotation simplified).
¶54 Here, the Hangar 16 Sublease included the Termination
Clause. In the Termination Clause, Airstar agreed that if the 1992
FBO Agreement “terminated for any reason” and Keystone was
“required to give up possession of the Premises as a result,” the
Hangar 16 Sublease would “terminate” too. As recognized by the
district court, this was a broadly worded clause. “Any” ordinarily
20190847-CA 19 2022 UT App 73Airstar Corp. v. Keystone Aviation
means “one or some indiscriminately of whatever kind.”10 And
the phrase “as a result” means “because of something,” which
connotes a cause-and-effect relationship.11 So when Keystone
reached an agreement with Salt Lake City that prematurely
terminated the 1992 FBO Agreement, this accordingly qualified as
a termination “for any reason” for which Keystone was “required
to give up possession of the Premises” “as a result.” Because of
this, the Hangar 16 Sublease terminated with the 1992 FBO
Agreement.
¶55 Airstar nevertheless focuses on the language from the
Termination Clause stating that Keystone must have been
“required to give up possession of the Premises as a result.”
(Emphasis added.) In Airstar’s view, the word “required” refers
to something that is involuntary. Airstar thus contends that
Keystone’s agreement to Amendment 7 (and, in particular, the
amendment’s language that caused the premature termination of
the 1992 FBO Agreement) was “unjustified” because this
agreement “was a choice, not a requirement.” According to
Airstar, this constituted a breach of the Hangar 16 Sublease
because “[i]n no sense can it be said here that Keystone was forced
to agree to the termination of the FBO Agreement.”
¶56 We disagree with Airstar’s interpretation. Again, on its
face, the Termination Clause was operative if Keystone’s right to
the property was “terminated for any reason,” and “any” is an
inclusive term. (Emphasis added.) If the parties had intended for
the Termination Clause to apply only if Keystone involuntarily
terminated the 1992 FBO Agreement, they could have said so. But
they didn’t—there is nothing in the Hangar 16 Sublease
prohibiting Keystone from voluntarily terminating the 1992 FBO
10. Any, Merriam-Webster, https://www.merriam-
webster.com/dictionary/any [https://perma.cc/UF4F-TVMP].
11. As a result, Merriam-Webster, https://www.merriam-
webster.com/dictionary/as%20a%20result
[https://perma.cc/Z95F-YKM7].
20190847-CA 20 2022 UT App 73Airstar Corp. v. Keystone Aviation
Agreement. We therefore see no support in the sublease’s plain
language for the limitation suggested by Airstar.
¶57 Our conclusion that the Termination Clause covered both
voluntary and involuntary terminations is also supported by the
parties’ inclusion of two exceptions within that same clause:
namely, the parties agreed that the Hangar 16 Sublease would not
terminate if the 1992 FBO Agreement was terminated because of
either “eminent domain” or “a failure of Keystone to timely
perform its obligations.” This demonstrated the parties’
recognition that some exceptions would apply, and, importantly,
it also demonstrated their ability to negotiate for any desired
exceptions. If Airstar had wanted to bargain for a prohibition on
voluntary termination by Keystone, it could have done so. But
because it didn’t (or, perhaps, tried to but was unsuccessful and
still entered the agreement anyway), we decline to read such
language into the contract now. See Bakowski v. Mountain States
Steel, Inc., 2002 UT 62, ¶ 19, 52 P.3d 1179 (“We will not make a
better contract for the parties than they have made for
themselves.”).
B. Breach of the Implied Covenant
¶58 Airstar next claims that even if Keystone didn’t breach the
Hangar 16 Sublease by agreeing to the premature termination,
Keystone violated the implied covenant of good faith and fair
dealing by doing so. We again disagree.
¶59 “[T]he parties to a contract cannot feasibly anticipate all
possible contingencies nor reasonably resolve how they would
address them in writing.” Young Living Essential Oils, LC v. Marin,
2011 UT 64, ¶ 8, 266 P.3d 814. Given this, Utah courts have
“recognized an implied duty that contracting parties refrain from
actions that will intentionally destroy or injure the other party’s
right to receive the fruits of the contract.” Id. ¶ 9 (quotation
simplified). This implied duty is commonly referred to as the
implied covenant of good faith and fair dealing. See id.
20190847-CA 21 2022 UT App 73Airstar Corp. v. Keystone Aviation
¶60 Although “a covenant of good faith and fair dealing
inheres in almost every contract, some general principles limit the
scope of the covenant.” Oakwood Village LLC v. Albertsons, Inc.,
2004 UT 101, ¶ 45, 104 P.3d 1226. Importantly, “this covenant
cannot be read to establish new, independent rights or duties to
which the parties did not agree ex ante.” Id. Nor can this covenant
“create rights and duties inconsistent with express contractual
terms.” Id. In one prior case, for example, we held that the
“implied covenant of good faith and fair dealing cannot inject a
term of years into the contract when the parties expressly agreed
to an at-will relationship terminable at any time.” Anderson v.
Larry H. Miller Commc’ns Corp., 2012 UT App 196, ¶ 18, 284 P.3d
674.
¶61 As explained above, Airstar agreed that the Hangar 16
Sublease would terminate if the 1992 FBO Agreement “terminated
for any reason” and Keystone was “required to give up
possession of the Premises as a result.” But Airstar now argues
that the implied covenant affirmatively prevents Keystone from
voluntarily terminating the 1992 FBO Agreement. If this were
true, however, then Keystone would not be able to terminate the
1992 FBO Agreement “for any reason.” Rather, Keystone would
only be able to involuntarily terminate the 1992 FBO Agreement.
In this sense, Airstar asks us to use the implied covenant as a
means of “establish[ing] new, independent rights or duties to
which the parties did not agree ex ante.” Oakwood Village, 2004 UT
101, ¶ 45.
¶62 Although this would be a new restriction, Airstar argues
that this would be appropriate under the implied covenant
because, in its view, Keystone’s decision to agree to the premature
termination was “inconsistent[] with the parties’ common
purpose and justified expectations under the Hangar 16
Sublease.”
¶63 But Airstar has not pointed to any contractual terms
showing that “the parties’ common purpose and justified
expectations” actually prohibited Keystone from prematurely
20190847-CA 22 2022 UT App 73Airstar Corp. v. Keystone Aviation
terminating the Hangar 16 Sublease. To the apparent contrary, the
contract’s terms recognized the possibility of termination “for any
reason,” so the contract itself appears to have contemplated the
possibility of such termination.
¶64 Moreover, the parties here were sophisticated entities who
negotiated a sublease for hangar space. From the face of the
sublease, Keystone’s apparent purpose was to lease the space so
that it could make a profit, while Airstar’s purpose was to gain
access to the space for its own use. When Keystone’s business
interests later caused it to agree to the premature termination, this
decision was consistent with its own purposes but inconsistent
with Airstar’s. We see nothing in the language of the Hangar 16
Sublease itself that would have made this decision inconsistent
with any common purpose for that agreement.
¶65 In any event, we disagree with Airstar’s suggestion that the
parties’ “common purpose and justified expectations” can trump
the express terms of a contract. As explained by our supreme
court, courts will “not use [the implied] covenant to achieve an
outcome in harmony with the court’s sense of justice but
inconsistent with the express terms of the applicable contract.”
Oakwood Village, 2004 UT 101, ¶ 45. Put differently, “[w]here the
parties themselves have agreed to terms that address the
circumstance that gave rise to their dispute,” a “court has no
business injecting its own sense of what amounts to ‘fair
dealing.’” Young Living, 2011 UT 64, ¶ 10. Here, because the
express terms of the Hangar 16 Sublease “address[ed] the
circumstances that gave rise to [this] dispute,” we will not apply
the implied covenant to reach an outcome that differs from what
the Hangar 16 Sublease dictates. Id.¶66 In short, if Airstar had wanted to limit Keystone’s ability to
prematurely terminate the 1992 FBO Agreement, it could have
negotiated for such a limitation in the Hangar 16 Sublease. It
didn’t, so we agree with the district court that the implied
covenant cannot be used to create such a limitation now. We
therefore conclude that the district court did not err when it
20190847-CA 23 2022 UT App 73Airstar Corp. v. Keystone Aviation
granted Keystone’s request for judgment on the pleadings on the
breach of the implied covenant claim that was based on
premature termination.
II. Third-Party Beneficiary Claims and Waiver
¶67 In its amended complaint, Airstar argued that it was a
third-party beneficiary of the 1992 FBO Agreement because it was
“a subtenant under the [1992] FBO Agreement.” Airstar then
alleged breach of contract and breach of the implied covenant
claims against Keystone and Salt Lake City, arguing that they had
“breached their obligations to Airstar as a third party beneficiary”
by modifying the 1992 FBO Agreement. After Keystone and Salt
Lake City filed motions to dismiss, the district court agreed that
Airstar “was an intended third party beneficiary of the [1992] FBO
Agreement.” But the court also determined that Airstar waived its
third-party rights when it signed the Hangar 16 Sublease, which,
again, provided that the Hangar 16 Sublease would terminate if
the 1992 FBO Agreement terminated. Airstar challenges that
ruling on appeal.
¶68 As an initial matter, we agree with the district court that
Airstar was a third-party beneficiary of the 1992 FBO Agreement.
“Third-party beneficiaries are persons who are recognized as
having enforceable rights created in them by a contract to which
they are not parties and for which they give no consideration.”
SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc.,
2001 UT 54, ¶ 47, 28 P.3d 669 (quotation simplified). “For a third
party to have enforceable rights under a contract, the intention of
the contracting parties to confer a separate and distinct benefit upon
the third party must be clear.” Id. (quotation simplified, emphasis
in original). Here, the 1992 FBO Agreement specifically identifies
third parties—it refers to them as “subtenants”—and it then gives
them an enforceable right of attornment. Airstar was a subtenant,
so we agree that it was a third-party beneficiary of the 1992 FBO
Agreement.
20190847-CA 24 2022 UT App 73Airstar Corp. v. Keystone Aviation
¶69 This accordingly leaves the question of whether the district
court correctly ruled that Airstar waived its third-party
beneficiary rights. On this, we agree with the district court.
¶70 “Waiver is the intentional relinquishment of a known
right.” Pioneer Builders Co. of Nevada v. K D A Corp., 2018 UT App
206, ¶ 14, 437 P.3d 539 (quotation simplified). “For waiver to
occur, there must be an existing right, benefit or advantage, a
knowledge of its existence, and an intention to relinquish it.” Id.(quotation simplified). “The intent to relinquish a right must be
distinct, although it may be express or implied.” Wilson v. IHC
Hosps., Inc., 2012 UT 43, ¶ 62, 289 P.3d 369 (quotation simplified).
¶71 As a third-party beneficiary, Airstar had “an existing
right.” Id. ¶ 61 (quotation simplified). That right allowed Airstar
to attorn to Salt Lake City if the 1992 FBO Agreement terminated.
By doing so, it could keep its sublease under the same “terms and
conditions.” Airstar has not contested that this was a “known
right.” Id. (quotation simplified). Indeed, it could not plausibly
make that argument, because the Hangar 16 Sublease explicitly
references the 1992 FBO Agreement—which, again, is the source
of the attornment rights in question.
¶72 Our waiver analysis thus turns on whether Airstar had the
“intention to relinquish” its attornment rights. Id. (quotation
simplified). We conclude that it did.
¶73 Airstar’s attornment rights, as provided in the 1992 FBO
Agreement, were predicated on there being an existing sublease.
But the Termination Clause provided that the Hangar 16 Sublease
would terminate if the 1992 FBO Agreement “terminated for any
reason” other than the two enumerated exceptions. So if the 1992
FBO Agreement terminated, the Hangar 16 Sublease would
terminate as well, and there would be no basis for attornment. By
signing the Hangar 16 Sublease, Airstar therefore intentionally
agreed to relinquish its attornment rights if the 1992 FBO
Agreement was terminated “for any reason” other than the two
enumerated reasons. See Pioneer Builders, 2018 UT App 206, ¶ 14.
20190847-CA 25 2022 UT App 73Airstar Corp. v. Keystone Aviation
We accordingly agree with the district court that this constituted
waiver.12
¶74 Airstar pushes back, however, contending that its “third-
party beneficiary rights under the FBO Agreement could not be
modified without Airstar’s consent, since Airstar’s rights had
vested.” But Airstar’s third-party beneficiary rights were not
“modified without Airstar’s consent.” Rather, as explained,
Airstar intentionally relinquished its attornment rights when it
entered into the Hangar 16 Sublease.
¶75 Airstar further argues that the Termination Clause is
consistent with its third-party rights, and not a waiver of them,
because the clause “was included in the Hangar 16 Sublease to
protect Keystone from liability to Airstar in the event that the FBO
Agreement terminated for reasons beyond Keystone’s control.”
But the phrase “for reasons beyond Keystone’s control” is not
anywhere in the Termination Clause, and it also contradicts the
parties’ agreement that the Hangar 16 Sublease would terminate
if the 1992 FBO Agreement “terminated for any reason.”
¶76 In sum, the district court did not err in dismissing Airstar’s
third-party beneficiary claims for breach of contract and breach of
the implied covenant.
III. Notice Claims and Proximate Cause
¶77 The Termination Clause required Keystone to provide “as
much notice as possible of any situation which may result in
termination of the FBO Agreement.” In the Notice Claims, Airstar
alleged that Keystone breached this clause by failing to timely
inform it of Keystone’s negotiations with Salt Lake City about a
possible premature termination of the 1992 FBO Agreement. But
12. Airstar’s original sublease (the Hudson Sublease) did not
include an equivalent to the Termination Clause. So under
Airstar’s original sublease, this particular roadblock to
attornment would not have existed.
20190847-CA 26 2022 UT App 73Airstar Corp. v. Keystone Aviation
the district court later granted summary judgment in favor of
Keystone on these claims based on Airstar’s failure to “present
any non-speculative evidence” showing that, had Airstar “been
apprised of the lease swap negotiations at an earlier date, [Airstar]
could have ensured that the rent and associated costs of renting
the hangar space would not increase following the expiration of
the FBO Agreement.”
¶78 Airstar challenges this ruling on appeal, arguing that it
“presented the district court with ample evidence” to show “that
a genuine dispute as to material fact existed” about this. We
disagree.
A. Summary Judgment Standard
¶79 A party is entitled to summary judgment if “there is no
genuine dispute as to any material fact” and it is “entitled to
judgment as a matter of law.” Utah R. Civ. P. 56(a). When a district
court considers a motion for summary judgment, “it is required
to draw all reasonable inferences in favor of the nonmoving party.”
IHC Health Services, Inc. v. D & K Mgmt., Inc., 2008 UT 73, ¶ 19, 196
P.3d 588 (emphasis in original). But the court “is not required to
draw every possible inference of fact, no matter how remote or
improbable, in favor of the nonmoving party.” Id.¶80 Moreover, the “moving party’s burden varies depending
on who bears the burden of persuasion at trial.” Salo v. Tyler, 2018
UT 7, ¶ 26, 417 P.3d 581. For example, “a movant who seeks
summary judgment on a claim on which the nonmoving party
bears the burden of persuasion may show that there is no genuine
issue of material fact without producing its own evidence.” Id.And such a movant can establish that there is no genuine issue of
material fact by showing that the nonmoving party “has no
evidence of essential elements of [its] claims.” Id. ¶ 33.
¶81 Proximate cause is an essential element of both breach of
contract and breach of the implied covenant. See Christensen
& Jensen, PC v. Barrett & Daines, 2008 UT 64, ¶ 26, 194 P.3d 931.
20190847-CA 27 2022 UT App 73Airstar Corp. v. Keystone Aviation
“Proximate cause is defined as that cause which, in natural and
continuous sequence (unbroken by an efficient intervening
cause), produces the injury and without which the result would
not have occurred.” Francis v. National DME, 2015 UT App 119,
¶ 49, 350 P.3d 615 (quotation simplified). In this case, the
proximate cause element therefore required Airstar to establish
that, absent Keystone’s tardy notice, “the injury”—meaning, here,
its claimed damages—would not have occurred. See id.¶82 Proximate cause typically presents “a question of fact for
the jury.” Rose v. Provo City, 2003 UT App 77, ¶ 10, 67 P.3d 1017.
And “if there is any doubt about whether something was a
proximate cause of the plaintiff’s injuries, the court must not
decide the issue as a matter of law.” Goebel v. Salt Lake City S. R.R.
Co., 2004 UT 80, ¶ 12, 104 P.3d 1185.
¶83 But “summary judgment may be granted on proximate
cause in appropriate circumstances.” Thurston v. Workers Comp.
Fund, 2003 UT App 438, ¶ 16, 83 P.3d 391. One such circumstance
is “when the proximate cause of an injury is left to speculation so
that the claim fails as a matter of law.” Harline v. Barker, 912 P.2d
433, 439 (Utah 1996). It is thus “appropriate” for a district court to
grant summary judgment based on a failure to show proximate
cause “if there is no evidence that establishes a direct causal
connection between” the alleged breach and the alleged injury.
Thurston, 2003 UT App 438, ¶ 16 (quotation simplified).
B. Application
¶84 Airstar argues that summary judgment was inappropriate
because the Administration Director provided testimony that
“would allow a jury to reasonably conclude that Keystone’s
untimely notice proximately caused Airstar’s damages.” Airstar
relies on this exchange from the Administration Director’s
deposition as support for its argument that it provided evidence
of proximate cause:
20190847-CA 28 2022 UT App 73Airstar Corp. v. Keystone Aviation
[Airstar’s Counsel] And so the question I put to you
was, if you had been aware that the Airstar lease
had a term continuing until 2021, would your
approach to the lease swap proposal have been any
different?
....
[Administration Director] I presume had we
known, we would have made it the obligation of --
or condition on a swap that Keystone make
accommodations for any of its tenants that have
leases that might have extended beyond the term of
these buildings.
[Airstar’s Counsel] What kind of accommodations?
....
[Administration Director] We might have -- we
would -- I don’t know that we would have
suggested a specific accommodation, but typically,
you know, our approach -- I wouldn’t say typically.
Our approach would likely have led to, as part of
the negotiation, making certain that Keystone not
create the dilemma that they ultimately found
themselves in, and that they make whatever
accommodations, whether financial
accommodations or other space accommodations or
some other accommodations, with any other tenants
that have prevailing terms that went beyond.
¶85 We agree with Airstar that, as a general proposition, even
a single sworn statement can create a genuine issue of material
fact. See, e.g., Kilpatrick v. Wiley, Rein & Fielding, 909 P.2d 1283, 1292
(Utah Ct. App. 1996). But while we “draw all reasonable inferences
in favor of” Airstar, IHC Health Services, 2008 UT 73, ¶ 19
20190847-CA 29 2022 UT App 73Airstar Corp. v. Keystone Aviation
(emphasis in original), Airstar still cannot defend itself against
summary judgment with “pure speculation,” Heslop v. Bear River
Mutual Ins. Co., 2017 UT 5, ¶ 21, 390 P.3d 314.
¶86 Here, the Administration Director’s testimony did not
establish a “direct causal connection” between Keystone’s alleged
failure to provide timely notice and Airstar’s claimed damages.
Thurston, 2003 UT App 438, ¶ 16 (quotation simplified). In its
amended complaint, Airstar identified its damages as: (1) the cost
of resurfacing the hangar’s floor; (2) the “substantially higher”
cost of rent and fuel that it had to pay under its subsequent
sublease with Atlantic Aviation; and (3) the cost of mitigating
those damages, including attorney fees.
¶87 The Administration Director’s testimony did not establish
that any of these would have been avoided if Keystone had
provided timely notice. To the contrary, while the Administration
Director surmised that Salt Lake City might have asked Keystone
to “make accommodations,” he also stated that he didn’t know if
Salt Lake City “would have suggested a specific accommodation.”
Instead, he suggested that Salt Lake City’s “approach would
likely have led to . . . financial accommodations or other space
accommodations or some other accommodations.” (Emphases
added.) The Administration Director’s repeated use of the
disjunctive “or” was significant because it demonstrated his
unwillingness to say that Salt Lake City would actually have
insisted on any particular accommodations.
¶88 This unwillingness was even more pronounced elsewhere
in his deposition. For example, Airstar’s counsel asked the
Administration Director if it was “the City’s understanding that
whatever arrangements were made for Airstar, [Airstar] would be
allowed to continue to occupy space at the airport under the same
terms and conditions as their existing sublease.” The
Administration Director replied, “No.” Similarly, the
Administration Director was asked if Salt Lake City “care[d] if
Keystone raised the rent for Airstar.” The Administration Director
responded, “That level of tenant-subtenant relationship was not
20190847-CA 30 2022 UT App 73Airstar Corp. v. Keystone Aviation
part of our negotiations or calculations.” And when the
Administration Director was asked if Salt Lake City “involve[d]
[itself] in the details of what the sublease terms were,” the
Administration Director explained, “It has . . . always been our
practice not to interfere in those business arrangements . . . . [W]e
do not involve ourselves in those lease matters. It would not be
appropriate, largely.”13
¶89 Again, when reviewing a summary judgment motion, a
court is required to draw only “reasonable inferences.” IHC Health
Services, 2008 UT 73, ¶ 19 (emphasis in original). Here, even
accepting what the Administration Director said as true, his
testimony established, at most, that Salt Lake City “would likely”
have required Keystone to accommodate Airstar in some
unspecified way. But he never said that Salt Lake City would have
insisted on any particular accommodations that would have
prevented the particular damages that Airstar asserted in its
amended complaint.14
13. The Airport Director was even more direct about this in her
deposition. There, Keystone’s counsel asked, “With respect to
negotiations between the airport and FBOs, do you believe that
the airport should have concerned itself, in those negotiations,
with the terms of subleases?” The Airport Director responded,
“No.”
14. It’s at least arguable that the cost of resurfacing the hangar’s
floor stands on a different footing than the other sources of
claimed damage. As noted, there was some evidence of how much
that resurfacing cost, and we see it as something of a close call as
to whether a jury could have drawn an inference that if Airstar
had been given earlier notice of Keystone’s negotiations with Salt
Lake City, Airstar might not have chosen to incur that expense.
But even if this were so, we would still affirm the grant of
summary judgment as to this source of damage, albeit on a
different ground. As noted, Airstar ultimately negotiated a new
(continued…)
20190847-CA 31 2022 UT App 73Airstar Corp. v. Keystone Aviation
¶90 We accordingly agree with the district court that Airstar
has provided no non-speculative evidence that established a
“direct causal connection” between Keystone’s alleged breach
and Airstar’s claimed damages. Thurston, 2003 UT App 438, ¶ 16
(quotation simplified). And because there was no genuine issue
of material fact on this essential element of Airstar’s claim,
Keystone was “entitled to judgment as a matter of law.” Utah R.
Civ. P. 56(a).
IV. Attorney Fees
¶91 After the district court granted summary judgment in
Keystone’s favor, Keystone requested attorney fees. In its fee
calculation, Keystone requested an award for fees that it incurred
while litigating claims based on both the 1992 FBO Agreement
and the Hangar 16 Sublease. The court granted that request,
finding that “the noncompensable claims—those related to Salt
Lake City Corporation, Atlantic Aviation and the FBO
Agreement—are inextricably intertwined with the compensable
claims asserted in this action.”
¶92 Airstar, however, argues that “Keystone should not be
awarded attorneys’ fees for defending against claims Airstar
made under the FBO Agreement since the FBO Agreement does
not contain an attorneys’ fees provision” and that the “district
court erred by conflating all claims in this matter as ‘inextricably
intertwined.’”
A. Standard of Review
¶93 Before addressing the merits of Airstar’s argument, we first
briefly note a dispute about the appropriate standard of review.
lease with Atlantic Aviation that allowed Airstar to still occupy
and use Hangar 16, rather than moving to a different hangar.
Indeed, because of this new agreement, Airstar is still enjoying the
benefits of that resurfacing. It therefore cannot show that it was
damaged in this particular respect by any lack of notice.
20190847-CA 32 2022 UT App 73Airstar Corp. v. Keystone Aviation
Airstar points to cases holding that “whether attorneys’ fees are
recoverable in an action is a question of law, which this Court
reviews for correctness.” See, e.g., Utah Telecomm. Open
Infrastructure Agency v. Hogan, 2013 UT App 8, ¶ 10, 294 P.3d 645.
Airstar accordingly asks us to give no deference to the district
court’s award of attorney fees. Keystone, however, points to cases
that, in its view, suggest that a “district court’s finding that
compensable claims overlapped significantly with non-
compensable claims . . . is reviewed for ‘patent error or clear abuse
of discretion.’” (Citing Stevensen 3rd East, LC v. Watts, 2009 UT
App 137, ¶¶ 27, 61, 210 P.3d 977.)
¶94 We need not resolve this dispute here, however, because,
even applying the non-deferential standard of review, we still
affirm the district court’s decision.
B. Airstar’s Claims
¶95 “In Utah, attorney fees are awardable only if authorized by
statute or by contract. If provided for by contract, the award of
attorney fees is allowed only in accordance with the terms of the
contract.” Dixie State Bank v. Bracken, 764 P.2d 985, 988 (Utah 1988)
(quotation simplified); see also Innerlight, Inc. v. Matrix Group, LLC,
2012 UT App 251, ¶ 7, 286 P.3d 945.
¶96 But “when a dispute involves multiple claims involving a
common core of facts and related legal theories, and a party
prevails on at least some of its claims, it is entitled to
compensation for all attorney fees reasonably incurred in the
litigation.” KB Squared LLC v. Memorial Bldg. LLC, 2019 UT App
61, ¶ 34, 442 P.3d 1168 (quotation simplified). Put differently, if a
compensable claim is “inextricably intertwined” with a
noncompensable claim, fees related to the noncompensable claim
are “appropriately included in the fee calculation.” Golden
Meadows Props., LC v. Strand, 2010 UT App 257, ¶ 35, 241 P.3d 375.
¶97 In the Hangar 16 Sublease, Keystone and Airstar agreed as
follows:
20190847-CA 33 2022 UT App 73Airstar Corp. v. Keystone Aviation
In the event of the bringing of any action or suit by
either party hereto by reason of any breach of any of
the covenants or agreements on the part of the other
party arising out of this Lease, then in that event the
prevailing party shall be entitled to have and
recover of and from the other party costs and
expenses of the action or suit, including reasonable
attorneys’ fees.
(Emphasis added.)
¶98 Airstar concedes that Keystone’s fees incurred while
defending against claims based on the Hangar 16 Sublease are
recoverable. But it argues that its claims based on the 1992 FBO
Agreement did not “arise under” the Hangar 16 Sublease and thus
fees incurred in litigating those claims are not recoverable. We
disagree.
¶99 In its amended complaint, Airstar alleged that by entering
into the Hangar 16 Sublease, it became a third-party beneficiary
of the 1992 FBO Agreement. It then asserted that Keystone and
Salt Lake City breached the 1992 FBO Agreement and its implied
covenant by prematurely terminating the 1992 FBO Agreement.
As explained above, however, Keystone successfully defended
against this claim by arguing that Airstar waived its third-party
beneficiary rights by entering into the Hangar 16 Sublease.
¶100 So in order to resolve Airstar’s third-party beneficiary
claims against Keystone, the court necessarily had to interpret the
Hangar 16 Sublease. In this sense, the claims based on the 1992
FBO Agreement and those based on the Hangar 16 Sublease both
ultimately hinged on the terms of the Hangar 16 Sublease; and
because of that, they all “involv[ed] a common core of facts and
related legal theories” and were “inextricably intertwined.”
Golden Meadows Props., 2010 UT App 257, ¶ 35 (quotation
simplified); see also KB Squared, 2019 UT App 61, ¶ 34 (holding that
multiple claims involved “a common core of facts and related
20190847-CA 34 2022 UT App 73Airstar Corp. v. Keystone Aviation
legal theories” when they all “related to the same issue of whether
[a party] was required to ‘repair’ [a bridge] under the Lease”).
¶101 We therefore agree with the district court that Airstar’s
claims based on the 1992 FBO Agreement were “inextricably
intertwined” with its claims based on the Hangar 16 Sublease. As
a result, Keystone was entitled to include work associated with
the 1992 FBO Agreement claims in its fee calculation. See Golden
Meadows Props., 2010 UT App 257, ¶ 35.
C. Attorney Fees on Appeal
¶102 Keystone has also requested attorney fees incurred on
appeal. “When a party who received attorney fees below prevails
on appeal, the party is also entitled to fees reasonably incurred on
appeal.” Valcarce v. Fitzgerald, 961 P.2d 305, 319 (Utah 1998)
(quotation simplified). We accordingly award Keystone its fees
reasonably incurred on appeal and remand for the district court
to calculate that award.
CONCLUSION
¶103 Because the parties agreed that the Hangar 16 Sublease
would terminate if the 1992 FBO Agreement “terminated for any
reason,” the district court did not err in dismissing Airstar’s
Premature Termination Claims. Nor did the court err in ruling
that Airstar waived its third-party beneficiary rights. The court
also did not err when it concluded that Airstar had presented only
speculative evidence of proximate cause and granted summary
judgment in Keystone’s favor. Finally, the court did not err in
ruling, for purposes of evaluating Keystone’s claim to attorney
fees, that Airstar’s compensable and noncompensable claims
were “inextricably intertwined.”
¶104 We therefore affirm the district court’s rulings, and we also
remand for a determination of attorney fees reasonably incurred
on appeal.
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