Osguthorpe v. Wolf Mountain Resorts, L.C.

This opinion is subject to revision before final
publication in the Pacific Reporter
2013 UT 12IN THE
SUPREME COURT OF THE STATE OF UTAH
STEPHEN A. OSGUTHORPE and
D.A. OSGUTHORPE FAMILY PARTNERSHIP,
Plaintiffs and Appellants,
v.
WOLF MOUNTAIN RESORTS, L.C.,
Defendant, Appellee, and Cross-Appellant,
v.
ASC UTAH, INC., dba THE CANYONS; AMERICAN SKIING COMPANY;
LESLIE B. OTTEN; and John Does I-XX,
Defendants and Appellees.
Nos. 20100928
Filed March 5, 2013
Third District, Silver Summit Dep’t
Honorable Robert K. Hilder
No. 060500297
Attorneys:
David W. Scofield, Sandy, for appellants
Joseph E. Wrona, Todd D. Wakefield, Park City,
for appellee and cross-appellant
John R. Lund, Kara L. Pettit, John P. Ashton, Clark K. Taylor,
Salt Lake City, for appellees
JUSTICE DURHAM authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,
JUSTICE LEE and JUDGE ORME joined.
Having recused herself, Justice Parrish does not participate
herein, Court of Appeals Judge Orme sat.
JUSTICE DURHAM, opinion of the Court:
INTRODUCTION
¶1 The D.A. Osguthorpe Family Partnership (Osguthorpe)
appeals the district court’s denial of its motion to compel arbitration
of claims between ASC Utah, Inc., (ASCU) and Wolf Mountain Re-
sorts, L.C. (Wolf Mountain). Osguthorpe also asserts that its due
process rights were violated by the district court. We affirm.
OSGUTHORPE v. WOLF MOUNTAIN
Opinion of the Court
BACKGROUND1
¶2 The claims for which Osguthorpe seeks to compel arbitra-
tion arise from two agreements: the 1997 Ground Lease Agreement
between ASCU and Wolf Mountain (Ground Lease) and the 1999
Amended and Restated Development Agreement for the Canyons
Specially Planned Area (SPA Agreement). The SPA Agreement has
thirty-six signatories, including ASCU, Wolf Mountain, Osguthorpe,
and Summit County (County). In the SPA Agreement, the parties
agreed to take specified steps to develop the Canyons Resort in ex-
change for the County’s approval of the projects, assistance in ob-
taining permits from other governmental agencies, and other sup-
port.
¶3 In 2006, ASCU and Wolf Mountain began litigating claims
involving both the Ground Lease and the SPA Agreement. See ASC
Utah, Inc. v. Wolf Mountain Resorts, L.C. (Wolf Mountain II), 2010 UT
65, ¶ 4, 245 P.3d 184. Shortly thereafter, in 2006 and 2007,
Osguthorpe sued ASCU and Wolf Mountain separately, alleging that
each party had breached a land-lease agreement distinct from the
Ground Lease or the SPA Agreement. In late 2007, ASCU moved to
consolidate Osguthorpe’s separate actions into ASCU’s litigation
with Wolf Mountain. The district court granted ASCU’s motion over
Osguthorpe’s opposition.
¶4 On July 30, 2009, the County issued a notice of default
against Osguthorpe, ASCU, Wolf Mountain, and several other par-
ties to the SPA Agreement. Nearly a year later, on June 28, 2010, the
district court issued an order granting leave to the parties to file
supplemental pleadings related to the Ground Lease under rule
15(d) of the Utah Rules of Civil Procedure. Osguthorpe filed a sup-
plemental pleading alleging four new causes of action, including one
related to liability for the default declared by the County under the
SPA Agreement. The district court refused to allow Osguthorpe’s
claims because they were entirely new claims, not supplemental
claims invited by the court pursuant to rule 15(d). Shortly thereafter,
Wolf Mountain moved to disqualify the district judge, and the judge
voluntarily recused himself. The judge to whom the case was reas-
1
For a more detailed account of this case’s factual and procedural
background, see ASC Utah, Inc. v. Wolf Mountain Resorts, L.C. (Wolf
Mountain II), 2010 UT 65, ¶¶ 2–9, 245 P.3d 184 and Osguthorpe v. Wolf
Mountain Resorts, L.C. (Wolf Mountain I), 2010 UT 29, ¶¶ 1–3, 232 P.3d
999.
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Cite as: 2013 UT 12Opinion of the Court
signed vacated the previous judge’s order and allowed Osguthorpe
to bring the new claims into the litigation.
¶5 In September 2010, Osguthorpe moved to compel arbitra-
tion of all the claims related to the SPA Agreement (SPA claims),
including the claims between ASCU and Wolf Mountain, to which
Osguthorpe was not a party. The district court scheduled a hearing
on the motion for November 24, 2010. On November 19, this court
issued Wolf Mountain II, in which we held that Wolf Mountain had
“waived any potential contractual right to arbitrate” its SPA claims.
2010 UT 65, ¶ 39. Based on that opinion, the district court canceled
the hearing on Osguthorpe’s motion and held that the SPA claims
between ASCU and Wolf Mountain were not arbitrable. As to
Osguthorpe’s own SPA claims, the district court held that
Osguthorpe could continue to litigate them in the present case or
pursue separate resolution through arbitration.
¶6 Osguthorpe appealed the district court’s denial of its mo-
tion to compel arbitration.2 Several weeks later, on the eve of trial,
Osguthorpe withdrew its SPA claims from the case. Thus, the appeal
before us involves only Osguthorpe’s motion to compel arbitration
of the SPA claims between ASCU and Wolf Mountain, to which
Osguthorpe is not a party. We have jurisdiction pursuant to Utah
Code section 78A-3-102(3)(j).
STANDARD OF REVIEW
¶7 We review the interpretation of a contract for correctness.
Meadow Valley Contractors, Inc. v. State Dept. of Transp., 2011 UT 35,
¶ 24, 266 P.3d 671. Although the denial of a motion to compel arbi-
tration presents a mixed question of fact and law, “when a district
court denies a motion to compel arbitration based on documentary
evidence alone,” we afford no deference to the district court’s deci-
sion. Wolf Mountain II, 2010 UT 65, ¶ 11, 245 P.3d 184. Finally,
“[c]onstitutional issues, including questions regarding due process,
are questions of law that we review for correctness.” Chen v. Stewart,
2004 UT 82, ¶ 25, 100 P.3d 1177.
ANALYSIS
¶8 Osguthorpe argues that, as a party to the SPA Agreement,
it is entitled to compel arbitration of the SPA claims between ASCU
and Wolf Mountain. Osguthorpe also contends that the district court
violated its right to due process by ruling on the motion to compel
2
Osguthorpe also petitioned this court to stay the litigation and
to disqualify the district judge. We denied these petitions.
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OSGUTHORPE v. WOLF MOUNTAIN
Opinion of the Court
arbitration without giving Osguthorpe an opportunity to be heard
on what effect, if any, our decision in Wolf Mountain II should have
on the motion’s disposition. We disagree with Osguthorpe on both
issues.
I. THE SPA AGREEMENT DOES NOT PERMIT OSGUTHORPE
TO COMPEL ARBITRATION OF CLAIMS BETWEEN ASCU
AND WOLF MOUNTAIN
¶9 Upon close examination of the default and arbitration pro-
visions of the SPA Agreement, we conclude that the SPA disputes
between ASCU and Wolf Mountain are not within the scope of the
arbitration provision and that even if they were, Osguthorpe would
not have a right to compel arbitration of claims between two other
parties.
¶10 “The underlying purpose in construing or interpreting a
contract is to ascertain the intentions of the parties to the contract.”
WebBank v. Am. Gen. Annuity Serv. Corp., 2002 UT 88, ¶ 17, 54 P.3d
1139. To ascertain the parties’ intentions, we look to the plain mean-
ing of the contractual language, Café Rio, Inc. v. Larkin-Gifford-
Overton, LLC, 2009 UT 27, ¶ 25, 207 P.3d 1235, and “we consider each
contract provision . . . in relation to all of the others, with a view
toward giving effect to all and ignoring none,” Selvig v. Blockbuster
Enters., LC, 2011 UT 39, ¶ 23, 266 P.3d 691 (alteration in original)
(internal quotation marks omitted).
¶11 The SPA Agreement contains detailed default provisions,
which on their face apply only to obligations running to the County.
Subsection 5.1.2 provides:
Within ten (10) days after the occurrence of a default . . .
the County shall give the Defaulting Party . . . written
notice specifying the nature of the alleged default and,
when appropriate, the manner in which the default
must be satisfactorily cured. The Defaulting Party shall
have sixty (60) days after receipt of written notice to
cure the default.
Subsection 5.1.3 provides that in the event of an uncured default, the
County may sue the defaulting party for specific performance or, if
the default is a “major default,” terminate the SPA Agreement. Un-
der the plain language of the default provisions, the County is the
only party that can declare a default and the only party that can sue
for specific performance or terminate the agreement.
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¶12 Subsection 5.8.1 of the SPA Agreement contains the follow-
ing arbitration provision:
In the event that the default mechanism contained herein
shall not sufficiently resolve a dispute under this Amended
Agreement, then every such continuing dispute, differ-
ence, and disagreement shall be referred to a single arbi-
trator agreed upon by the parties . . . and such dispute,
difference, or disagreement shall be resolved by the
binding decision of the arbitrator.
(Emphasis added.) The arbitration provision limits its scope to
disputes that “the default mechanism” referenced above has failed
to resolve. The phrase “every such continuing dispute” thus
indicates that only disputes to which the default mechanism has
actually (whether successfully or not) been applied fall within the
scope of the arbitration provision. Because the default mechanism
can only be exercised by the County, the County will necessarily be
a party to “every such continuing dispute.” Thus, Osguthorpe is
incorrect when it asserts that the arbitration provision applies to all
disputes between any parties to the SPA Agreement.
¶13 A comparison of the arbitration provision with the attorney
fee provision in subsection 5.8.6 of the SPA Agreement reinforces
our interpretation. The attorney fee provision states:
Should any party hereto employ an attorney . . . for any
reasons or in any legal proceeding whatsoever, including
insolvency, bankruptcy, arbitration, declaratory relief or
other litigation, including appeals or re-hearings . . . the
prevailing party shall be entitled to receive from the
other party thereto reimbursement for all attorney’s fees
and all costs and expenses.
(Emphasis added.) This provision bolsters our analysis in two ways.
First, it suggests that not all disputes between parties to the SPA
Agreement are governed by the arbitration provision. Second, its
expansive language stands in contrast to the limiting language of the
arbitration provision. The attorney fee provision applies to “any
legal proceeding” involving “any party” to the SPA Agreement. In
contrast, the arbitration provision applies only “[i]n the event that
the default mechanism . . . shall not sufficiently resolve a dispute”
and applies only to “such continuing dispute[s]”with the County.
¶14 Here, the SPA claims for which Osguthorpe is attempting
to compel arbitration are not “continuing dispute[s]” with the
County that the default mechanism has failed to resolve. The County
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OSGUTHORPE v. WOLF MOUNTAIN
Opinion of the Court
is not a party to this appeal or to any of the litigation leading to this
appeal, and the default mechanism has not been (and cannot be)
invoked as to these claims. Although the claims involve liability for
the default declared by the County, they are distinct from the
parties’ disputes with the County. Thus, these SPA claims do not fall
within the scope of the arbitration provision.
¶15 Even if the SPA claims were arbitrable, Osguthorpe would
not have a right to invoke the arbitration provision because it is not
a party to the claims between ASCU and Wolf Mountain. The
arbitration provision directs that arbitrable disputes “be referred to
a single arbitrator agreed upon by the parties.” The word “parties”
refers not to all thirty-six parties to the contract but rather to the
parties to the particular dispute. To interpret the contract otherwise
would lead to the absurd result of requiring all thirty-six signatories
to agree on an arbitrator to hear a dispute in which most of the
signatories have no interest. Nothing in the arbitration provision
entitles signatories to the SPA Agreement that are not party to a
dispute to compel that dispute into arbitration.
¶16 We conclude that the SPA claims between ASCU and Wolf
Mountain are not arbitrable because they are not “continuing
dispute[s]” with the County that the default mechanism has failed
to resolve.3 And even if these claims were arbitrable, Osguthorpe, as
a non-party to the disputes, would have no right under the SPA
Agreement to compel their arbitration.
II. OSGUTHORPE’S DUE PROCESS RIGHTS WERE
NOT VIOLATED
¶17 Osguthorpe also argues that the district court violated its
right to due process by denying its motion to compel arbitration
before it could be heard on what effect, if any, our opinion in Wolf
Mountain II had on the motion. We disagree.
3
Our analysis in Wolf Mountain II was premised on the
unexamined assumption that the SPA Agreement gave Wolf
Mountain a right to arbitrate its disputes with ASCU. In that appeal,
the applicability of the arbitration provision was not disputed and
therefore not briefed or argued to us. Accordingly, we did not
analyze or interpret subsection 5.8.1, as acknowledged in the
cautious phrasing of our holding: “Wolf Mountain waived any
potential contractual right to arbitrate . . . .” Wolf Mountain II, 2010 UT
65, ¶ 39, 245 P.3d 184 (emphasis added). Although Wolf Mountain II
could have been resolved on contract interpretation grounds rather
than on waiver grounds, the opinion remains sound.
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¶18 After we issued Wolf Mountain II, the district court
cancelled the hearing it had scheduled on Osguthorpe’s motion to
compel arbitration, and denied the motion. In its written order, the
court correctly explained that under rule 7(e) of the Utah Rules of
Civil Procedure a court can deny hearings on dispositive motions if
“the court finds that . . . the issue has been authoritatively decided.”
Here, the district court indeed found “that the arbitration issue in
this case ha[d] been . . . authoritatively decided” by our opinion in
Wolf Mountain II. We agree.
¶19 We have held that “due process requires that those with an
interest in a proceeding be given notice and an opportunity to be
heard in a meaningful manner before their interests are adjudicated
by a court.” Salt Lake Legal Defender Ass’n v. Atherton, 2011 UT 58, ¶ 2,
267 P.3d 227. Here, Osguthorpe fully briefed the matter to the
district court, and the court noted in its written order that it “read all
of the briefing.” The district court complied with rule 7(e) in ruling
on the motion without a hearing, see supra ¶ 18, and Osguthorpe has
not argued that rule 7(e) is constitutionally inadequate. Nor has
Osguthorpe provided any authority or argument for the notion that
if new controlling precedent is handed down after a matter is briefed
but before it is ruled on, the district court is required to order
supplemental briefing. Therefore, we hold that Osguthorpe’s due
process rights were not violated.
CONCLUSION
¶20 The disputes for which Osguthorpe seeks to compel
arbitration are not subject to the SPA Agreement’s arbitration
provision. Furthermore, as a non-party to the disputes, Osguthorpe
has no contractual right to compel their arbitration. We hold that the
district court was correct in denying Osguthorpe’s motion to compel
arbitration, and that the district court did not violate Osguthorpe’s
due process rights. Affirmed.
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