Commerce Commercial Partners v. Milliken & Company

District Court, D. Utah·Decided July 4, 2024·No. 4:22-cv-00020·Unknown

Opinion

THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH

COMMERCE COMMERCIAL PARTNERS, MEMORANDUM DECISION LLC, a Utah limited liability company, AT THE END OF EVIDENCE IN PHASE 1 OF TRIAL Plaintiff,

v. Case No. 4:22-cv-00020-DN-PK

MILLIKEN & COMPANY, a Delaware District Judge David Nuffer corporation, Magistrate Judge Paul Kohler Defendant.

The first phase of trial began on Tuesday June 25, 2024, and continued until and including Tuesday July 2, 2024. Both parties rested. As ordered on June 4, 2024, a second phase of trial “will consider additional evidence and argument on issues inherent in attorneys’ fee awards; issues arising under Utah Code Ann. § 78B-5-826; and any amount of attorneys’ fees to be awarded.”1 This Memorandum Decision advises the parties of the fact findings and conclusions made thus far. Contents Preliminary .......................................................................................................................... 2 Background ......................................................................................................................... 2 Landlord Tenant Relationships Generally .............................................................. 2 Relationship of these Parties ................................................................................... 3 Alteration Authorizations........................................................................................ 3 The End of Milliken Production ............................................................................. 4 Deterioration of Relationships ................................................................................ 4 Weight Given Evidence and Testimony ............................................................................. 6 Determinations of Liability ................................................................................................. 6 Milliken breached its duty to repair and maintain .................................................. 6 Milliken breached its duty to give CCP access during the lease ............................ 7

1 Memorandum Decision and Order Denying Milliken’s Motion on Limine No. 6 to Exclude Plaintiff’s Claim For Attorneys’ Fees and Granting [71] Motion on Limine Re: Plaintiff’s Attorneys’ Fees and Costs, at 21, docket no. 111, filed June 4, 2024. Milliken made unauthorized alterations, some of which impaired the structural integrity of the building .............................................................................. 8 Milliken’s penetrations of the Tilt Up walls and abuse of the mezzanine constitute waste ........................................................................................................... 8 Milliken is rightfully charged with the office HVAC unit replacement ................. 9 Milliken is responsible for six weeks Rent Abatement .......................................... 9 CCP provided notices of breach sufficient to trigger the 10% late fee ................. 10 CCP made no waiver ............................................................................................ 10 Milliken’s payments and letters do not constitute settlements or complete cures 11 Questions and Discussion Friday July 5, 2024 ................................................................. 11 Who is the loading dock damage attributable to? ................................................. 11 Good faith and fair dealing ................................................................................... 11 The Issue of Interest .............................................................................................. 12 Damages ................................................................................................................ 12 Phase II Preparation .............................................................................................. 12

Preliminary All findings of facts are made by a preponderance of the evidence. The burden of proof is on CCP except for affirmative defenses and application of Utah Code Ann. § 78B-5-826. This case had to be tried. There were too many facts, documents, and interpretations of facts and meaning and effect of lease provisions to decide the case without trial. This document overviews the views of the fact finder, preliminary to preparation and entry of formal Findings of Fact and Conclusions of Law. It reviews the parties’ relationship; decides key concepts related to liability; identifies remaining questions about the completed evidence presentation; and sets the stage for a discussion of damages, preparatory to determination of attorneys’ fees. The document is a benchmark to moving forward. The findings and conclusions expressed are hard and fast, though the language is not. There will be opportunity to object to an eventual draft of more complete and formal Findings of Fact and Conclusions of Law. Background Landlord Tenant Relationships Generally Leases bring together two entities with divergent interests. The landlord has a long-term capital investment, while the tenant has a short-term need for space. To protect the interests of the tenant, a lease has provisions to protect the typical interests of each party. To protect the interests of the tenant, the lease contains provisions such as a guarantee of quiet enjoyment, a set rent schedule, and duties of the landlord to maintain specified items. To protect the interests of the landlord, a lease usually provides for rent payments, assurances of protection of the capital investment, and coverage of taxes and insurance by the tenant. Lease agreements must be examined, interpreted, and enforced with the balance of interests in mind. A tenant cannot have free license with the premises, and the landlord cannot deny a compliant tenant the legitimate use of the premises for the lease term. Relationship of these Parties These parties had different backgrounds. The Tenant Milliken is a large manufacturing concern and the Landlord CCP leases several different buildings to different tenants. The Landlord CCP built this structure for use by a predecessor entity (both of which are referred to as CCP) – until that use became financially disadvantageous. CCP designed and then used the Premises for light manufacturing, while Milliken’s operation involved highly specialized production with heavy equipment installations which required Milliken to request authorization to make substantial changes. CCP, having built the structure and used it for a business operation, had a more personal interest with a greater financial stake than Milliken. The building was in essentially new condition when delivered to Milliken after a little over a year of light manufacturing use by the CCP-related entity. Physical proximity is another difference between these parties. CCP’s CEO lives in California, and he was closer than Milliken’s management located in South Carolina. Each party had local representatives, but CCP’s management took more opportunities to visit the Premises than Milliken’s management. CCP’s representative was Kjeld Hestehave, who contracted the construction, operated the first business on the Premises, negotiated the Lease Agreement with Milliken, and personally invoiced each monthly rent notice. Milliken’s senior management was located in South Carolina. Local Milliken plant managers had little authority for Milliken compared to that of Mr. Hestehave for CCP.

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