IHC Health Services, Inc. v. D & K MANAGEMENT, INC.

2008 UT 73, 196 P.3d 588, 615 Utah Adv. Rep. 32, 2008 Utah LEXIS 159, 2008 WL 4682287
CourtUtah Supreme Court
DecidedOctober 24, 2008
Docket20061017
StatusPublished
Cited by109 cases

This text of 2008 UT 73 (IHC Health Services, Inc. v. D & K MANAGEMENT, INC.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
IHC Health Services, Inc. v. D & K MANAGEMENT, INC., 2008 UT 73, 196 P.3d 588, 615 Utah Adv. Rep. 32, 2008 Utah LEXIS 159, 2008 WL 4682287 (Utah 2008).

Opinion

AMENDED OPINION

DURRANT, Associate Chief Justice:

INTRODUCTION

{1 In this case, a landlord, IHC Health Services, Inc. ("IHC"), seeks to eject its tenant, D & K Management ("D & K"), for breach of its lease (the "Lease") because of a late rental payment. The district court granted summary judgment in favor of IHC and awarded attorney fees to IHC pursuant to a provision in the Lease. D & K appeals, asserting that the district court erred when it (1) held that, as a matter of law, IHC did not waive its right to terminate the Lease; (2) refused to consider D & K's untimely-raised defense of substantial compliance; and (8) awarded attorney fees to IHC. We conclude that the district court appropriately granted summary judgment in favor of IHC on the issue of waiver because, under the totality of the cireumstances, no reasonable fact finder could conclude that IHC intended to waive its right to terminate the Lease. We also affirm the district court's decision to refuse to consider D & K's untimely-raised substantial compliance defense. But we reverse the district court's award of attorney fees.

BACKGROUND

T 2 The parties do not dispute the underlying material facts. In 1994, D & K leased space in a shopping center in Murray, Utah, from Medical Plaza 9400. D & K uses the space to operate a sexually oriented business, the Southern Xposure private club. In January 1998, IHC purchased the shopping center from Medical Plaza 9400 with plans to build a state-of-the-art medical complex. IHC notified D & K by letter that it had purchased the shopping center.

T3 The initial term of the Lease was five years, but it includes three five-year renewal options. The Lease provides that the tenant must pay rent "in advance of the first day of each calendar month during the term of the Lease." In addition, the Lease provides that "faillure] to pay any rental or any other sum due hereunder within ten [10] days after the same / [sic] shall be due" constitutes default. And upon occurrence of default, the landlord may "[tJerminate this Lease by written notice to the Tenant.... [Alnud the Landlord may recover from Tenant all damages it may incur by reason of Tenant's breach, including . reasonable attorney's fees." Section 28 of the Lease also provides as follows:

In the event that at any time during the term of this Lease either Landlord or the Tenant institutes any action or proceeding against the other relating to the provisions of this Lease or any default hereunder, then the unsuccessful party in such action or proceeding agrees to reimburse the sue-cessful party for the reasonable expenses of such action including reasonable attorney's fees, incurred therein by the successful party.

T4 IHC sought to terminate the Lease after D & K failed to pay rent for March 1998 during that month. D & K did, however, deliver a check for its rental payment for April 1998 on April 8. IHC accepted and cashed the check. D & K still had not sent the March 1998 rental payment on April 14, 1998, when IHC sent D & K a Notice of Default and Forfeiture of Lease Agreement. The notice directed it to surrender possession of the leased premises within thirty days. On April 16, having received the Notice of Default, D & K attempted to deliver a *592 check for the March 1998 rental payment to IHC. Although IHC's property managers accepted D & K's March rent check at their office and issued a receipt, IHC promptly returned the check uncashed to D & K on April 17, 1998.

15 D & K asserts that IHC waived its right to terminate the Lease by accepting and cashing the check for the April 1998 rental payment and by sending certain correspondence to D & K. From June 1998 to January 1999, IHC sent numerous letters and invoices to D & K demanding, among other things, that D & K pay increased rent and maintain insurance according to the terms of the Lease. In each of these letters, IHC addressed D & K as "Dear Tenant." D & K timely sent rent checks each month from May 1998 until March 1999. IHC retained the checks but did not cash them.

T 6 In March 1999, the parties entered into an agreement to hold all rental payments in escrow and preserve the parties' then-existing rights. Shortly thereafter in May 1999, IHC sued, alleging breach of the Lease. IHC sought ejectment, a declaratory judgment that D & K was in breach, damages for breach, and attorney fees. D & K's answer invoked ten affirmative defenses, including waiver, estoppel, and unconscionability. D & K did not specifically invoke the defense of substantial compliance in its Answer.

T7 IHC moved for a declaratory judgment that D & K had forfeited the Lease and that all of D & K's affirmative defenses failed as a matter of law. IHC pointed out that D & K admitted that it had paid the March rent late. IHC argued that it did not, as a matter of law, waive its right to terminate the Lease. D & K moved for summary judgment in its favor on the affirmative defenses of waiver and equitable estoppel. Although IHC's motion sought declaratory judgment that D & K had forfeited the Lease and that all of D & K's defenses failed as a matter of law, D & K's Opposition and Motion for Summary Judgment raised only waiver and equitable estoppel as defenses. D & K did not raise the doctrine of substantial compliance in any pleading or motion in response to IHC's motion.

T8 The district court granted summary judgment in favor of IHC, ruling that D & K's waiver defense failed as a matter of law and that it had forfeited the Lease. The district court did not directly address D & K's equitable estoppel defense. But its memorandum decision erroneously noted that IHC had returned the April 1998 rent check to D & K uncashed. D & K appealed the ruling to this court.

T9 This court took up the matter in IHC Health Services, Inc. v. D & K Management, Inc. ("D & K I"). 1 We ruled that although the district court failed to address D & K's equitable estoppel argument, the argument failed as a matter of law. 2 As to waiver, we reiterated the rule from our previous cases that although waiver is intensely fact dependent, "a fact finder need only determine whether the totality of the cireumstances warrants the inference of relinquishment." 3 We stated that because the district court had misapprehended the fact that IHC accepted the April 1998 rental payment, it could not have properly considered the totality of the cireumstances. 4 Therefore, we remanded the case to the district court for reconsideration in light of the correct facts. 5

T10 On remand, IHC filed a new Motion for Summary Judgment on its claims for forfeiture, declaratory judgment, and breach of contract. D & K argued only waiver as a defense in its Opposition to Summary Judgment and did not raise the doctrine of substantial compliance. The district court again granted summary judgment in favor of IHC and ruled that it was entitled to judgment as a matter of law on its claims for forfeiture, declaratory judgment, and breach of contract.

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Cite This Page — Counsel Stack

Bluebook (online)
2008 UT 73, 196 P.3d 588, 615 Utah Adv. Rep. 32, 2008 Utah LEXIS 159, 2008 WL 4682287, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ihc-health-services-inc-v-d-k-management-inc-utah-2008.