Tech Center 2000, LLC v. ZRII, LLC

2015 UT App 281, 363 P.3d 566, 801 Utah Adv. Rep. 35, 2015 Utah App. LEXIS 303, 2015 WL 7708483
CourtCourt of Appeals of Utah
DecidedNovember 27, 2015
Docket20130848-CA
StatusPublished
Cited by32 cases

This text of 2015 UT App 281 (Tech Center 2000, LLC v. ZRII, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tech Center 2000, LLC v. ZRII, LLC, 2015 UT App 281, 363 P.3d 566, 801 Utah Adv. Rep. 35, 2015 Utah App. LEXIS 303, 2015 WL 7708483 (Utah Ct. App. 2015).

Opinion

*569 Judge STEPHEN L. ROTH

authored this

Opinion,

in which Judge J. FREDERIC VOROS JR. concurred. Judge GREGORY K. ORME concurred in parts II, III, and IV, and dissented as to parts I and V.

Opinion

ROTH, Judge:

¶11 Zrii, LLC, (Zrii) appeals the district court's judgment in favor of Tech Center 2000, LLC (Landlord). We affirm.

BACKGROUND

¶ 2 Zrii leased office space in a multi-building complex that Landlord was developing. Eventually, Zrii occupied space in two different buildings. In October 2008, Landlord and Zrii entered into a lease (the Lease) for a third building that had yet to be constructed (the Building). Zrii agreed to lease the Building for three years beginning on April 1, 2009. Rent was set at approximately $21,000 per month for the first year, with the amount increasing to approximately $25,000 per month by the third year. In addition to providing a structural "shell" and utility access, Landlord agreed to construct leasehold essentials such as an elevator, restrooms, and lobby areas. .Landlord also agreed to provide up to $40 per square foot, or $611,760, in additional "tenant improvement[s]" and customization (the tenant improvement allowance). Zril was responsible for the cost of any further improvements or modifications to the Building. The Lease was personally guaranteed by William <F. Farley, Zril's CEO,. .

¶38 In February 2009, Zrii experienced a company-wide "walkout" of the majority of its distributors and employees. Shortly afterward, Zrii announced it would no longer be able to occupy the Building. Landlord filed suit against Zrii a few weeks later, asserting claims for breach of the Lease-principally unpaid rent-and enforcement of the personal guarantee. A bench trial was held and the district court ruled in favor of Landlord. The district court determined that Landlord was entitled to $795,871.04 in damages. -It arrived at this number by first calculating the .amount of rent due from the date of the breach until March 3%, 2012-three years after the commencement of the Lease-and subtracting the amount Landlord received in mitigation from renting the Building to replacement tenants. The district court also noted that in an invoice to Zrii following the breach, Landlord had provided Zrii a monthly credit of $4,690.39. The district court found that the amount represented "an amortization of the tenant [improvement] allowance, for a total credit over the life of the lease," which the court calen-lated to be $168,854.04. 1 In the damages calculation, the district court also included late fees, interest, and realtor commissions. Finally, the court ruled that Farley's guarantee was enforceable under the cireamstances.

¶ 4 Zrii filed a motion to amend the order, arguing that the district court erred in four respects: (1) by finding that Landlord had adequately mitigated its damages; (2) by giving Zrii credit against the unpaid rent for only the amortized amount of the tenant improvement allowance rather than the entire $611,760 provided in the Lease agreement; (8) by rejecting Zrii's impracticability and frustration of purpose defense despite the financially "devastating" company-wide "walkout" of Zrit's personnel and distributors; and (4) by determining that Farley was lable under the personal guarantee for damages from Zrii's breach of the lease agree- . ment and for Landlord's attorney fees. After a hearing on the motion, the district court entered an amended order rejecting Zrii's contentions. Zrii appeals.

ISSUES AND STANDARDS OF REVIEW

¶5 Zrii first argues that the Lease was unenforceable because the tenant improvement allowance rendered the base rental rate indefinite, and that even if the Lease was enforceable, the district court erred in calculating damages because it did not give Zrii credit for the full tenant improvement allow *570 ance of $611,760. "'Questions of contract interpretation which are confined to the language of the contract itself are questions of law, which we review for correctness?" Hillcrest Inv. v. Sandy City, 2010 UT App 201, ¶7, 238 P.3d 1067 (quoting Mellor v. Wasatch Crest Mut, Ins. Co., 2009 UT 5, ¶ 7, 201 P.3d 1004). "If a contract is deemed ambiguous, and the trial dourt allows extrinsic evidence of intent, interpretation of the contract becomés a factual matter and our review is strictly limited." Id. (citation and internal quotation marks omitted)." "[Tihe adequacy of a damage award is a factual question" and "we will not reverse the trial court's findings unless they are clearly erroneous." Lysenko v. Sawaya, 2000 UT 58, ¶ 13, 7 P.3d 783 (citation and internal quotation marks omitted); see also id. 116; Utah R. Civ. P. 52(a) (providing that findings of fact "shall not be set aside unless clearly erroneous").

¶ 6 Second, Zrii argues that Landlord failed to adequately mitigate its damages. "[Wle review a trial court's conclusions as to the legal effect of a given set of found facts for correctness." - Watkins v. Ford, 2010 UT App 243, ¶11, 239 P.3d 526 (alteration in original) (citation and internal quotation marks omitted), aff'd, Watkins v,. Ford, 2013 UT 31, 304 P.3d 841.

7 Third, Zrii argues that the district court improperly rejected its impracticability and - frustration of purpose - defenses. "Whether impracticability affords a party re- - lief from its obligations under a contract is a question of law that we review for correctness." - Central Utah Water Conservancy Dist, v. Upper E. Union Irrigation Co., 2013 UT 67, ¶ 27, 321 P.3d 1113.

¶ 8 Fourth, Zrii contends that the district court erred in determining that Farley's personal guarantee was enforceable As we have stated above, "Questions of contract interpretation which are confined to the language of the contract itself are questions of law, which we review for correctness" Hillcrest, 2010 UT App 201, ¶7, 238 P.3d 1067 (quoting Mellor, 2009 UT 5, 17, 201 P.8d 1004).

'ANALYSIS-

I. Claims Related to the Tenant Improvement Allowance

¶ 9 Zrii challenges two of the district court's determinations related to the tenant improvement allowance. Zrii first claims that the tenant improvement allowance renders the Lease's rental provision too indefinite to be enforced. Zrii also argues that the district court erred in failing to credit the full tenant improvement allowance toward the damages Zrii owed to Landlord under the Lease. We address each claim in turn,

A. Indefiniteness of the Lease

¶10 Zrii argues that the lease provision for a tenant improvement allowance rendered "the amount of the payable rent ... too indefinite to be enforced." Imi makes several arguments in connection with this contention. We are not persuaded. -

111 First, Zrii contends that under the Lease, "the amount of payable Base Rent was directly dependent upon the Tenant Improvement Allowance." "When interpreting a contract, we first look at the plain language to determine the parties' meaning and intent." Meadow Valley Contractors, Inc. v. Utah Dep't of Transp., 2011 UT 35, ¶ 64, 266 P.3d 671. "An agreement cannot be enforced if its terms are indefinite or demonstrate that there was no intent to contract." Richard Barton Enters. Inc. v.

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Cite This Page — Counsel Stack

Bluebook (online)
2015 UT App 281, 363 P.3d 566, 801 Utah Adv. Rep. 35, 2015 Utah App. LEXIS 303, 2015 WL 7708483, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tech-center-2000-llc-v-zrii-llc-utahctapp-2015.