Park City Mountain Resort's filing on bond for upcoming ski season

8/11/2019 Park City Mountain Resort's filing on bond for upcoming ski season

1/4019843005

Alan L. Sullivan (3152)Amber M. Mettler (11460)Snell & Wilmer L.L.P.

15 West South Temple, Suite 1200Gateway Tower WestSalt Lake City, Utah 84101-1004Telephone: (801) [email protected]@swlaw.com

Michael D. Zimmerman (3604)Troy L. Booher (9419)Zimmerman Jones Booher LLCKearns Building, Suite 721

136 South Main StreetSalt Lake City, Utah 84101Telephone: (801) [email protected]@zjbappeals.com

Attorneys for Plaintiffs/Counterclaim Defendants

Greater Park City Company and Greater Properties,

Inc.

James W. Quinn (pro hac vice)Bruce S. Meyer (pro hac vice)Weil Gotshal & Manges, LLP

767 Fifth AvenueNew York, New York 10153Telephone: (212) [email protected]@weil.com

IN THE THIRD JUDICIAL DISTRICT COURT IN AND FOR

SUMMIT COUNTY, STATE OF UTAH

GREATER PARK CITY COMPANY, a Utahcorporation, and GREATER PROPERTIES,INC., a Delaware corporation,

Plaintiffs,

vs.

UNITED PARK CITY MINESCOMPANY, a Delaware corporation, andTALISKER LAND HOLDINGS, LLC, a

Delaware limited liability company,TALISKER LAND RESOLUTION LLC, aDelaware limited liability company, VRCPC HOLDINGS, INC., a DelawareCorporation, FLERA, LLC, a Delawarelimited liability company, TALISKERCANYONS LEASECO LLC, a Delawarelimited liability company, TALISKER

PLAINTIFFS MEMORANDUM

REGARDING SECURITY FOR A STAY

PENDING THE CONCLUSION OF

LITIGATION BEFORE THE TRIAL

COURT

**REDACTED**

Case No. 120500157

Judge Ryan Harris


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CANYONS FINANCE CO LLC, aDelaware limited liability company, andJOHN DOE CORPORATIONS 1

THROUGH 10,

Defendants.

UNITED PARK CITY MINES COMPANY,a Delaware corporation, and TALISKERLAND HOLDINGS, LLC, a Delaware limitedliability company,

Counterclaim Plaintiffs,

vs.

GREATER PARK CITY COMPANY, a Utahcorporation, and GREATER PROPERTIES,INC., a Delaware corporation,

Counterclaim Defendants.

Pursuant to the Stipulated Scheduling Order signed by the Court on July 1, 2014, and the

Revised Stipulated Scheduling Order signed by the Court on August 12, 2014,

Plaintiffs/Counterclaim Defendants Greater Park City Company and Greater Properties, Inc.

(collectively, Plaintiffs), by and through their counsel of record, respectfully submit this

Memorandum Regarding Security for a Stay Pending the Conclusion of Litigation Before the

Trial Court.


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TABLE OF CONTENTS

Page

-i-

I. SUMMARY ....................................................................................................................... 1

Period Covered by the Bond .............................................................................................. 1

The Appropriate Amount of the Bond ............................................................................... 2

Fair Rental Value ............................................................................................................... 2

Items That Should Not Be Included in the Bond ............................................................... 3

II. BACKGROUND ............................................................................................................... 3

A. The Leases ............................................................................................................. 3

B. Vail Transaction ..................................................................................................... 4

C. Taliskers Unlawful Detainer Counterclaim .......................................................... 5

D. Taliskers Damages Claims ................................................................................... 6III. GENERAL LEGAL STANDARDS FOR STAYS PENDING FURTHER

ADJUDICATION AND FOR THE DETERMINATION OF SECURITY ...................... 8

A. Utahs Unlawful Detainer Statute .......................................................................... 8

B. Utah Rule of Civil Procedure 62 ............................................................................ 9

IV. ARGUMENT ................................................................................................................... 10

A. The Period for Which Plaintiffs Seek a Stay ....................................................... 10

B. Taliskers Claims for Rent and Damages ............................................................ 10

1. The Value of All Taliskers Claims for Monetary Relief Are Basedon the Fair Rental Value of the Leased Premises .................................... 10

2. The Fair Rental Value of the Leased Premises is No More Than$1,000,000 Per Year ................................................................................ 12

a. Fair Market Value ........................................................................ 12

b. Investment or Use Value .............................................................. 15

c. Vails Valuation of the Leased Premises ..................................... 16

3. Summary Rental Value Calculations ....................................................... 18

4. Amounts to Which Talisker is Not Entitled Under its DamagesClaims ...................................................................................................... 18

a. Taliskers Alleged Lost Profits .................................................... 18

b. Plaintiffs Profits .......................................................................... 20

c. Double Recovery of Rent From Both Vail and Plaintiffs ............ 22

d. Prejudgment Interest .................................................................... 25


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TABLE OF CONTENTS(continued)

Page

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e. Limited Reasonable Attorneys Fees ........................................... 27

C. Principles for the Computation of the Amount of Security ................................. 29

1. The Amount Secured Should Equal No More Than the Fair RentalValue of the Leased Premises from May 1, 2011, to May 29, 2013,Plus Taliskers Reasonable Attorneys Fees Incurred in Connectionwith the Unlawful Detainer Counterclaim Since October 28, 2013 ........ 29

2. Trebled Damages Should Not Be Included in the Amount Secured ....... 29

3. Prejudgment Interest Should Not be Included in the AmountSecured ..................................................................................................... 30

V. CONCLUSION ................................................................................................................ 31


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TABLE OF AUTHORITIESPage

-iii-

FEDERAL CASES

650 Park Ave. Corp. v. McRae,665 F. Supp. 228, 237 (S.D.N.Y. 1987)................................................................................. 22

Alexander v. Chesapeake, Potomac, and Tidewater Books, Inc.,190 F.R.D. 190 (E.D. Va. 1999) .............................................................................................. 1

Bowes v. Saks & Co.,397 F.2d 113 (7th Cir. 1968) ................................................................................................. 17

ClearOne Commcns, Inc. v. Chiang,432 Fed. Appx. 770 (10th Cir. 2011) ..................................................................................... 26

E.E.O.C. v. Waffle House, Inc.,534 U.S. 279 (2002) ............................................................................................................... 23

In re Network Associates, Inc., Sec. Litig.,C 99-01729WHA, 2000 WL 33376577 (N.D. Cal. Sept. 5, 2000) ........................................ 15

Kelly v. Kruse, Landa, Zimmerman & Maycock, Civil No. C-85-1057W,1998 U.S. Dist. LEXIS 18657 (D. Utah Dec. 9, 1988) .......................................................... 30

Lenci v. Owner,638 P.2d 598, 803-04 (Wash. Ct. App. 1981)........................................................................ 11

Murphy v. Texaco, Inc.,567 F. Supp. 910 (N.D. Ill. 1983) .......................................................................................... 13

Shepherd v. C.I.R.,115 T.C. 376 (2000) ............................................................................................................... 15

United States v. Miller,317 U.S. 369 (1942) ............................................................................................................... 12

STATE CASES

438 W. 19th St. Operating Corp. v. Metro. Oldsmobile, Inc.,142 Misc. 2d 170 (N.Y. Civ. Ct. 1989).................................................................................. 13

Anesthesiologists Assocs. of Ogden v. St Benedicts Hosp.,852 P.2d 1030 (Utah Ct. App. 1993) ..................................................................................... 26

Aris Vision Institute, Inc. v. Wasatch Prop. Management, Inc.,2006 UT 45, 143 P.3d 278 .............................................................................................. passim

Bennett v. Huish,2007 UT App 19, 155 P. 3d 917 ............................................................................................ 27

Bjork v. April Indus., Inc.,560 P.2d 315 (Utah 1977) ...................................................................................................... 26

Brooks v. Networks of Chattanooga, Inc.,946 S.W.2d 321 (Tenn. Ct. App. 1996) ................................................................................. 13

Canyon Country Store v. Bracey,781 P.2d 414 (Utah 1989) ...................................................................................................... 26

Charles Downey Family Ltd. Pship v. S & V Liquor, Inc.,880 N.E.2d 322 (Ind. Ct. App. 2008)..................................................................................... 13

Christopherson, Farris, White & Utley, P.C. v. Pugh,2006 UT App 68, 2006 WL 448677 (Utah Ct. App. Feb. 24, 2006) ..................................... 28


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TABLE OF AUTHORITIES

(continued)Page

iv

Coinmach Corp. v. Aspenwood Apartment Corp.,417 S.W.3d 909 (Tex. 2013) .................................................................................................. 20

Coleman v. Thomas,2000 UT 53, 4 P.3d 783 ......................................................................................................... 11

Colt Investments, L.L.C. v. Boyd,419 S.W.3d 194 (Mo. Ct. of App. 2013) ............................................................................... 13

Dejavue, Inc. v. U.S. Energy Corp.,1999 UT App 355, 993 P.2d 222 ........................................................................................... 25

Diversified Holdings, L.C. v. Turner,2002 UT 129, 63 P.3d 686 ..................................................................................................... 29

First Sec. Bank of Utah, N.A. v. J.B.J. Feedyards, Inc.,653 P.2d 591 (Utah 1982) ...................................................................................................... 26

Forrester v. Cook,

292 P. 206 (Utah 1930) .............................................................................................. 11, 18, 21Golden Meadows Properties, LC v. Strand,

2010 UT App 257, 241 P.3d 375 ........................................................................................... 27Hall v. Feigenbaum,

319 P.3d 61 (Wash. Ct. App. 2014) ....................................................................................... 22Keith Jorgensens, Inc. v. Ogden City Mall Co.,

2001 UT App 128, 26 P.3d 872 ............................................................................................. 28McGuire v. City of Jersey City,

593 A.2d 309 (N.J. 1991)....................................................................................................... 17Monroc, Inc. v. Sidwell,

770 P.2d 1022 (Utah Ct. App. 1989) ..................................................................................... 11

Nielsen v. OReilly,848 P.2d 664 (Utah 1992) ...................................................................................................... 30

Olympus Hills Shopping Center, Ltd. v. Landes,821 P.2d 451 (Utah 1991) ...................................................................................................... 23

Reid v. Mutual of Omaha Ins. Co.,776 P.2d 896 at 906 (Utah 1989) ..................................................................................... 11, 23

Rische Const. Co. v. May,112 N.W.2d 165 (Wis. 1961) ................................................................................................. 22

Simmons v. OCharley's, Inc.,914 S.W.2d 895 (Tenn. Ct. App. 1995) ................................................................................. 20

Sprincin King St. Partners v. Sound Conditioning Club, Inc.,

925 P.2d 217 (Wash. 1996).................................................................................................... 30Superior Motels, Inc. v. Rinn Motor Hotels, Inc.,

241 Cal. Rptr. 487 (Cal. Ct. App. 1987) .................................................................... 21, 22, 26Taylor Nat'l, Inc. v. Jensen Bros. Constr. Co.,

641 P.2d 150 (Utah 1982) ........................................................................................................ 8T-Mobile USA, Inc. v. Utah State Tax Commn,

2011 UT 28, 254 P.3d 752 ..................................................................................................... 16


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TABLE OF AUTHORITIES

(continued)Page

v

Valley Lane Corp. v. Bowen,592 P.2d 589 (Utah 1979) ...................................................................................................... 13

Westport Taxi Serv., Inc. v. Westport Transit Dist.,664 A.2d 719 (Conn. 1995) ................................................................................................... 26

Wright v. Vickaryous,598 P.2d 490 (Alaska 1979)................................................................................................... 23

STATE STATUTES

N.M. Stat. Ann. 47-8-3 ............................................................................................................. 13Utah Code Ann. 15-1-1(2) ........................................................................................................ 30Utah Code Ann. 59-2-102(12) .................................................................................................. 12Utah Code Ann. 78B-6 .................................................................................................... passim

STATE RULES

Utah R. Civ. P. 4 ............................................................................................................................ 8Utah R. Civ. P. 54(b) ................................................................................................................. 8, 9Utah R. Civ. P. 62 ................................................................................................................. passim

FEDERAL REGULATIONS

26 C.F.R. 1.170A-1(c)(2) .......................................................................................................... 12

OTHER AUTHORITIES

9 A.L.R. 5th 63 (Originally published in 1993) ........................................................................... 27

32 A.L.R. 2d 582.......................................................................................................................... 13Accounting Standards Codification 840 ...................................................................................... 17Accounting Standards Codification 840-10-25. .......................................................................... 17Restatement (Second) of Property, Land. & Ten. 14.5 ............................................................. 25The Appraisal of Real Estate at 22 (12thed. 2003) ................................................................ 12, 15


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I. SUMMARY

The issues before the Court concern (1) the methodology the Court should follow in

setting the amount of the bond that will secure a stay of the Order of Restitution entered on July

1, 2014, and (2) the appropriate amount of the bond.1 In a motion filed on June 12, 2014,

Plaintiffs asked the Court, among other things, to stay any order of restitution pending the

conclusion of this case at the trial level. The Court has since directed the parties to file

simultaneous memoranda on the methodology the Court should follow in calculating the amount

of the bond and for the parties positions on what the amount of the bond should be. This

memorandum complies with that direction.

Period Covered by the Bond

The bond that is the subject of the present proceeding is interim in nature. The period of

time for which a stay is sought will conclude with this Courts entry of final judgment following

the adjudication of the remaining claims of the parties. Based on the Courts Stipulated Order

Regarding Schedule (July 1, 2014), the parties anticipate that the remaining issues will be tried

late this year or early in 2015. When final judgment is entered by this Court, Plaintiffs expect to

apply for a stay pending appeal to the Utah Supreme Court under Rule 62(d), Utah Rules of Civil

1Throughout this memorandum and for convenience, Plaintiffs refer to the proposed security asa bond. However, both Rule 62 and the unlawful detainer statute contemplate the possibilityof security other than a corporate bond, including, for example, a personal bond having one ormore sureties who are residents of Utah with a collective net worth of at least twice the amountof the bond, or a deposit of money in court or security in lieu of a bond. See Utah Code Ann. 78B-6-808(4)(b)(i)-(ii); Utah R. Civ. P. 62(i)(1)-(2); see also Alexander v. Chesapeake,Potomac, and Tidewater Books, Inc., 190 F.R.D. 190, 193-94 (E.D. Va. 1999) (defendants mayeither post a bond in the amount set aside, or, if the parties agree, place the sum into an escrow,to be released to plaintiffs if they prevail on appeal). Once the Court sets the appropriateamount of security required to continue the stay, and if Plaintiffs elect to post such security,Plaintiffs should be afforded the opportunity to post security in a form other than a corporatebond, as long it is acceptable to and approved by the Court.


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Procedure. The bond that is the subject of the present memorandum would be replaced by a

supersedeas bond in an amount determined by the Court pursuant to Rule 62(j).The Appropriate Amount of the Bond

The amount secured by the bond should equal no more than the fair rental value of the

Leased Premises from May 1, 2011, through May 28, 2013, plus Taliskers reasonable attorneys

fees incurred in connection with the unlawful detainer counterclaim since October 2013, and

costs. Plaintiffs experts have determined the range of values for the market rent appropriate for

the Leased Premises based on a series of assumptions. Based solely on the fair market value of

the Leased Premises which should control here the fair rental value of the property for the

period from May 1, 2011 to January 31, 2015, is $226,650 per year. Assuming, however, that

the Leased Premises may be leased as part of an operating ski resort, the reasonable rental value

is no more than $1,000,000 per year. Vails own estimate of the fair market value of the Leased

Premises together with unspecified improvements implies an annual rental value for the property

is no more than $2,890,000 per year. Using these figures to provide a range of possible values,

the total amount of the security required to stay the execution of the Order of Restitution until

entry of final judgment before this Court should be between $1,021,308 and $6,559,616.

Fair Rental Value

The Courts determination of the amount of an interim bond must be based on a

preliminary estimate of the total net amount of rent and damages that will be awarded to

Defendant Talisker Land Holdings, LLC (Talisker). Those damages will be based on the fair

rental value of the Leased Premises for the period in question, which began on May 1, 2011, and

will end when final judgment is entered by this Court. The Court should base its estimate of the

fair rental value on the fair market value the leasehold. As shown below, since both rent and

damages must be based on fair rental value, Talisker would not be entitled to recover for either

its own alleged lost profits or Plaintiffs profits for the period of occupancy.


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Items That Should Not Be Included in the Bond

Talisker should not be permitted to recover and the amount of the bond should notinclude rent for the period for which Talisker has already been paid rent by Defendant VR CPC

Holdings, Inc. (Vail). Nor should the bond include prejudgment interest primarily because

the fair rental value is not a liquidated sum to which prejudgment interest should be applied.

Trebled damages should be excluded from the amount secured because the law is clear that all

such punitive damages must be excluded from the amount secured by the bond under both the

unlawful detainer statute and Rule 62. Finally on this score, although the estimated amount of

Taliskers unlawful detainer attorneys fees may be included in the amount secured by the bond,

those attorneys fees began to accrue in about October 2013, when Taliskers unlawful detainer

counterclaim was filed.

II. BACKGROUND

A. The Leases

1. Plaintiffs own and operate the Park City Mountain Resort (the Resort or

PCMR). A significant portion of the Resortsskiable terrain is operated on land leased

through two lease agreements (the Resort Area Lease and the Crescent Ridge Lease,

collectively referred to as Leases). The Leases cover approximately 3,000 acres of land (the

Leased Premises).

2. The Leases initial term ran until 1991, with the option to extend the term for

three additional terms of twenty years (for a total of sixty years or until 2051). Prior to the end

of the initial term in 1991, both Leases were extended for an additional twenty-year term until

April 30, 2011.

3. On May 2, 2011, Plaintiffs gave written confirmation to UPCM and Defendant

Talisker Land Holdings, LLC (collectively, Talisker) that the Leases had been extended for an

additional 20-year term.


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4. On December 30, 2011, Talisker advised Plaintiffs for the first time that its

position was that Plaintiffs had failed to timely renew the Leases and the Leases had, therefore,expired on April 30, 2011.

5. Plaintiffs initiated this lawsuit on March 9, 2012, seeking, among other things, a

declaration from the Court that the Leases had been extended. (See generally Compl.)

6. Although Talisker contended that the Leases expired on April 30, 2011, by letter

dated April 12, 2012, Talisker expressly permitted Plaintiffs to remain on the Leased Premises

for the period between April 30, 2011, and April 30, 2012. (See 4/12/2012 Letter attached as

Exhibit 14 to 2/7/2014 Declaration of Michael D. Zimmerman (Zimmerman Decl.).) Among

other things, Talisker stated that if Plaintiffs did not leave the premises by April 30, 2012,

beginning May 1, 2012, rent for the Leased Premises would be $7.7 million per annum. (Id.)

7. On March 29, 2013, Talisker sent another letter to Plaintiffs again demanding rent

in the amount of $7.7 million per year and informing Plaintiffs that while Talisker had no

present intention to move for immediate possession of the Resort Lands, it may do so in the

future. (See 3/29/2013 Letter from D. Smith, attached as Exhibit 15 to Zimmerman Decl.)

8. On April 15, 2013, Talisker sent notice to Plaintiffs reiterating that Talisker had

no present intention to move for immediate possession of the Premises, but informing

Plaintiffs that if they remained on the Leased Premises after May 1, 2013, they would do so as a

tenant at will. (4/15/2013 Letter from D. Smith, attached as Exhibit 16 to Zimmerman Decl.)

B. Vail Transaction

9.

On or about May 29, 2013, Talisker and Vail Resorts, Inc. (through DefendantVR CPC Holdings, Inc.) consummated a transaction in a series of agreements, pursuant to which

VR CPC Holdings leased the Canyons Resort property for a fifty-year term, with six automatic

fifty-year renewal periods, for a total term of 350 years (the Vail Transaction). (See 5/21/2014

Mem. Decision and Order at 97.)


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10. As part of the Vail Transaction, the parties created a new entity, known as

Talisker Land Resolution LLC, in order to afford Vail a means to exercise control over thislitigation. (Id. at 98.) Talisker Land Resolution acquired 100% of the equity in, and is the sole

member of, TLH. (Id.)

11. As part of the Vail Transaction, the parties agreed that the Leased Premises may

be added to Vails lease if Talisker prevails in this litigation, although the amount of rent paid by

Vail to Talisker a fixed base rent of $25 million per year will not change; additional

participatory rent which is to be paid by Vail based on the resorts earnings, may change if

Vail is able to operate PCMR. (See, e.g., 4/8/2014 Decl. of Jack Bistricer at 6 (The May 2013

deal with Vail was structured so that the Talisker-affiliated entities involved in the deal would

benefit financially from the potential upside that I believed could be achieved through the

arrangement with Vail. Specifically, in addition to the $25 million per year that VR CPC

Holdings pays as fixed base rent, VR CPC Holdings is also obligated to pay participating rent

of 42% of the amount by which the EBITDA from [Canyons Resort and PCMR] exceeds a

certain threshold amount.), Ex. A.)

12. In its public securities filings, Vail represented that the fair market value of the

Leased Premises with improvements, is $57.8 million. (See September 27, 2013 Vail Resorts,

Inc. 10-K at F-18, available at

http://files.shareholder.com/downloads/MTN/2798586215x0xS812011-13-29/812011/filing.pdf,

excerpts attached as Ex. B.)

C. Taliskers Unlawful Detainer Counterclaim

13. On August 28, 2013, Talisker, by and through its sole member, Talisker Land

Resolution, served GPCC and GPI with a Five Day Notice to Quit pursuant to Utah Code Ann.

78B-6-802, et seq. (5/21/2014 Mem. Decision and Order at 84.)


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14. On October 28, 2013, Talisker filed counterclaims against Plaintiffs, including a

counterclaim for unlawful detainer.15. On March 14, 2014, for the first time, Talisker took action to obtain possession of

the Leased Premises by filing a motion for partial summary judgment on the unlawful detainer

counterclaim and an order of restitution. (See Talisker Counterclaim at 66-75; 3/14/2014

Talisker Mem.)

16. On June 12, 2014, Plaintiffs filed their Motion to Postpone or Stay the Effect and

Enforcement of Any Ruling that May be Rendered on Defendants Unlawful Detainer

Counterclaim.

17. On July 1, 2014, the Court entered an Order of Partial Summary Judgment and an

Order of Restitution on an unlawful detainer counterclaim in favor of Talisker. The Court ruled

that Talisker is entitled to take possession of the Leased Premises, but stayed enforcement of the

July 1 orders until after the August 27, 2014 hearing.

18. On July 25, 2014, Talisker responded to Plaintiffs motion to stay, indicating that

it would not oppose a stay of the Courts Order of Restitution on the condition that Plaintiffs

post a bond sufficient to protect Taliskers rights to collect on a judgment for [Plaintiffs]

wrongful use of Taliskers property. (7/29/2014 Letter from J. Lund.)

19. On July 10, 2014, Plaintiffs filed an appeal from the July 1 orders entered by the

Court concerning Taliskers unlawful detainer counterclaim as a precautionary measure.

Plaintiffs do not believe the July 1 orders finally resolve the litigation, but filed the appeal out of

an abundance of caution.

D. Taliskers Damages Claims

20. Talisker has asserted three claims for monetary relief: (1) rent for the period since

the Leases expired on April 30, 2011; (2) unlawful detainer damages; and (3) in the alternative,


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unjust enrichment damages.2 (See generally Talisker Counterclaim at 61-81.) Pursuant to

the unlawful detainer statute, in addition to seeking restitution of the Leased Premises, Taliskerclaims it is entitled to the reasonable value of use of the Leased Premises and the buildings,

structures, facilities, and improvements thereon, from five days after service of the Notice to

Quit to the present until the time [GPCC and GPI] vacate the premises. (See Talisker

Counterclaim at 73-74.)

21. In its written discovery responses, Talisker refused to disclose the amount of

damages it seeks. It advised Plaintiffs only that the monetary relief it claims will be the subject

of expert evidence and testimony and that it is entitled to at least $7.7 million for the 2012-

2013 period pursuant to its April 12, 2012 letter, even though this amount was not computed,

but was simply closer to what [Talisker believes it] should at leastbe getting for Plaintiffs use

of [Taliskers] lands. (7/9/2013 Defs Resp. to Interrogatory No. 4, attached as Ex. C;

8/23/2013 Defs Suppl Resp. to Interrogatory No. 4, attached as Ex. D.)

22. To date, Talisker has provided no additional information as to the amount of

damages to which it claims to be entitled, the alleged reasonable value of use of the Leased

Premises, or the basis for such amounts. (See, e.g., 12/16/2013 Talisker Suppl Initial Discl. at

5-6, attached as Ex. E.) Jack Bistricer, however, testified that EBITDA (earnings before interest,

taxes, depreciation, and amortization) is not relevant to real estate, only to an operating

business. (See 11/20/2013 J. Bistricer Dep. Tr. at 21:13-24, attached as Ex. F.)

23. Other than Talisker, none of the defendants has asserted a claim against Plaintiffs

for rent or damages. To be specific, Vail has not asserted a claim for damages or any other relief

in this case.

2As the Court noted in its February 20, 2014 Memorandum Decision and Order, Talisker waspermitted to maintain its claim of unjust enrichment in the alternative, even though it was highlyunlikely that such a claim will ever be needed because Talisker likely has an adequate remedy atlaw. (See 2/20/2014 Mem. Decision and Order at 20-21.)


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III. GENERAL LEGAL STANDARDS FOR STAYS PENDING FURTHER

ADJUDICATION AND FOR THE DETERMINATION OF SECURITY

A.

Utahs Unlawful Detainer Statute

Because there is no final judgment from which Plaintiffs may appeal as a matter of right

pursuant to Utah Rule of Civil Procedure 4, and because no judgment has been certified as final

and appealable pursuant to Utah Rule of Civil Procedure 54(b) (such that Rules 62(d) and 62(h)

would apply by their terms), the appropriate standard for determining the amount of security is

the unlawful detainer statute. The unlawful detainer statute provides that [a] request for hearing

by the defendant may not stay enforcement of the restitution order unless: (i) the defendant

furnishes a corporate bond, cash bond, certified funds, or a property bond to the clerk of the court

in an amount approved by the court according to the formula set forth in Subsection 78B-6-

808(4)(b); and (ii) the court orders that the restitution order be stayed. Utah Code Ann. 78B-

6-812(2)(b) (emphasis added). The formula set forth in Subsection 78B-6-808(4)(b) is as

follows: the probable amount of costs of suit, including attorney fees and actual damages which

may result to the plaintiff if the defendant has improperly withheld possession. Utah Code Ann.

78B-6-808(4)(b)(vi) (emphasis added). Subsection 78B-6-808(4)(b) indicates that the requisite

security may take the form of a corporate bond, cash bond, certified funds, or a property bond

executed by two persons who own real property in the state and who are not parties to the action

and the form of the bond is at the [tenants] option. Id. at -808(4)(b)(i)-(ii)

To the extent there is any lack of clarity in Subsection 78B-6-808(4)(b) as to the

standards this Court should follow in setting the bond amount, the principles set forth in Rule 62

provide guidance, particularly since Rule 62 generally allows the Court to stay execution of a

judgment in its discretion. See Utah R. Civ. P. 62(a); see also Taylor Natl, Inc. v. Jensen Bros.

Constr. Co., 641 P.2d 150, 154 (Utah 1982) (court, in its discretion, may temporarily stay

execution in order to prevent injustice, but it may not negate its own judgment by indefinitely

staying execution thereon).


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B. Utah Rule of Civil Procedure 62

Rule 62 allows the Court to stay execution of a judgment in its discretion, Utah R. Civ. P.

62(a), when an appeal is taken, Utah R. Civ. P. 62(d), or when a court has ordered a final

judgment on some but not all of the claims presented in the action under the conditions stated in

Rule 54(b), Utah R. Civ. P. 62(h). Subsection (h) allows the court to stay enforcement under

such conditions as are necessary to secure the benefit thereof to the party in whose favor the

judgment is entered. Subsection (d) conditions a stay on the posting of a supersedeas bond.

Rule 62(j) directs the Court to set the supersedeas bond in an amount that adequately protects

the judgment creditor against loss or damage occasioned by the appeal and assures payment in

the event the judgment is affirmed. Utah R. Civ. P. 62(j). [T]he presumptive amount of a

bond for compensatory damages is the amount of the compensatory damage plus costs and

attorney fees, as applicable, plus 3 years of interest at the applicable rate. Utah R. Civ. P.

62(j)(2)(A) (emphasis added).3 In setting the amount of the bond, the Court may consider any

relevant factors, including the judgment debtors ability to pay the judgment and the

respective harm to the parties from setting a higher or lower amount. Utah R. Civ. P. 62(j)(1).

The Advisory Committee Note to the rule states: In considering conditions for setting a bond of

less than the presumed amount under paragraph (j)(1), the judges objective is to protect both a

judgment creditors interest in collecting a judgment affirmed on appeal and to afford a judgment

debtor a reasonable opportunity to prosecute an appeal without unduly and unnecessarily

affecting the judgment debtors operations. No bond is required for punitive damages. Id. at

62(j)(2)(C). Further, a supersedeas bond may be either a commercial bond or a personal bond

having one or more sureties who are residents of Utah having a collective net worth of at least

twice the amount of the bond, exclusive of property exempt from execution. Id. at 62(i)(1).

3The post judgment interest rate for calendar year 2014 is 2.13%. Seehttps://www.utcourts.gov/resources/intrates/interestrates.htm.


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IV. ARGUMENT

A. The Period for Which Plaintiffs Seek a Stay.

Plaintiffs seek a stay of enforcement of the Order of Restitution through the conclusion of

the proceedings before this Court. Based on the Stipulated Scheduling Order entered by the

Court on July 1, 2014, the parties anticipate a trial occurring at the end of this year or the early

part of 2015. Once the remaining issues have been resolved and final judgment is entered,

Plaintiffs will seek a stay during the pendency of their appeal pursuant to Rule 62; the Courts

order of stay pursuant to Rule 62(d) will be conditional on a bond or other security in compliance

with Rule 62(j). That bond will, in effect, replace the bond or other security that is the subject of

this memorandum. For present purposes, the relevant period for the calculation of the amount to

be secured is from May 1, 2011 through January 31, 2015, the approximate date of trial.

B. Taliskers Claims for Rent and Damages.

1. The Value of All Taliskers Claims for Monetary Relief Are Based on theFair Rental Value of the Leased Premises.

The starting point for the Court should be its preliminary determination of the market rent

for the Leased Premises. Talisker has asserted three overlapping claims for monetary relief: (1)

rent; (2) unlawful detainer damages; and (3) in the alternative, unjust enrichment damages. No

other defendant including Vail has asserted any claim for damages. The damages sought by

Talisker under the unlawful detainer statute are inclusive of all other damages it seeks. This is

because the unlawful detainer statute provides [t]he judgment shall be entered against the

defendant for [1] the rent, [2] for three times the amount of the damages assessed resulting to

the plaintiff from, in relevant part, unlawful detainer and/or waste, and [3] for reasonable

attorney fees.4 Utah Code Ann. 78B-6-811(3). Damages incurred during the period of

4Although Talisker has alleged damages for waste of the premises, it has never identified because it cannot what waste Plaintiffs allegedly committed. (See, e.g., 12/16/2013 TaliskerSuppl Discl. at p. 5 (waste is currently unknown but will be the subject of future discovery)Ex. E.)


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unlawful detainer in other words, damages incurred after the fifth day following service of the

notice to quit are subject to trebling. Id.; see also Monroc, Inc. v. Sidwell, 770 P.2d 1022,1025 (Utah Ct. App. 1989) (only damages incurred after the tenancy has been terminated by the

notice to quit may be trebled).

Thus, for the period May 1, 2011, through September 2, 2013 (the date on which the

tenancy terminated as a result of the Notice to Quit served on August 28, 2013), Talisker may be

entitled to rents, which amounts are not subject to trebling. See, e.g., Monroc, Inc., 770 P.2d at

1025. For the period after termination of the tenancy (on September 2, 2013) through entry of

final judgment, Talisker may be entitled to damages resulting from Plaintiffs unlawful

detainer of the Leased Premises, which damages are measured by the rental value or the

reasonable value of the use and occupancy of the premises5and are subject to trebling.

Forrester v. Cook, 292 P. 206, 211 (Utah 1930); see also Monroc, Inc., 770 P.2d at 1025-26

(noting that damages for unlawful detainer were the propertys fair rental value for the period

the tenant remained on the premises after receiving the notice of unlawful detainer); Lenci v.

Owner, 638 P.2d 598, 803-04 (Wash. Ct. App. 1981) (The amount of damages occasioned by

an unlawful detainer and holding over is based upon the fair value of the use of the premises

rather than the amount of rent agreed upon by the parties under a lease no longer in effect.).

5For the reasons argued in detail at pages 22 to 25 of this memorandum, Talisker cannotlawfully claim any such damages. However, if such damages were to be assessed, thesedamages would continue to accrue until Plaintiffs returned possession of the Leased Premises toTalisker, which assuming the stay is continued would presumably only occur if, and notuntil, Plaintiffs do not prevail on their appeal. See, e.g., Coleman v. Thomas, 2000 UT 53, 6, 4P.3d 783. As such, any damages that accrue after entry of judgment may either be paid intoescrow or may be added to the supersedeas bond that replaces the security required for theinterim stay requested by Plaintiff. Cf. Reid v. Mutual of Omaha Ins. Co., 776 P.2d 896, 906(Utah 1989) (To recover for later accruing rents, the landlord must bring a supplementalproceeding or proceedings in which it can prove that additional rents have accrued and thatreasonable efforts to mitigate those losses have been taken.).


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2.

The Fair Rental Value of the Leased Premises is No More Than$1,000,000 Per Year.

The Court may potentially follow one of two different approaches to determine the value

of the Leased Premises: (1) a fair market value analysis or (2) an investment or use value

analysis. Both can be determined by analyzing the price paid for comparable properties or by

performing an income capitalization analysis (calculating the present value of the future benefits

of the Leased Premises). (See, e.g., Declaration of Lance Dor (Dor Decl.) at 12-14, 20,

33, Ex. G.) Using both of these methods, Plaintiffs conclude that an appropriate rental value of

the Leased Premises is $226,650 per year, but in no event more than $1,000,000 per year. As

shown below (at pages 16 to 18), a valuation in this range of magnitudes is confirmed by the fair

market value ($57.8 million) attributed to the Leased Premises in Vails public securities filings.

a. Fair Market Value

Fair market value means the amount at which property would change hands between a

willing buyer and a willing seller, neither being under any compulsion to buy or sell and both

having reasonable knowledge of the relevant facts. Utah Code Ann. 59-2-102(12); see also

United States v. Miller, 317 U.S. 369, 374 (1942) (market value is what a willing buyer would

pay in cash to a willing seller); 26 C.F.R. 1.170A-1(c)(2) (The fair market value is the price

at which the property would change hands between a willing buyer and a willing seller, neither

being under any compulsion to buy or sell and both having reasonable knowledge of relevant

facts.); The Appraisal of Real Estate at 22 (12th ed. 2003) (market value is [t]he most probable

price, as of a specific date, in cash, or in terms equivalent to cash, or in other precisely revealed

terms, for which the specified property rights should sell after reasonable exposure in a

competitive market under all conditions requisite to a fair sale, with the buyer and seller each

acting prudently, knowledgeable, and for self-interest, and assuming that neither is under undue

duress.). Plaintiffs have found no authority permitting the use of any method other than a fair


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market value analysis to arrive at the rent and damages due in an unlawful detainer action.6

As set forth in the Declaration of Lance Dor, attached hereto as Exhibit F, the fairmarket rental value of the Leased Premises is $226,650 per year. (Dor Decl. at 16-30.) This

figure was calculated by determining the annual rental income of the fair market value of the

property using a 5% overall rate of return, which is appropriate for the risk profile of the Leased

Premises. This method based on the sales of comparable properties assumes that a buyer (or

in this case a lessee) would pay no more for a specific property than the cost of acquiring (or

renting) a property with the same quality, utility, and perceived benefits of ownership (or

6See, e.g., Murphy v. Texaco, Inc., 567 F. Supp. 910, 913 (N.D. Ill. 1983) (damages includerecovery for any rental income Texaco could have obtained during the post-termination periodan amount based on the then-prevailing market rental rate); Colt Investments, L.L.C. v. Boyd,419 S.W.3d 194, 198 (Mo. Ct. of App. 2013) (evidence as to fair rental value of the propertybased on testimony of local real estate broker); Charles Downey Family Ltd. Pship v. S & VLiquor, Inc., 880 N.E.2d 322, 327 (Ind. Ct. App. 2008) (as numerous cases have held, thatmeasure is the fair market rental value of the premises after the expiration of the lease); Brooksv. Networks of Chattanooga, Inc., 946 S.W.2d 321, 325 (Tenn. Ct. App. 1996) (the tenantbecomes liable for the fair market rental value for the period that it occupies the premises beyondthe term of the lease (quotation omitted)); 438 W. 19th St. Operating Corp. v. Metro.Oldsmobile, Inc., 142 Misc. 2d 170, 173 (N.Y. Civ. Ct. 1989) (In making a determination as tovalue the Court has the obligation to appraise the actual value of the property taking intoconsideration whatever restrictions apply because of agreements between the parties, or togovernmental decrees, or other factors (citations omitted)); Valley Lane Corp. v. Bowen, 592P.2d 589, 592 (Utah 1979) (Defendants evidence through an expert witness was that areasonable monthly rental value of the property for the ten months they were in possession afterexpiration of the old lease would be $1,800. As opposed to this, the plaintiffs expert testifiedthat with only minor repairs and upkeep, the rental value would be $3,800 per month; and thatwith more extensive renovation, i.e., if new pin setters and carpeting was installed and theinterior of the building was painted, a fair market value on a ten year lease commencingSeptember 1, 1976 would be $5,700 per month.); see also N.M. Stat. Ann. 47-8-3 (NewMexicos Uniform Owner-Resident Relations Act defines fair rental value to mean that valuethat is comparable to the value established in the market place); 32 A.L.R. 2d 582 at 2(Rental value apparently has reference to what the premises are worth for lease purposes on theopen market . . . .).


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appropriate measure of the fair rental value of the Leased Premises.10 In other words, the

resulting value is necessarily different from what a willing lessor and willing lessee would acceptfor the Leased Premises; rather, it equates to the amount a particular investor or user would pay

to lease the Leased Premises for the purpose of operating a ski resort on the property, and it

assumes that such a use is possible.

Even though the investment or use value of the Leased Premises is not directly relevant

to the determination of fair rental value, Plaintiffs asked their expert real estate appraiser to

determine the propertys investment or use value as a point of reference. As set forth in Mr.

Dors declaration, the rental value based on an investment or use value of the Leased Premises

is approximately $829,000 to $1,000,000 per year. (See Dor Decl. at 31-36, Ex. G.) These

amounts are based on land rents currently being paid for similar facilities, using the formula

adopted by the U.S. Forest Service, the lessor of the majority of ski resort lands in the United

States, and land rent rates generally paid in the ski industry. This valuation necessarily assumes

that the Leased Premises could be leased for the purpose of operating a ski resort on the property.

Plaintiffs believe that this assumption is unreasonable unless the owner of the property also

acquires ownership or control of base facilities and infrastructure. Because of these limitations,

Plaintiffs do not believe these values reflect a fair rental value for the property.

c. Vails Valuation of the Leased Premises

In its public securities filings, Vail estimated fair market value of the land and

associated improvements on the Leased Premises as $57.8 million. (See September 27, 2013

10Investment or use value may also include both tangible and intangible assets associated withthe property. Here, since the issue is the fair rental value of the Leased Premises (i.e., property),only tangible assets (the land) should be considered. Intangible assets such as synergy valueand customer base are associated with the business being conducted on the property; they arenot directly attributable to tangible property. T-Mobile USA, Inc. v. Utah State Tax Commn,2011 UT 28, 39, 254 P.3d 752. As a consequence, any measure of the fair rental value ofLeased Premises that includes intangible assets, would improperly be assessing damages againstPlaintiffs for assets to which Talisker is not entitled and which Talsisker does not own or control.


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Vail Resorts, Inc. 10-K at F-18 & F-19, available at

http://files.shareholder.com/downloads/MTN/2798586215x0xS812011-13-29/812011/filing.pdf.)Vails disclosure is relevant here for two reasons.

First, it is apparent from these filings that the Vail Transaction even though structured

as a lease transaction was in fact an acquisition by Vail of the Canyons Resort as well as the

Leased Premises.11 (See Connors Decl. at 9-12, Ex. H.) As demonstrated below, this

confirms that Talisker could assert no damages arising from Plaintiffs occupancy of the Leased

Premises once those lands were sold to Vail. See, e.g., Bowes v. Saks & Co., 397 F.2d 113, 116-

17 (7th Cir. 1968) (holding, in relevant part, that landlords suffered no damages as a result of

commercial tenants failure to restore premises that had been sold by landlords); McGuire v. City

of Jersey City, 593 A.2d 309, 315 (N.J. 1991) (we think it is more appropriate to consider the

landlords sale of the premises as a mitigation, and the sale ended the right to damages for lost

future rent because sale price . . . compensate[d] for the value of the future rental income).

Second, Vails disclosure suggests a fair rental value of less than $3 million per year.

Based on Vails estimate of the fair market value of the Leased Premises at $57.8 million (which

is generous since Vail acknowledges this amount includes the value of improvements that may

11GAAP guidance set forth in Accounting Standards Codification (ASC) 840: Leasesestablishes a four-part test to determine whether the economics of a transaction indicate that it isan operating lease (true lease) or a capital lease (constructive sale). If a lease satisfies any of thefour tests, it must be accounted for as a capital lease, meaning it will be treated as a sale. In otherwords, the accounting is meant to recognize the true economics of the transaction. The four testsare generally described as: (1) whether the lease transfers title of the asset to the lessee; (2)whether a bargain-purchase option exists such that the lessee can purchase the asset at a pricesignificantly below the expected fair value at the date the option becomes exercisable; (3)whether the lease period equals or exceeds 75% of the assets economic life; or (4) whether thepresent value of the minimum lease payments equals or exceeds 90% of the fair market value ofthe assets subject to the lease. See also ASC 840-10-25.


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or may not belong to Talisker under the Leases12), and based on a capitalization rate appropriate

for the Leased Premises, the implied annual rental rate is $2,890,000 ($57,800,000 x 5%).

13

(SeeConnors Decl. at 20, Ex. H.)

As shown above, the annual rental rate derived from Vails valuation of the Leased

Premises exceeds the fair market rental value of the Leased Premises.

3. Summary Rental Value Calculations.

In sum, based on the fair market value of the Leased Premises, the fair rental value of the

property is $226,650 per year. Assuming the Leased Premises can be leased for use as part of an

operating a ski resort on the property, an appropriate rental value of the property is between

$829,000 and $1,000,000 per year. Based on Vails own fair market valuation of the Leased

Premises (and associated improvements), the rental value is no more than $2,890,000. Rental

values derived from an investment or use valuation or from Vails valuation of the Leased

Premises represent the outer limit of those rental values that could under any circumstances

be assessed for the Leased Premises.

4.

Amounts to Which Talisker is Not Entitled under its Damages Claims.

a. Taliskers Alleged Lost Profits

Talisker is only entitled to recover those damages that are the natural and proximate

consequences of the acts complained of and nothing more. Forrester, 292 P. at 211. Since

Talisker has never been more than a landlord entitled to a reasonable rent on its land, Talisker is

not entitled to recover its alleged lost profits in excess of the fair rental value since April 30,

12It also is unknown whether Vail accounted for the fact that a significant portion of the ParkCity Mountain Resorts skiable terrain the 240 acres surrounding the base of Jupiter Lift isnot owned by Talisker, is not the subject of the Leases, and, therefore, could not have beentransferred by Talisker to Vail.13Indeed, an estimate of the amount of Vails $57.8 million attributable to land only based on thehistorical percentage land represents of total fixed assets as reflected in the financial statementsof Vail and Park City Mountain Resorts parent company, Powdr Corp., results in an impliedland rental rate of between $404,600 and $578,000 per year. (See Connors Decl. at 23, Ex. H.)


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2011. In other words, the damages must be directly traceable to the . . . unlawful detainer . . . .

A causal connection that is too attenuated, such as unlawful detainer which allegedly results inloss of consortium, would not justify an award for damages. There must be a common sense

relationship. Aris Vision Institute, Inc. v. Wasatch Prop. Management, Inc., 2006 UT 45, 19,

143 P.3d 278.

The only consequence to Talisker of Plaintiffs continued occupancy of the Leased

Premises has been that Talisker has been deprived of its rent. Talisker itself has never utilized

the property for any purpose other than to lease it to Plaintiffs, and it could not possibly make

any other productive use of the Leases Premises. In 2007, it successfully annexed the majority

of the Leased Premises into Park City Municipal Corporation, stripped all of the development

rights from the property, and executed a deed restriction limiting the use of the property. (See

2/7/2014 Declaration of M. Harrington (Harrington Decl.) at 19(a) (In return for the transfer

of density from PCMRs ski terrain to the Flagstaff Mountain Annexation Area, the use of the

alpine terrain would be perpetually limited to open space and ski resort uses would be governed

by the terms of the PCMR Development Agreement), (b) (No development or associated

operations would be permitted on the annexed alpine terrain other than as part of the ski-related

operations as allows and described in the PCMR Development Agreement.).) As a result, even

if Talisker had intended to make productive use of the Leased Premises following the expiration

or termination of the Leases, the only allowable economic use of the property would be as part of

a ski resort. (See id.) Talisker itself, however, could not operate such a resort on the Leased

Premises because, among other things, Talisker does not own or control the base facilities,

parking, snow-making infrastructure, or water rights necessary to operate the Resort all of

which are owned or controlled by Plaintiffs or their affiliates.

In sum, Talisker is entitled at most to rent. Because Talisker could not have made any

profits on the Leased Premises, it is not entitled to recover any profits as a result of Plaintiffs


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continued occupancy of the Leased Premises. See, e.g., Simmons v. OCharleys, Inc., 914

S.W.2d 895, 902 (Tenn. Ct. App. 1995) (rejecting claim for lost profits in unlawful detainer casebecause landlord had no building prior to the end of the unlawful detainer, thus there was no

delay that resulted in lost profits). Because Taliskers intention has always been to lease the

Leased Premises to Plaintiffs, any profits purportedly lost by Talisker would necessarily be

duplicative of (and possibly even less than) the reasonable rent to which it is entitled. This is

because a landowners profits derived from leasing its land would be included in the rent paid to

the landowner by the tenant. Payment of both rent and a portion of the Taliskers allegedly lost

profits would, therefore, be duplicative. As one court has explained,

Typically, the landlord could not recover both reasonable rent andlost profits because recovery is limited to the amount necessary toplace the plaintiff in the position it would have been in but for thetrespass. Lost profits are measured by deducting operatingexpenses from gross earnings, resulting in net profits. Reasonablerenti.e., the value of the use of the propertyis calculated aspart of the gross earnings, and thus is already included in the netprofit calculation. To allow the plaintiff to recover both reasonable

rent and lost profits would, in most cases, constitute a doublerecovery. In a residential leasewhere there is no business or for-profit endeavorlost profits would constitute the profits normallyassociated with reasonable rent.

Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 921 n.7 (Tex. 2013)

(quotation, citation, and alterations omitted).

b. Plaintiffs Profits

Talisker should not be permitted to claim as damages all or a portion of Plaintiffs profits

from the Resort for at least three reasons:

First, Talisker has never asserted any claim or entitlement to Plaintiffs profits

regardless of Plaintiffs unlawful detainer of the Leased Premises. See, e.g., Aris Vision

Institute, Inc., 2006 UT 45, 19 (there must be a common sense relationship between the


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unlawful detainer and an alleged loss to justify an award of damages). Thus, the natural and

proximate consequences of Plaintiffs continued occupancy of the Leased Premises cannotinclude Taliskers loss of all or a portion of Plaintiffs profits. Forrester, 292 P. at 211.

Second, Plaintiffs profits are not attributable solely, or even substantially, to the Leased

Premises. Plaintiffs profits like the profits of any business owner are a result of Plaintiffs

own investment in and management of the Resort, Plaintiffs marketing and brand name

recognition, Plaintiffs workforce, as well as Plaintiffs ownership or control of the water rights

necessary for snowmaking, the base facilities, and the parking all necessary components of the

Resort.

Finally, the Court has already held that Talisker is not entitled to Plaintiffs profits under

its alternative claim of unjust enrichment. (See 2/20/2014 Memorandum Decision and Order at

23.) On this score, Talisker has conceded two key propositions. First, its unjust enrichment

claim will be subject to dismissal if there is an adequate remedy at law. Second, in order to

obtain the remedy of disgorgement of lost profits, some showing of willful misconduct or bad

faith is necessary. (Id. at 20, 22 (quotation omitted).) The Court concluded that remaining on

the land after expiration of a lease, even after being told to leave does not constitute the sort of

fraudulent or willfully wrongful conduct envisioned by the disgorgement of profits remedy in an

unjust enrichment claim. (Id. at 22.) The same must be true with respect to Taliskers claims

for rent and unlawful detainer, for which it does not even plead entitlement to disgorgement of

profits. To hold otherwise, would ignore and render meaningless the Courts ruling dismissing

Taliskers request for disgorgement of profits and it finds no support in the law. See, e.g.,

Superior Motels, Inc. v. Rinn Motor Hotels, Inc., 241 Cal. Rptr. 487, 508 (Cal. Ct. App. 1987)

(Profits [of the tenant] are not synonymous with rental value.). In short, [n]et profits may be

an appropriate measure of damages in a breach of contract action, but they are not equivalent to

reasonable rental value the measure of damages in an unlawful detainer case, and are,


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position it would have been in had [the tenant] vacated the [premises] as she had agreed to do).

Because Talisker has not been damaged after May 29, 2013, it can claim no damages for theperiod in which Plaintiffs have been in unlawful detainer (September 3, 2013, through present).

As a result, none of Taliskers damages is subject to trebling.

Like any other type of damages, damages for unlawful detainer or rent may (and, under

certain circumstances, must) be mitigated. See, e.g., Reid, 776 P.2d at 906 (a mitigation

requirement is generally appropriate in the context of modern landlord-tenant transactions and,

therefore, a landlord who seeks to hold a breaching tenant liable for unpaid rents has an

obligation to take commercially reasonable steps to mitigate its losses, which ordinarily means

that the landlord must seek to relet the premises); see also Olympus Hills Shopping Center, Ltd.

v. Landes, 821 P.2d 451, 455 (Utah 1991) (approving of trial courts conclusion that liability

should be limited to two years of rent because using commercial reasonable efforts, the landlord

could have relet the premises within two years).15 The corollary of the principle of mitigation is

that a landlord, like Talisker, is not entitled to double compensation. See Wright v. Vickaryous,

598 P.2d 490, 499-500 (Alaska 1979) (rejecting unlawful detainer damages award that included

rental value for the property and the award of the hay crops harvested off the property as double

compensation); see also E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 296-97 (2002) (if one

fails to mitigate his or her damages, any recovery is limited because it goes without saying that

the courts can and should preclude double recovery by an individual (quotation omitted)).

Since Vail is already paying rent to Talisker, and since Talisker is being more than fairly

compensated for use of the Leased Premises, Talisker has suffered no injury since May 2013. As

a result, it is not entitled to seek damages for Plaintiffs occupancy and/or unlawful detainer.

15Plaintiffs do not contend that Talisker had an obligation to mitigate its damages since Plaintiffsremained in possession of the Leased Premises. Indeed, Plaintiffs concede that the fact Taliskerwas able to more than mitigate its damages (i.e., find a party willing to pay in excess of fairrental value for property to which it was and is not entitled to possess and is the subject ofongoing and contentious litigation) is remarkable.


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Presumably, Talisker will respond by arguing that it would be unfair for Plaintiffs to

occupy the property without payment rent for the period after May 29, 2013. The immediatequestion becomes, unfair to whom? Certainly not to Talisker which is already being paid

more than fair rental value for use of the property. And Vail the only party conceivably

harmed by Plaintiffs ongoing possession of the Leased Premises could not possibly complain

for at least two reasons.

First, Vail entered into the transaction with Talisker fully aware of the dispute over the

Leases. Vail knew that Plaintiffs continued to occupy the Leased Premises, even though Talisker

asserted the Leases had expired on April 30, 2011. In other words, Vail agreed to pay Talisker

$25 million per year (in total rent for both the Canyons and Park City Mountain Resort

properties) regardless whether Plaintiffs remained on the property, regardless whether Talisker

prevailed in the litigation, and regardless whether Vail ever took possession of the Leased

Premises. Presumably Vail took this risk because it saw an opportunity to take over Park City

Mountain Resort. (See, e.g., 1/31/2014 Mem. in Supp. of Motion for Partial Summary Judgment

on Violation on Sale at 18 (in Vail transaction Vail obtained an immediate long-term

leasehold interest in the Canyons Resort property, with the possibility of adding to that lease the

Talisker property upon which PCMR operates, following the resolution of this litigation). Thus,

Vails damages (if any) are a result of its own doing and not, as required by the law, directly

traceable to the . . . unlawful detainer. Aris Vision Institute, Inc., 2006 UT 45, 19.

Second, Vails deal with Talisker does not allow it to take possession until the present

litigation is over. Although Vail now controls the litigation on behalf of Talisker, the Leased

Premises have not yet been added to the Master Agreement of Lease, and Vail does not have the

right to occupy the property. As a result of its bargain with Talisker, Vail has no right of

possession and has no claim against Plaintiffs. This is critical because the right of the incoming

tenant to sue [a holdover tenant] for damages is grounded in his right to possession of the


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premises during the period of the holdover. Restatement (Second) of Property, Land. & Ten.

14.5 Rep. Note 4 (1977). Vail cannot claim to have been deprived of the right of possessionduring the holdover period because its right of possession must await the conclusion of this case

or at least the addition of the Leased Premises to the Master Agreement of Lease. As Talisker

and Vail have argued repeatedly to this Court, the lease of the Park City Mountain Resort ski

terrain to Vail is contingent only. (See, e.g., 9/18/2013 Hearing Tr. (If we win, they [Vail]

become a tenant on this property, thats all.); 2/7/2014 Talisker Mem. in Supp. of Motion for

Partial Summary Judgment on Right of First Refusal at 3 (a future lease contingent on the

outcome of this litigation . . . is precisely what Vail obtained); 1/31/2014 Mem. in Supp. of

Motion for Partial Summary Judgment on Violation on Sale at 18 (in Vail transaction Vail

obtained an immediate long-term leasehold interest in the Canyons Resort property, with the

possibility of adding to that lease the Talisker property upon which PCMR operates, following

the resolution of this litigation).)

Because Vail has never had the right to possess the Leased Premises, Vail can have no

claim against Plaintiffs arising out of Plaintiffs continued occupancy of the Leased Premises.16

d. Prejudgment Interest

Talisker is not entitled to recover prejudgment interest. The Utah Court of Appeals has

observed that [w]hile an award of prejudgment interest might well be appropriate under the

breach of contract claim, such an award is highly problematic with respect to the forcible entry,

unlawful detainer, and conversion claims. Dejavue, Inc. v. U.S. Energy Corp., 1999 UT App

16For this same reason, Talisker cannot claim any damages arising from any lost participatingrent associated with the Resort. In other words, even assuming Vail could make productive useof the Leased Premises without the assets owned or controlled by Plaintiffs (it cannot), unlessand until the demising amendment has been exercised, Vail has no right to possess the LeasedPremises and, therefore, Talisker is not entitled to any participating rent associated with theResort. (See, e.g., 1/31/2014 Talisker Mem. in Supp. of Motion for Partial Summary Judgmenton Violation on Sale at 21 (For purposes of the participating rent calculation, the PCMRland is not included as part of the Resort unless and until it is leased to Vail.).)


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355, 25, 993 P.2d 222, 228 (emphasis added); see also Superior Motels, Inc., 241 Cal. Rptr. at

510 (rejecting prejudgment interest in unlawful detainer case). This is not a situation, forexample, in which a tenant has defaulted on a lease and owes a liquidated sum of rent that is to

be determined by reference to the lease. Instead, Talisker has shown that it is completely unable

to justify the rent it has demanded. As a result, until judgment is entered, Taliskers damages

will not be capable of calculation with the mathematical accuracy required to warrant

prejudgment interest. See Canyon Country Store v. Bracey, 781 P.2d 414, 422 (Utah 1989)

(While the basis of the formula used to determine Canyon Countrys lost profits may have

been sufficient for the jury to render a verdict in favor of Canyon Country, it is too speculative to

allow for the addition of prejudgment interest.); Anesthesiologists Assocs. of Ogden v. St

Benedicts Hosp., 852 P.2d 1030, 1042 (Utah Ct. App. 1993) (affirming denial of prejudgment

interest award on lost profits), revd on other grounds, 884 P.2d 1236 (Utah 1994).

Prejudgment interest is available only where damages can be calculated with mathematical

accuracy. . . . ClearOne Commcns, Inc. v. Chiang, 432 Fed. Appx. 770, 773-74 (10th Cir.

2011) (citing Bjork v. April Indus., Inc., 560 P.2d 315, 317 (Utah 1977)).

Even if it were appropriate to assess prejudgment interest in an unlawful detainer case,

prejudgment interest cannot lawfully be assessed on any trebled damages. Cf. Westport Taxi

Serv., Inc. v. Westport Transit Dist., 664 A.2d 719, 740 (Conn. 1995) (holding that prejudgment

interest on treble damages was improper). Although no Utah court appears to have addressed the

specific question, it is clear that prejudgment interest is not awarded on punitive damages and

that Utah courts view treble damages under the unlawful detainer statute as the equivalent of

punitive damages. See, e.g., Aris Vision Institute, Inc., 2006 UT 45, 7 (trebling of damages

under the unlawful detainer statute is highly penal in nature); First Sec. Bank of Utah, N.A. v.

J.B.J. Feedyards, Inc., 653 P.2d 591, 600 (Utah 1982) (This rule clearly precludes prejudgment

interest on the courts mental anguish and punitive damages awards, which were not fixed or


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ascertainable before the time of trial.); Bennett v. Huish, 2007 UT App 19, 42-45, 155 P.3d

917 (prejudgment interest awarded on actual damages only; not punitive damages award). Thisis consistent with the general rule across the country. See 9 A.L.R. 5th 63 (Originally published

in 1993) (attempts to collect prejudgment interest on punitive and statutory multiple damages

are denied by the majority of the courts.).

Accordingly, Talisker is not entitled to prejudgment interest.

e. Limited Reasonable Attorneys Fees

Pursuant to the unlawful detainer statute, Talisker is entitled to recover its reasonable

attorneys fees incurred in connection with the unlawful detainer claim. See Utah Code Ann.

78B-6-811(3) (providing for reasonable attorney fees). Courts permit fee awards for all claims

including claims that do not generally permit an award of attorneys fees when all of the

claims involve a common core of facts and related legal theories. Golden Meadows

Properties, LC v. Strand, 2010 UT App 257, 35-37, 241 P.3d 375. In Golden Meadows, for

example, the plaintiff initiated an unlawful detainer action and the defendants responded with a

counterclaim for quiet title, constructive trust, and adverse possession. Id. at 1. Under those

circumstances, the court agreed that the legal work performed in responding to the counterclaim

was inextricably intertwined with the legal work associated with the initial unlawful detainer

action and, therefore, the fees for such work were appropriately awarded to the prevailing

plaintiff. Id. at 35.

In contrast to Golden Meadows, Plaintiffs initiated this litigation in March 2012, but

Talisker refrained from seeking relief under the unlawful detainer statute until August 2013.Until that time, it expressly permitted Plaintiffs to remain on the Leased Premises. (See, e.g.,

5/21 2014 Mem. Decision and Order at 80, 82.) Talisker did not file a counterclaim under the

unlawful detainer statute until October 28, 2013. Thus, no legal work by Taliskers attorneys

was or could have been inextricably mixed with the unlawful detainer claim until such a claim


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was filed.17 Compare, e.g., Christopherson, Farris, White & Utley, P.C. v. Pugh, 2006 UT App

68, 2006 WL 448677, at *4 (Utah Ct. App. Feb. 24, 2006) (unpublished) (holding that legalwork performed on the complaint for breach of contract was inextricably mixed with the defense

on the counterclaims. [Counterclaim plaintiff] relied on the same factual assertions for the entire

case, based on her belief that the [counterclaim defendant] had not properly represented her in

the prior case.). Moreover, it is simply unfair to assess attorneys fees for legal work done by

Taliskers attorneys during the time period in which Talisker expressly allowed Plaintiffs to

remain on the Leased Premises and, in fact, disclaimed any intention to move for immediate

possession of the Resort Lands. (5/21/2014 Mem. Decision and Order at 82.)

Accordingly, upon entry of judgment Talisker should be required to categorize the time

and fees expended for (1) successful claims for which there may be an entitlement to attorney

fees, (2) unsuccessful claims for which there would have been an entitlement to attorney fees had

the claims been successful, and (3) claims for which there is no entitlement to attorney fees.

Keith Jorgensens, Inc. v. Ogden City Mall Co., 2001 UT App 128, 26 P.3d 872, 880 (quotation

omitted). Talisker will only ever be entitled to its reasonable attorney fees incurred in

connection with its unlawful detainer counterclaim and only for the period after October 28,

2013.

17Indeed, at the very least, no attorneys fees incurred in connection with Plaintiffs seventh andeighth causes of action should be awarded because Talisker itself argued vociferously that theseclaims d[id] not belong in this case, but should be filed, if at all, as a separate action that can bestayed until the status of the Leases has been determined. (8/12/2013 Defs Oppn to Motionfor Leave at iv; see also id. at 8-10 (arguing that Plaintiffs new claims . . . involve multiplenon-parties and legally have nothing whatever to do with the present litigation (emphasisadded)).)


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C. Principles for the Computation of the Amount of Security.

1. The Amount Secured Should Equal No More Than the Fair Rental Value

of the Leased Premises from May 1, 2011, to May 29, 2013, PlusTaliskers Reasonable Attorneys Fees Incurred in Connection with theUnlawful Detainer Counterclaim Since October 28, 2013.

As shown above, Talisker is entitled to recover the fair market rental value of the Leased

Premises for the period after the expiration of the Leases but before the Vail Transaction, which

equals $471,308 in damages ($226,650 per year for the period May 1, 2011, through May 28,

2013). But even using Vails own estimate of the fair market value of the Leased Premises, the

most Talisker would be entitled to is roughly $6,009,616 in damages ($2,890,000 per year for theperiod May 1, 2011, through May 28, 2013) plus reasonable attorneys fees in connection with

the unlawful detainer claim and costs. These are the only amounts that should be included in any

security required to stay the eviction through entry of final judgment.

2. Trebled Damages Should Not Be Included in the Amount Secured.

Trebled damages should not be included in the amount secured for three reasons. First,

as shown above, Talisker has suffered no injury since May 29, 2013, and is, therefore, not

entitled to any damages that are subject to trebling. Second, the unlawful detainer statute limits

the bond amount to the probable amount of costs of suit, including attorney fees and actual

damages which may result to the plaintiff if the defendant has improperly withheld possession.

Utah Code Ann. 78B-6-808(4)(b)(vi) (emphasis added). Trebled damages are not actual

damages incurred by the landlord, but merely amounts included as the judgment by the Court

essentially as punishment. See id. at 78B-6-811(3) (The judgment shall be entered against the

defendant for . . . three times the amount of the damages assessed . . . .). Third, Rule

62(j)(2)(C) expressly excludes punitive damages from a bond required for a stay, and statutory

treble damages are the equivalent of punitive damages. See Avis Vision Institute, Inc., 2006 UT

45, 7 (trebling of damages under the unlawful detainer statute is highly penal in nature);

Diversified Holdings, L.C. v. Turner, 2002 UT 129, 30, 63 P.3d 686 (a statutory penalty of


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treble damages coupled with an award of punitive damages was duplicative); Sprincin King St.

Partners v. Sound Conditioning Club, Inc., 925 P.2d 217, 222 (Wash. 1996) (recognizing thatdouble damages pursuant to Washingtons unlawful detainer statute is the equivalent of punitive

damages).

3. Prejudgment Interest Should Not be Included in the Amount Secured.

Finally, prejudgment interest should not be included in the amount secured by the bond

because not only does the unlawful detainer statute omit any reference to prejudgment interest in

the formula used to calculate a bond, see Utah Code Ann. 78B-6-811(3), as shown above,

Talisker is not entitled to prejudgment interest in any event.18

* * *

In summary, the amount of the security required to stay the execution of the Order of

Restitution until entry of final judgment should be between $1,021,308 and $6,559,616.19

Item Low High

Rent for the period May 1, 2011 through May

28, 2013

$471,308 $6,009,616

Actual damages which may result to theplaintiff if the defendant has improperly

$0 $0

18Even assuming Talisker is entitled to prejudgment interest (it is not), it is unclear and Taliskerhas to date supplied no evidence of what interest rate should apply. The Utah Code provides arate for breach of contract claims. See Utah Code Ann. 15-1-1(2) (Unless parties to a lawfulcontract specify a different rate of interest, the legal rate of interest for the loan or forebearanceof any money, goods, or chose in action shall be 10% per annum.). Here, however, there is nobreach of contract claim and thus the 10% rate does not apply. See, e.g., Nielsen v. OReilly,848 P.2d 664, 670 (Utah 1992) (rejecting claim that insured was entitled to prejudgment interestbecause he had a contractual relationship with the insurance company because the insured didnot pursue a breach of contract claim against [the insurer]); compare Kelly v. Kruse, Landa,Zimmerman & Maycock, Civil No. C-85-1057W, 1998 U.S. Dist. LEXIS 18657, at *26-27 (D.Utah Dec. 9, 1988) (unpublished) (awarding prejudgment interest on legal malpractice claimwhere there was a finding that the defendants breached the express terms of the parties RetainerAgreement and Statement of Services).19These amounts do not account for Plaintiffs own remaining damages claims against Taliskerwhich, if awarded, would offset, in whole or in part, any damages owed by Plaintiffs to Talisker.


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withheld possession. Utah Code Ann. 78B-6-808(4)(b)

Estimate of reasonable attorneys fees

associated with unlawful detainer claim

$500,000 $500,000

Costs $50,000 $50,000

Total: $1,021,308 $6,559,616

Upon entry of final judgment, Plaintiffs can replace the security required for the

requested interim stay with a supersedeas bond which bond will include the actual amount of

damages awarded by the jury and three years of post-judgment interest, as required by Rule

62(j).

V.

CONCLUSION

For the reasons set forth herein and for those set forth in Plaintiffs motion to stay, the

Court should continue the stay of the Order of Restitution through the remainder of the

litigation before this Court and require Plaintiffs to post security in an amount between

$1,021,308 and $6,559,616, which amounts represent an estimate of (1) Taliskers actual

damages, (2) Taliskers attorneys fees incurred in connection with the unlawful detainer

counterclaim, filed October 28, 2013, and (3) costs.

DATED this 15th day of August, 2014.

Snell & Wilmer L.L.P.

/s/ Alan L. SullivanAlan L. SullivanAmber M. Mettler

Zimmerman Jones Booher LLCMichael D. ZimmermanTroy L. Booher

Weil Gotshal & Manges, LLP

James W. QuinnBruce S. Meyer

Attorneys for Plaintiffs/Counterclaim

Defendants


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CERTIFICATE OF SERVICE

I hereby certify that on the 15th day of August, 2014, I caused the foregoing

PLAINTIFFS MEMORANDUM REGARDING SECURITY FOR A STAY PENDING

THE CONCLUSION OF LITIGATION BEFORE THE TRIAL COURT to be served via

the Courts electronic filing system and/or U.S. mail upon the following:

John R. LundKara L. PettitSNOW, CHRISTENSEN & MARTINEAU10 Exchange Place, 11th FloorPost Office Box 4500

Salt Lake City, Utah 84145-5000(Via electronic filing)

Howard M. Shapiro (pro hac vicepending)Jonathan E. Paikin (pro hac vicepending)Christopher E. Babbit (pro hac vicepending)WILMER CUTLER PICKERING HALE and DORR LLP1875 Pennsylvania Avenue, NWWashington, D.C. 20006(Via U.S. mail)

Attorneys for Defendants United Park City Mines Company;Talisker Land Holdings, LLC; Talisker Land Resolution LLC;

and Talisker Canyons Leaseco LLC

Jonathan A. DibbleRAY QUINNEY & NEBEKER P.C.36 South State Street, Suite 1400Salt Lake City, UT 84111(Via electronic filing)


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Robert C. Blume (pro hac vice)Ryan T. Bergsieker (pro hac vice)GIBSON, DUNN & CRUTCHER LLP

1801 California StreetDenver, CO 80202-2642(Via U.S. mail)

Attorneys for Defendant VR CPC Holdings, Inc.

Mark JamesHatch, James & Dodge, P.C.10 West Broadway, Suite 400Salt Lake City, Utah 84101(Via electronic filing)

Attorneys for Talisker Canyons Finance Co LLC andFlera, LLC

Michael GillDaniel StorinoMayer Brown LLP71 South Wacker DriveChicago, Illinois 60606(Via U.S. mail)

Of Counsel for Talisker Canyons Finance Co LLC and Flera, LLC

/s/ Patricia Haslam

Park City Mountain Resort's filing on bond for upcoming ski season

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