Title: Jackson Hole Racquet Club Resort v. Teton Pines Ltd. Partnership

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Jackson Hole Racquet Club Resort v. Teton Pines Ltd. Partnership1992 WY 130839 P.2d 951Case Number: 91-149Decided: 10/13/1992Supreme Court of Wyoming

JACKSON HOLE RACQUET CLUB RESORT, Appellant 
(Defendant/Third-Party Plaintiff),

 
 
v.

 
 
TETON PINES LIMITED PARTNERSHIP, a 
Wyoming Limited Partnership, Appellee (Plaintiff), v. TETON PINES DEVELOPMENT 
COMPANY, a Wyoming Corporation, Appellee (Third-Party 
Defendant).

 
 
Appeal from the DistrictCourtofTetonCounty. Honorable D. Terry Rogers, 
Judge

 
 
Joseph F. Moore, Jackson Wyoming; Gregory C. Dyekman of Dray, Madison & Thomson, P.C., Cheyenne, Wyoming, for appellant.

 

William P. Schwartz of Ranck & Schwartz, 
Jackson, Wyoming, for appellees.

 
 
Before 
MACY, C.J., and THOMAS, CARDINE, URBIGKIT * and GOLDEN, JJ. GOLDEN, J., 
delivered the opinion of the court. CARDINE, J., filed a dissenting 
opinion.

 
 
* Chief Justice at time of oral 
argument.

 
 
GOLDEN, 
Justice.

 
 

[¶1.]     This case involves some 
rather complex and high level business dealings that affect two of the largest 
resorts in Jackson Hole. Appellant, Jackson 
Hole Racquet Club Resort, claims an exclusive right to perform certain property 
management functions for the two resort areas. Appellees, Teton Pines Limited 
Partnership and Teton Pines Development Company, counter that appellant has no 
such exclusive right. The district court found that a 1984 agreement which 
purported to grant appellant the exclusivity right at issue was not binding on 
the appellees and granted summary judgment for them.

 
 

[¶2.]     We 
reverse.

 
 

[¶3.]     Appellant raises these 
issues:

 

I. The district court erred in granting summary 
judgment to plaintiff when issues of material fact 
existed.

 

II. The district court erred in failing to find a 
binding contractual relationship between the parties.

 

III. The district court erred in failing to consider 
the importance of the notice that plaintiff had of the restrictions which are 
the subject of this dispute and in failing to recognize the existence of an 
equitable servitude.

 

IV. The district court's findings and conclusions 
were clearly erroneous in several respects.

 
 

[¶4.]     Appellees respond with 
a markedly different perception of the issues:

 

I. Whether the district court properly construed the 
exclusivity provision at issue to relate unambiguously to the Aspens Subdivision 
and not to the separate and independent development of Teton 
Pines.

 

II. Whether the district court properly concluded 
that appellee is not a party to the 1984 lease containing the exclusivity 
provision and is not bound by its terms.

 

 III. 
Whether the district court properly concluded that the exclusivity provision 
does not fulfill the requirements necessary for a covenant to run with the 
land.

 
 

[¶5.]     The facts are complex, 
and this problem is compounded by appellees' muddying of the waters. The 
controversy concerns the two largest resort developments in TetonCounty, 
located four miles south of TetonVillage on Wyoming Highway 390. "The 
Aspens" is a resort, development of which began in the 1960's and 1970's. "Teton 
Pines" is immediately adjacent to "The Aspens," but initial development of it 
did not commence until the mid-1980's. We now describe a series of "business 
deals" which ultimately led to the issues now posed before this 
court:

 

1. On August 25, 1980, Arthur E. Brown Jr. (Brown) 
caused to be created a Wyoming corporation known as "The Jackson Hole 
Racquet Club Resort [appellant]." The purpose of this corporation was to serve 
as property manager for the improvements (homes, condominiums, etc.) located at 
"The Aspens." Brown was an officer, director and principal shareholder of this 
corporation.

 

2. On April 29, 1983, Brown caused to be created a 
Wyoming 
corporation known as "Lake Creek, Inc." He and his wife were the officers and 
directors of this corporation, and it served as the entity which owned, and was 
substantially responsible for, the further development of "The 
Aspens."

 

3. On February 21, 1984, the Teton County 
Commissioners conditionally approved Brown's application for a development 
permit. This permit is identified in the Teton County records as "Aspens II" and 
included the tract of land upon which "Teton Pines" is now located. Although 
Brown and his associates did not possess this latter tract of land at the time 
the permit was issued, they did have an option to purchase 
it.

 

4. On April 6, 1984, "Lake Creek, Inc. leased its 
office space in a building it owned in "The Aspens" to appellant. Certain 
provisions of this lease form the core of the controversy. On page 3 of this 19 
page-long lease, this language is found:

 

3. USE OF PREMISES/RESTRICTIONS. The 
lessor hereby agrees that Lessee [appellant] may utilize the office for general 
office and administrative operations of Lessee in Lessee's property management, 
meeting, convention, seminar, banquet and resort business, and may utilize the 
conference space for meetings, conferences, conventions, banquets, seminars and 
other related uses.

 
 
Lessee [appellant] shall have the exclusive right to 
conduct property management, convention, meeting, seminar, hotel, motel, sleigh 
rides, and other similar operations from commercial premises located at The 
Aspens, including the Aspens as expanded from time to time on adjacent property 
presently owned by Skip Wright-Clark and Blake and Lee Vandewater (which is 
subject to an option in favor of Arthur E. Brown, Jr. or his affiliates), except 
as follows:

 
 
A. If the Aspens commercial area is expanded to such 
adjacent property, and Lessee determines that an expansion of Lessee's property 
management operations is desirable, then the parties will cooperate in good 
faith on the leasing of premises for a new, larger, first-class property 
management operation in the expansion area on terms which shall, unless 
otherwise agreed by the parties, be substantially the same per square foot 
rental (adjusted as appropriate for higher construction costs or financing 
costs, assuming 100% financing over 25 years at the conventional mortgage rates 
for construction of the new facilities) and other terms as this agreement, and 
this lease shall be revised to reflect the new location and the new 
terms.

 
 
B. If Lessee terminates this lease as to the 
conference facility (unless a new lease for a conference facility is being 
entered into concurrently therewith, for The Aspens or the Aspens as expanded), 
then this section shall no longer apply to meeting, seminar and convention 
facilities at the existing or expanded Aspens commercial 
area.

 
 
C. If Lessee ceases to provide property management 
services for all or any material portion of The Aspens or the expanded Aspens 
due to reasons other than force majeure, for a reasonable period of time (but 
not less than 60 days) after written notice of such failure including a specific 
request of Lessor that such services be provided, then the exclusive rights of 
Lessee with respect to these specific services shall 
cease.

 
 
D. This section shall not apply to a property 
maintenance operation undertaken by or on behalf of homeowners associations and 
not utilizing independent managers.

 
 
Neither the Lessee nor any of its principals, agents, 
servants, contract vendees, sublessees, concessionaires, employees, nor any 
other party whatsoever acting with the consent of Lessee, shall engage on the 
subject property, either directly or indirectly, in the brokerage or sale of 
real estate at The Aspens Subdivision, Teton County, Wyoming, (as expanded) 
during the terms of this lease, other than brokerage of rentals and real estate 
seminars and similar activities at the convention center.

 
 

[¶6.]     The initial term of 
this lease ran from the date of signing until September 30, 1993, and could be 
renewed for two additional five year periods (or through September 30, 2003). 
The final paragraph of the lease, paragraph 32, provides: "The parties agree to 
execute a memorandum of this agreement which will be recorded with the Clerk of 
Teton County, Wyoming, for the purpose of putting the public on notice of the 
existence of the terms of this agreement.

 
 

[¶7.]     Brown signed the lease 
for lessor in his capacity as President of "Lake Creek, Inc." and for lessee 
(appellant) in his capacity as President of Jackson Hole Racquet Club Resort. In 
addition to these two signatures, Brown endorsed a paragraph which appears on 
the signature page of the lease, entitled "Confirmation," and stated "The 
provisions of paragraph 3 of said Lease Agreement are hereby accepted and agreed 
to by the undersigned, on behalf of himself and his affiliates." Finally, Brown 
also signed another paragraph entitled "Confirmation," and which also appeared 
on the signature page of the lease, in his capacity as President of "Shooting 
Iron Development Company." That paragraph stated: "The provisions of said Lease 
Agreement are hereby accepted and agreed to by the undersigned parent company of 
Lessor [Lake Creek, Inc.]."

 
 

[¶8.]     As provided in the 
lease, and accomplished or December 20, 1984, a "Memorandum of Agreement" was 
recorded in the records pertaining to the real estate on which Brown had an 
option and onto which he intended to expand "The Aspens," said memorandum 
declaring that "Lake Creek, Inc." has granted to 
appellant:

 

The exclusive rights to conduct the following 
commercial activities at the Aspens I and Aspens II commercial areas in 
Teton County, Wyoming:

 

property management, convention, meeting, seminar, 
hotel, motel, sleighrides and other similar operations * * 
*.

 

5. Also on April 6, 1984, the date on which the lease 
was signed, Brown sold his controlling interest in appellant to Burt Myrin and 
Phil Warner.

 

6. On April 16, 1984, Brown caused to be created yet 
another company, "Lake Creek Development Company," a Wyoming Corporation. Its 
purpose was to take title to the property on which Brown and his associates had 
an option (see paragraph 3, above). On July 27, 1984, the property under option 
was conveyed to "Lake Creek Development Company." Brown was also President and a 
director of that corporation.

 

7. Also on July 27, 1984, "Lake Creek Development 
Company" deeded all but 25 acres of the property acquired that day to "Jackson 
Hole Racquet Club Limited Partnership," yet another entity formed by Brown and 
this one for the purpose of developing the property just acquired. The 25-acre 
parcel retained by Lake Creek Development Company in this transaction is another 
crucial factor in this dispute. This 25-acre parcel was intended to become the 
commercial area for "Teton Pines." Lake Creek Development Company was one of the 
general partners in "The Jackson Hole Racquet Club Limited 
Partnership."

8. In July 1986, Corwin Denney (Denney) entered upon 
the scene. At that time Brown and his "group" were experiencing some financial 
difficulties and were looking for additional investors. In July 1986, Denney was 
given a copy of an offering memorandum concerning the property which alerted the 
reader to the exclusivity agreements pertaining to appellant which were recorded 
in the county clerk's records.

 

9. On September 17, 1986, a Denney-led group of 
investors purchased a controlling interest in "The Jackson Hole Racquet Club 
Limited Partnership," the entity formed by Brown to develop the property 
acquired from Lake Creek Development Company. We will refer to this group of 
investors as the "Denney Group." Also on September 17, 1986, at the insistence 
of the Denney Group, Brown caused "Lake Creek Development Company" to convey the 
25-acre parcel it had retained to "The Jackson Hole Racquet Club Limited 
Partnership." Refer to paragraph number 7 above.

 

10. On October 14, 1986, "The Jackson Hole Racquet 
Club Limited Partnership" changed its name to "Teton Pines Limited Partnership." 
Brown continued to serve as president of that entity for a time and remains an 
investor in it at the time this appeal was docketed.

 

11. The Denney Group, with controlling interest in 
"Teton Pines Limited Partnership," sought to develop a resort hotel on the 
property and discovered that the exclusivity agreement held by appellant was a 
serious impediment to that development. The Denney Group had, by this time, 
bought out the holders of all the other exclusivity agreements which Brown had 
executed.

 

12. Thus, on September 10, 1990, appellees filed suit 
against appellant in order to have the exclusivity agreement declared invalid. 
Since June of 1989, the Denney Group has acted as general partner for "The Teton 
Pines Limited Partnership" through a corporation called "Teton Pines Development 
Company, Inc.," which was the third party defendant in the proceedings below and 
is an appellee here.

 
 

[¶9.]     The facts contained in 
these twelve paragraphs are not disputed by the parties. In its findings of fact 
and conclusions of law, the district court recites essentially these same facts. 
However, beginning with paragraph 21 of its findings of fact, the district court 
strays from reciting undisputed facts to reaching conclusions and resolving 
factual conflicts which are very much in dispute. In some instances, appellant 
contends the district court is wrong in these findings and conclusions and in 
others it asserts the court's findings have no particular relevance. For 
instance, paragraph 21 of the findings of fact states:

 
 
21. Neither Lake Creek, Inc. nor Defendant Racquet 
Club Resort (the parties to the 1984 Lease) have at any time owned any interest 
in any of the 560 acres of the property now constituting Teton 
Pines.

 

This finding is correct so far as it goes. The 
acreage was, however, under option to Brown at the time the lease was executed 
and another Brown entity (Lake Creek Development Company) acquired title to that 
property shortly after the lease (as was contemplated by the lease) and most of 
the acreage was then deeded to "The Jackson Hole Racquet Club Limited 
Partnership." Our conclusion is that this finding has no real relevance to 
resolution of the controversy. Paragraphs 22-24 of the findings of fact 
state:

 
 
22. Neither Lake 
Creek Development Company, Inc., Jackson Hole Racquet Club Limited Partnership, 
nor Teton Pines Limited Partnership has ever entered into any written agreement 
with the Defendant Racquet Club Resort, granting the Defendant the exclusive 
right specified in the 1984 Lease in regard to Teton Pines or the Teton Pines 
property.

 
 
23. Neither Lake 
Creek Development Company, Inc. nor any other Brown entity has ever assumed any 
of the obligations of Lake Creek, Inc., the grantor of the exclusive rights in 
issue.

 
 
24. The term "Aspens" in the 1984 Lease refers to the 
Aspens Subdivision, sometimes called "Aspens I". While Brown contemplated 
expanding "Aspens I" through a development known as "Aspens II" on the property 
adjacent to "Aspens I", such an expansion never occurred nor has any other 
expansion of the Aspens occurred.

 
 

[¶10.]  We conclude that, based on the facts now 
known and demonstrated of record, these findings are simply incorrect. At best, 
they ignore the reality of what has occurred. Paragraph 25 of the findings of 
fact states:

 
 
25. Neither Teton Pines Limited Partnership, Jackson 
Hole Racquet Club Limited Partnership, nor Lake Creek Development Company, Inc. 
are parties to the 1984 Lease. None of those entities even existed at the time 
the 1984 Lease was executed. There is no contractual basis to bind Teton Pines 
Limited Partnership to the provision, of the 1984 Lease.

 

Again, based on facts extant, this finding appears to 
be incorrect, but more importantly, it does not appear to be relevant to 
resolution of the issues. The lease was executed as described in paragraph 4 
above, and none of the subsequent transactions or business maneuvers purport to 
extinguish it. Paragraph 26 of the findings of fact 
states:

 
 
26. The Aspens Subdivision has never been "expanded" 
to include additional properties. Since Teton Pines does not constitute an 
"expanded Aspens" the purported management rights granted in the 1984 Lease on 
their face do not attach to Teton Pines.

 

"The Aspens" was expanded and this finding is not 
only incorrect, but seems to defy the reality of the situation as presented by 
all parties. The district court then concludes in paragraph 27 of the findings 
of fact:

 
 
27. Defendant Racquet Club Resort has no valid 
contractual right binding upon the Plaintiff to act as Plaintiff's exclusive 
property and activities manager.

 

This is, of course, the crux of the case and this 
conclusion simply cannot follow from the facts as they are demonstrated in the 
record. The district court's findings then continue:

 
 
28. On December 20, 1984 Defendant Racquet Club 
Resort caused to be recorded with the Teton County Clerk an instrument entitled 
"Memorandum of Agreement", reciting the execution of the 1984 Lease. The 
Memorandum also recites that the property subject to the exclusive rights 
granted in the 1984 Lease is described in an exhibit to the Memorandum and that 
property description includes the 25-acre parcel originally purchased and 
retained by Lake Creek Development Company, Inc. and later deeded to Jackson 
Hole Racquet Club Limited Partnership, and which parcel is that parcel presently 
involved in the dispute between the parties.

 
 
29. Restrictions upon the use of 
land, being in derogation of the common law, are not favored, are to be strictly 
construed, will not extend by implication, and in case of doubt the restrictions 
will be construed in favor of the free use of the land. Kincheloe v. 
Milatzo, 678 P.2d 855 Wyo. 1984), citing 
Kindler v. Anderson, 433 P.2d 268 (Wyo. 1967).

 
 
30. In order for a restrictive covenant to "run with 
the land" the following elements must be established:

 

a. The original covenant must be 
enforceable;

 

b. The parties to the original covenant must intend 
that the covenant run with the land;

 

c. The covenant must touch and concern the land; 
and

 

d. There must be privity of estate between the 
parties.

 

20 Am.Jur.2d Covenants, Conditions and Restrictions § 
30 Pages 600 to 601.

 
 
 31. It is generally recognized that covenants contained in a lease 
may run with the land when they are of such character that the benefits and the 
burdens pass with the land. 51C C.J.S. Landlord and Tenant § 
240.

 
 
32. The Wyoming Supreme Court has held that where restrictive covenants were adopted and pertain to the 
first filing of a subdivision, and where language in the declaration purported 
to make the declaration of protective covenants applicable to all lands owned by 
the declarant, the covenants apply only to the first filing area. Kincheloe 
v. Milatzo, 678 P.2d 855 (Wyo. 1984).

 

This series of findings and recitation of the law is 
essentially accurate. Continuing, the district court 
stated:

 
 
33. The recording of the Memorandum of Agreement on 
December 20, 1984, did not create a covenant, condition or restriction which ran 
with the land. It does not satisfy the four elements for a restrictive covenant 
set forth above in that the "exclusive rights" provision of the 1984 Lease is so 
indefinite concerning its scope and meaning that it is legally unenforceable; 
the exclusive rights provision in the 1984 Lease does not "touch and concern the 
land" in that it does not purport to restrict in any way the use or development 
of the property constituting Teton Pines and does not burden the property 
itself, but rather restricts the contractual freedom of the present and future 
owners of the property to select the property and activities manager of their 
choice; the purported covenantor, Lake Creek, Inc. did not convey the burdened 
property (i.e., the Teton Pines property) to Teton Pines Limited Partnership or 
its predecessor, Lake Creek Development Company, Inc.

 
 
34. There is no privity between in the covenanting 
parties - Lake Creek, Inc. and the defendant Racquet Club Resort, with respect 
to the burden of property. The covenantee, Racquet Club Resort received no 
interest in the Teton Pines property in conjunction with the purported grant of 
the exclusive rights.

 
 
35. The covenant which is to burden the land, in 
order that something may exist to which the former may be tied, and that it may 
not be suspended in the air, must accompany a grant of the land itself, or of an 
interest therein which exists at the time of the grant. Lingle Water User's 
Assn. v. OxidentalBuilding & Loan Assn., 297 P. 385 (Wyo. 1931), 43 Wyo. 41.

 
 
36. Plaintiff has no obligation to Defendant Racquet 
Club Resort under the 1984 Lease.

 
 
37. The performance or breach of the obligations 
called for under the 1984 Lease is strictly a matter between the Defendant 
Racquet Club Resort, Lake Creek, Inc. and Brown.

 
 
38. A doctrine of estoppel by deed is inapplicable to 
the fact situation in this case. That doctrine could only be applicable to Lake 
Creek, Inc. in this matter if it afterwards acquired some title to the Teton 
Pines property after its conveyance by lease on April 6, 1984. Since Lake Creek, 
Inc. has never acquired such an interest in the Teton Pines property, estoppel 
by deed does not apply.

 
 
39. Plaintiff is entitled to declaratory judgment as 
a matter of law, decreeing that the exclusive rights provision does not obligate 
Plaintiff or encumber Plaintiff's property.

 
 
40. Defendant's Motion for Judgment on the Pleadings 
and/or Summary Judgment should be denied.

 
 
IT IS ORDERED:

 
 

[¶11.]  1. Defendant's Motion for judgment on the 
Pleadings and/or Summary Judgment is hereby denied.

 
 

[¶12.]  2. Plaintiff's Motion for Summary 
Judgment is hereby granted.

 
 

[¶13.]  3. The exclusive property rights 
provision of the April 6, 1984 Lease Agreement between Lake Creek, Inc. and 
Jackson Hole Racquet Club Resort, Inc. do [sic] not obligate Plaintiff or 
encumber Plaintiff's property.

 
 

[¶14.]  In view of the facts which are thus far 
established by the record, these findings and conclusions cannot stand nor do 
they justify grant of summary judgment in favor of 
appellees.

 
 

[¶15.]  Although our standard of review for 
summary judgment cases has been repeated on countless occasions, we deem it 
prudent here to set out its precepts once again. We review a summary judgment in the same light as did the 
district court and we use the same materials, at least to the extent they appear 
in the record on appeal, as did the district court. Summary judgment is proper 
only if there are no genuine issues of material fact and the prevailing party is 
entitled to judgment as a matter of law. Popejoy v. Steinle, 820 P.2d 545, 548 (Wyo. 
1991). An appellee defending a summary judgment has a heavy burden in this 
court. Summary judgment is a useful tool to cut short litigation for which there 
is no useful purpose, but it is not a device for deciding doubtful cases in a 
summary manner and passing difficult questions of law on to this court for 
resolution without an adequate record. Weaver v. Blue Cross-Blue Shield, 
609 P.2d 984, 986 (Wyo. 1980). If there is doubt lout the meaning 
of a written instrument or, as in this case, a group of written instruments 
which may have to be read together, a genuine issue of material fact exists and 
summary judgment is unsuitable. Meuse-Rhine-Ijssel Cattle Breeders of Canada 
Ltd. v. Y-Tex Corp., 590 P.2d 1306, 1311 (Wyo. 1979). To a great extent there is not 
serious disagreement about the facts of the instant case, but clearly the 
parties, quite justifiably, put two widely divergent interpretations on them. If evidence is subject to conflicting interpretations or 
reasonable minds might differ as to its significance, summary judgment is 
improper. Weaver, 609 P.2d  at 987. See Parker v. Haller, 751 P.2d 372, 376-77 (Wyo. 1988); Shauers v. Bd. of 
CountyComm'rs, 746 P.2d 444 448-49 (Wyo. 1987); Greaser v. Williams, 703 P.2d 327, 334 
(Wyo. 1985); Hunter v. Farmers Ins. 
Group, 554 P.2d 1239, 1243 (Wyo. 1976).

 
 

[¶16.]  Determination of the intention of the 
parties to a contract is the prime focus of contract construction. True Oil 
Co. v. Sinclair, 771 P.2d 781, 790 (Wyo. 1989). Moreover, a court may look to the 
surrounding circumstances. the subject matter and the purpose of the contract to 
ascertain the parties' intentions. State v. Pennzoil Co., 752 P.2d 975, 
978 (Wyo. 
1988). Subsequent events or conduct of the parties cannot be used so as to vary 
the unambiguous terms of a contract. Id. However, if the meaning of a 
contract is ambiguous or not apparent, resort to extrinsic evidence may be 
necessary and summary judgment is not available. Worland Sch. Dist. v. 
Bowman, 445 P.2d 364, 366 (Wyo. 1968).

 
 

[¶17.]  We are not able to command or earnestly 
advise how this case should be resolved in the trial court. It best serves if we 
remand to the district court with the observation that, because of its 
complexity the parties have polarized into extreme positions, and presentation 
of the issues to a fact finder will likely be required. After more complete 
development of the facts, whether it is necessary to present the fundamental 
issue to the fact finder undoubtedly will become less clouded. Appellant relied 
upon V Restatement of the Law of Property, Servitudes §§ 531-537 (1944 & 
Supp 1991-92), in its argument before the district court and, again based upon 
the record extant, that law appears to be relevant (that volume is available at 
the Wyoming State Law Library and at the University of Wyoming College of Law 
Library). See Piccolo-Lynam Drug Co. v. Omaha 
Nat'l Bank, 195 Neb. 772, 241 N.W.2d 107 (1976). Appellant did 
pose somewhat different issues in this appeal, but that cannot operate in this 
instance to benefit appellees because the principal reason for reversal is the 
district court's error in determining that there were no genuine issues of 
material fact and that appellees were entitled to judgment as a matter of law. 
Whether the theory relied upon was that most strenuously brought forward in the 
district court or the theory most strenuously brought forward in this court, the 
result is the same. Based on the record extant there are genuine issues of 
material fact which preclude summary judgment.

 
 

[¶18.]  Reversed and remanded to the district 
court or further proceedings consistent with this opinion.

 
 
CARDINE, Justice, dissenting.

 
 

[¶19.]  I dissent. I would affirm the decision of 
the district court.