Opinion ID: 1349675
Heading Depth: 1
Heading Rank: 6

Heading: claims against gpcc

Text: UPCM sought reformation of the 1975 agreements as against GPCC to remedy their unconscionable unfairness resulting from GPCC's breaches of fiduciary duty to UPCM and aiding and abetting Anaconda and ASARCO in their breaches. In particular, the two additional twenty-year extensions of the ski leases were assailed as unfair. UPCM also sought to reform the 1971 water agreement to permit it to use its reservation of 2850 gallons per minute of group II water for any and all purposes rather than only for mining, milling and related purposes as the agreement provides. UPCM argues that these provisions were unconscionable when the contracts were made in 1971 and in 1975 and that their unconscionability has been exacerbated by subsequent events. Therefore, it is clear that the applicable six-year statute of limitations on actions on written contracts began to run no later than 1975 and had long expired before this action was filed in 1986. UPCM further alleged that GPCC breached the 1971 water agreement by filing with the Utah state engineer a bad-faith protest against UPCM's application to the engineer for an extension of time to resume the use of certain of its water rights. In the water agreement, UPCM reserved 2850 gallons flowing from eleven of its mining claims. It is now not using any water from five of the claims but asserts that it may use that water in the future if it resumes mining operations. Paragraph 14 of the water agreement prohibits GPCC from taking any action without UPCM's approval which may impair water rights. The trial court granted summary judgment in favor of GPCC on this issue on the ground that after the commencement of this action, GPCC made the final payment of the purchase price for the water, rendering moot any cause of action UPCM might have had for breach of contract. This was error. Clearly, the obligation imposed on GPCC by paragraph 14 survives payment of the purchase price. That paragraph imposes a continuing duty on GPCC to protect the water right, the use of which under the agreement is shared by both UPCM and GPCC. Because of this shared use, the agreement requires cooperation and the exercise of good faith between the users to use the water beneficially to protect the water right from being lost due to forfeiture for nonuse. UPCM has also alleged that the water agreement has been breached by the failure of GPCC to pay the cost of treating the water coming from the Ontario No. 2 drain tunnel. While the facts in the record regarding this matter are sketchy, it appears that the water is polluted as it emerges from the drain tunnel and that since 1982, UPCM has treated the water at an annual cost of approximately $350,000. UPCM contends that this cost should have been borne by GPCC under paragraph 5 of the water agreement, which requires GPCC to pay the cost of treatment as necessary for the purposes of GPCC. The trial court granted GPCC summary judgment on this cause of action on the ground that GPCC's final payment of the purchase price rendered moot any cause of action. This was error. Since the water agreement contemplates and provides for joint use of the water, final payment of the purchase price does not affect the continuing nature of the obligation imposed in paragraph 5. Factual questions remain as to how much, if any, of the water GPCC uses and is thereby liable for treating. We also find unavailing the trial court's reasoning that UPCM had waived or was estopped from asserting this cause of action for breach of contract because during the years in question UPCM treated the water at its own cost and, in its annual report to its shareholders, reported that GPCC was current in its obligations. Waiver requires the intentional relinquishment of a known right. See Soter's, Inc. v. Deseret Fed. Sav. & Loan, 857 P.2d 935, 938 (Utah 1993) (citing Phoenix Inc. v. Heath, 90 Utah 187, 194, 61 P.2d 308, 311-12 (1936)). Estoppel requires (1) an admission, statement, or act inconsistent with the claim afterwards asserted, (2) action by the other party on the faith of such admission, statement, or act, and (3) injury to such other party resulting from allowing the first party to contradict or repudiate such admission, statement, or act. Celebrity Club, Inc. v. Utah Liquor Control Comm'n, 602 P.2d 689, 694 (Utah 1979). Factual questions remain as to whether the elements of waiver can be made out and whether the elements of estoppel are present, including whether GPCC relied to its detriment on the statements in the annual reports and whether it sustained an injury. In the final cause of action for breach of contract, UPCM alleged that GPCC failed to include in its calculation of revenue from the sale of ski-lift tickets (a percentage of which revenue UPCM is entitled to) the value of lift tickets GPCC traded for goods and services, sold at a discount, or gave away. In 1985, UPCM audited the lift-revenue accounting records for the first time and discovered this omission. The trial court granted summary judgment in favor of GPCC on the ground that UPCM had waived or was estopped from pursuing any claim for breach of contract because UPCM had certified to an escrow agent for the parties and reported in its annual report to its shareholders that GPCC was current in its payments under the ski leases. Once again, summary judgment was improperly granted because the record does not reflect undisputed facts which would support the invocation of waiver or estoppel. Remand on this issue therefore is required for the trial court to further consider this cause of action with the other two causes of action for breach of contract discussed above. UPCM does not dispute that all of its claims for breach of contract would be subject to the six-year statute of limitations contained in section 78-12-23(2). Finally, UPCM contends that GPCC trespassed by constructing a maintenance building and a ski-lift tower (the Town Lift) on UPCM property which was not under lease to GPCC. The trial court held that these trespass claims failed (1) because of UPCM's contractual duties of cooperation with GPCC under paragraph 19 of the land purchase agreement, (2) because of UPCM's written and verbal consent to GPCC's use of the land in question, and (3) because the Town Lift was constructed on property subject to the resort-area lease. We shall consider each of these grounds. Paragraph 19 provides: UPCM will, upon request, grant to [GPCC] such easements over its properties as may be reasonably necessary for ingress and egress to and from any of the Subject Properties, provided that the nature and duration of such easements shall be subject to the approval of [UPCM] and the use thereof shall be subject to such reasonable conditions and restrictions as [UPCM] shall impose. That paragraph deals with the granting of easements for ingress and egress and cannot be construed to require UPCM to allow a building and a ski-lift tower to be built on nonleased property. Doing so would require us to stretch the language far beyond any reasonable limits. The alleged trespasses cannot therefore be justified under paragraph 19. As to UPCM's giving written and verbal consent to the location of the maintenance building, the record reflects that an issue of fact exists. While GPCC apparently relies on a deposition of E. LaMar Osika, former secretary of UPCM, that consent was given, UPCM relies on the affidavit of Osika's son, Edwin L. Osika, Jr., presently executive vice president and secretary-treasurer, that while the subject was discussed, no agreement was reached. There being a dispute in the facts, summary judgment cannot rest on the ground of consent. The final ground relied upon by the trial court for summary judgment was that the Town Lift had been constructed by GPCC on land under its lease. UPCM counters that while the site of the lift was originally under the lease, UPCM had the right under paragraph 14 to sell certain parts of the leased premises that GPCC was not using to third parties, provided GPCC was given the first right of refusal. Pursuant to this provision, UPCM gave one John Sweeney an option to purchase seventy-five acres which included the lift site. GPCC declined to exercise its first right of refusal. Before the option expired, the parties entered into a third amendment to the lease on December 12, 1980, which excluded the seventy-five acres from the scope of the lease. Sweeney did not exercise his option, but his failure to do so did not bring the property back under the lease. In its brief, GPCC asserts that it did not receive any consideration for excluding the seventy-five acres from the lease in the third amendment. However, the amendment recites that good and valuable consideration has been given, the receipt and sufficiency whereof are hereby acknowledged. GPCC has not in its pleadings sought to be relieved of its agreement under the third amendment because of lack of consideration. Consequently, that defense is not before us. The summary judgment cannot be supported on the ground that the Town Lift site is under the lease. The summary judgment on the trespass claims is therefore reversed, and the case is remanded for further proceedings on these claims.