talisker filing on bond for park city mountain resort

8/11/2019 Talisker filing on bond for Park City Mountain Resort

1/48

John R. Lund (4368)Kara L. Pettit (8659)SNOW, CHRISTENSEN & MARTINEAU10 Exchange Place, 11th FloorPost Office Box 45000Salt Lake City, UT 84145-5000Telephone: (801) 521-9000Facsimile: (801) 363-0400

Howard M. Shapiro ( pro hac vice )Jonathan E. Paikin ( pro hac vice )Christopher E. Babbitt ( pro hac vice )WILMER CUTLER PICKERING HALE and DORR LLP1875 Pennsylvania Avenue, NWWashington, DC 20006Telephone: (202) 663-6000Facsimile: (202) 663-6363

Attorneys for Defendants United Park City Mines Company,Talisker Land Holdings, LLC , Talisker Land Resolution LLC,and Talisker Canyons LeaseCo LLC

IN THE THIRD JUDICIAL DISTRICT COURT IN AND FORSUMMIT COUNTY STATE OF UTAH

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

Plaintiffs/Counterclaim Defendants,

vs.

UNITED PARK CITY MINES COMPANY, aDelaware corporation, and TALISKER LANDHOLDINGS, LLC, a Delaware limited liabilitycompany, et al .,

Defendants/Counterclaimants.

DEFENDANTS UNITED PARK CITYMINES COMPANY AND TALISKERLAND HOLDINGS, LLCSMEMORANDUM ON SETTING ANAPPROPRIATE BOND

Case No. 120500157Judge Ryan Harris


2/48

i

TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................. i

INTRODUCTION ...........................................................................................................................1

ARGUMENT ...................................................................................................................................6

I. GPCC/GPI MUST POST A BOND SUFFICIENT TO ENSURE THAT TALISKERWILL BE ABLE TO RECOVER THE FULL AMOUNT OF THE DAMAGES ITWILL BE OWED FOR GPCC/GPIS WRONGFUL USE OF ITS PROPERTYSINCE APRIL 30, 2011. .....................................................................................................6

A. Talisker Has Agreed To A Stay Of The Order Of Restitution Pending An

Appeal Despite The Appeals Lack Of Merit And The Substantial Hardships AStay Imposes. ...........................................................................................................6

B. GPCC/GPI Are Required To Post A Bond Whether Or Not They Pursue AnInterlocutory Appeal: A Bond Is Required Under Rule 62 And The UnlawfulDetainer Statute. .......................................................................................................8

1. Because there is an interlocutory appeal pending, Rule 62 is the properframework for determining a bond. .............................................................9

2. In the alternative, GPCC/GPI must post a possession bond under theunlawful detainer statute. ...........................................................................10

C. The Purpose And MannerOf Computing The Bond Is The Same Under EitherRule 62 Or The Unlawful Detainer Statute............................................................11

1. The bond must ensure that Talisker can collect on a judgment. ................11

2. If GPCC/GPI cannot afford an adequate bond, damages cannotcontinue to accrue and no stay can issue. ..................................................13

3. The Court must estimate the probable amount of damages that will beowed to Talisker at the end of the appellate process. ................................15

II. THE CALCULATION OF THE REASONABLE VALUE OF GPCC/GPI S USEAND OCCUPATION OF TALISKER S PROPERTY .....................................................18

A. Resort Income ........................................................................................................21

B. Method One: The Cost Approach ..........................................................................23


3/48

ii

C. Method Two: The Income Approach .....................................................................23

D. Method Three: Market Approach ..........................................................................25

1. Northstar ....................................................................................................25

2. Canyons......................................................................................................26

3. PPI Lease ...................................................................................................28

E. The Annual Value of GPCC/GPIs Use Of Taliskers Property ............................28

III. GPCC/GPIS MITIGATION ARGUMENT IS WITHOUT MERIT ................................28

IV. ADDITIONAL STATUTORY DAMAGES AND FEES MUST BE INCLUDED INTHE BOND AMOUNT .....................................................................................................31

A. To Provide Proper Security, The Bond Must Include All Components Of TheJudgment ................................................................................................................31

B. Calculation Of The Bond. ......................................................................................36

CONCLUSION ..............................................................................................................................37


4/48

iii

TABLE OF AUTHORITIES

Page(s)FEDERAL C ASES

767 Third Ave. Assocs. v. Permanent Mission of Republic of Zaire to United Nations ,787 F. Supp. 389 (S.D.N.Y. 1992) ......................................................................................... .14

Aldasoro v. Kennerson ,915 F. Supp. 188 (S.D. Cal. 1995) .......................................................................................... .15

Am. Anthracite & Bituminous Coal Corp. v. Leonardo Arrivabene, S.A .,280 F.2d 119 (2d Cir. 1960).................................................................................................... .18

Bad Ass Coffee Co. of Hawaii, Inc. v. Bad Ass Coffee Ltd. Pship , No. 2:99-CV-00150, 2000 WL 33710901 (D. Utah Feb. 24, 2000) ....................................... .37

Clearone Commcns, Inc. v. Chiang , No. 2:07-CV-37-TC-DN, 2009 WL 5216856 (D. Utah Dec. 30, 2009) ................................. .34

Cooper v. Hartford Fin. Servs. Grp., Inc. , No. Civ. A. 04-003832005 WL 1378907 (D.D.C. June 9, 2005) ........................................... .32

Gordon Johnson Co. v. Hunt ,109 F. Supp. 571 (N.D. Ohio 1952) ........................................................................................ .17

Grubb v. Fed. Deposit Ins. Corp .,833 F.2d 222 (10th Cir. 1987) ................................................................................................ .14

In re AMR Corp. No. 11-15463 (Bankr. S.D.N.Y.) (filed Jan. 31, 2013) ........................................................... .34

In re Integrated Health Servs., Inc .,289 B.R. 32 (Bankr. D. Del. 2003) ......................................................................................... .19

In re Liggett ,118 B.R. 219 (Bankr. S.D.N.Y. 1990) ................................................................................ .7, 14

J. Perez & CIA., Inc. v. United States ,747 F.2d 813 (1st Cir. 1984) ............................................................................................. .11, 12

Janigan v. Taylor ,344 F.2d 781 (1st Cir. 1965) ................................................................................................... .20


5/48

iv

Mead Johnson & Co. v. Abbott Labs .,201 F.3d 883 (7th Cir. 2000) .................................................................................................. .17

N. Am. Prods. Corp. v. Moore ,196 F. Supp. 2d 1217 (M.D. Fla. 2002) .................................................................................. .17

Nken v. Holder ,556 U.S. 418 (2009) .................................................................................................................. .6

Olympia Equip. Leasing Co. v. W. Union Tel. Co .,786 F.2d 794 (7th Cir. 1986) .................................................................................................. .17

Pharmacia Corp. v. Motor Carrier Servs. Corp .,Civ. No. 04-3724 (GEB), 2008 WL 852255 (D.N.J. Mar. 28, 2008) ..................................... .17

Phoenix Assoc., Inc. v. Pagoda Intl, Inc. ( In re Pagoda Intl, Inc .),26 B.R. 18 (Bankr. D. Md. 1982) ............................................................................................. .7

President Casinos, Inc. v. Columbia Sussex Corp. ( In re President Casinos, Inc .),360 B.R. 262 (B.A.P. 8th Cir. 2007)....................................................................................... .17

Sheldon v. Metro-Goldwyn Pictures Corp. ,106 F.2d 45 (2d Cir. 1939)...................................................................................................... .20

Sletten v. Navellier Series Fund , No. 3:00-cv-0167, 2006 WL 2335566 (D. Nev. Aug. 10, 2006) ............................................ .14

SMC Corp., Ltd. v. Lockjaw, LLC ,481 F. Supp. 2d 918 (N.D. Ill. 2007) ...................................................................................... .17

Triangle Oil & Gas, Inc. v. Petsec Energy, Inc ., No. Civ. A. 06-0251, 2006 WL 1751209 (W.D. La. June 20, 2006)...................................... .17

Triple Net Inv. IX, LP v. DJK Residential, LLC ( In re DJK Residential, LLC ), No. 08-10375 (JMP), 2008 WL 650389 (S.D.N.Y. Mar. 7, 2008) ......................................... .14

United Intl Holdings, Inc. v. Wharf (Holdings) Ltd .,210 F.3d 1207 (10th Cir. 2000) .............................................................................................. .37

United States v. OCallaghan ,805 F. Supp. 2d 1321 (M.D. Fla. 2011) .................................................................................. .12


6/48

v

STATE C ASES

4447 Assocs. v. First Sec. Fin. ,889 P.2d 467 (Utah Ct. App. 1995) ........................................................................................ .30

AHCI, Inc. v. Lamar Adver. of Tenn., Inc .,898 S.W.2d 191 (Tenn. 1995) ................................................................................................. .18

Aris Vision Inst., Inc. v. Wasatch Prop. Mgmt., Inc. ,2006 UT 45, 143 P.3d 278 ....................................................................................................... 18

Beaver Cnty. v. WilTel, Inc .,2000 UT 29, 995 P.2d 602 ...................................................................................................... .19

Bichler v. DEI Systems, Inc. ,2009 UT 63, 220 P.3d 1203 ...................................................................................................... .9

Bjork v. April Indus., Inc .,560 P.2d 315 (Utah 1977) ....................................................................................................... .34

Cambridge Mut. Fire Ins. Co. v. Spinosa ,972 N.E.2d 1063, 2012 WL 3599828 (Mass. App. Ct. Aug. 23, 2012) .................................. 17

Diversified Holdings, L.C. v. Turner ,2002 UT 129 ........................................................................................................................... .12

Eide v. Bierbaum ,472 N.W.2d 193 (Minn. Ct. App. 1991) ................................................................................. .17

Forrester v. Cook ,292 P. 206 (Utah 1930) .................................................................................................... passim

Fowler v. Seiter ,838 P.2d 675 (Utah Ct. App. 1992) .............................................................................. .2, 13, 32

Golden Meadows Props., LC v. Strand ,2010 UT App 257, 241 P.3d 375 ...................................................................................... .33, 34

Great Am. Ins. Co. v. R.R. Furniture Salvage of Mobile, Inc. ,162 So. 2d 488 (Ala. 1964) ..................................................................................................... .29

Guzzetta v. Serv. Corp. of Westover Hills ,7 A.3d 467 (Del. 2010) ..................................................................................................... .16, 17


7/48

vi

Hogle v. Zinetics Med., Inc .,2002 UT 121, 63 P.3d 80 ........................................................................................................ .19

Jensen v. Schwendiman ,744 P.2d 1026 (Utah Ct. App. 1987) ...................................................................................... .10

Kennecott Corp. v. State Tax Commn ,814 P.2d 1099 (Utah 1991) ....................................................................................................... .9

Mahana v. Onyx Acceptance Corp. ,2004 UT 59, 96 P.3d 893 ........................................................................................................ .29

Osborn v. Tax Commn ,2009 UT App 222, 217 P.3d 274 ............................................................................................ .22

Osguthorpe v. Wolf Mountain Resorts, LC, 2010 UT 29, 232 P.3d 999 .................................................................................................. .6, 15

Pingree v. Contl Grp. of Utah, Inc .,558 P.2d 1317 (Utah 1976) ..................................................................................................... .18

Red Cliffs Corner, LLC v. J.J. Hunan, Inc. ,2009 UT App 240, 219 P.3d 619 ............................................................................................ .32

Reid v. Mutual of Omaha Ins. Co. ,776 P.2d 896 (Utah 1989) ....................................................................................................... .29

Richards v. M&M Capital, LLC ,2012 UT App 59, 273 P.3d 396 .............................................................................................. .16

Salt Lake City S. R.R. Co. v. Utah State Tax Commn, 1999 UT 90, 987 P.2d 594 ................................................................................................ .19, 20

Shaia v. City of Richmond ,153 S.E.2d 257 (Va. 1967)...................................................................................................... .21

T- Mobile USA, Inc. v. Utah State Tax Commn ,2011 UT 28, 254 P.3d 752 ................................................................................................ .22, 23

Taylor Natl, Inc. v. Jensen Bros. Constr. Co. ,641 P.2d 150 (Utah 1982) ......................................................................................................... .8

TruGreen Cos., L.L.C. v. Mower Bros., Inc. ,2008 UT 81, 199 P.3d 929 ...................................................................................................... .19


8/48

vii

Truong v. Holmes ,2009 UT App 212, 2009 WL 2331871 (Utah Ct. App. July 30, 2009) ...................... .13, 32, 34

Wells Fargo Bank NA v. Cox ,2012 UT App 136, 279 P.3d 841 ............................................................................................ .16

STATE STATUTES

Utah Code Ann. 15-1-1 .................................................................................................... .2, 13, 34

Utah Code Ann. 70A-9a-204 ..................................................................................................... .30

Utah Code Ann. 78B-6-802 ....................................................................................................... .32

Utah Code Ann. 78B-6-808 ................................................................................................ passim

Utah Code Ann. 78B-6-811 ................................................................................................ passim

Utah Code Ann. 78B-6-812 ....................................................................................... .4, 10, 12, 14

R ULES

Utah R. App. P. 4 .......................................................................................................................9, 10Utah R. App. P. 5 ...................................................................................................................... .9, 10

Utah R. App. P. 8 .......................................................................................................................... .10

Utah R. Civ. P. 54 ............................................................................................................... .9, 10, 11

Utah R. Civ. P. 62 .................................................................................................................. passim

O THER AUTHORITIES 49 Am. Jur. 2d Landlord and Tenant 278 .................................................................................. .19

60 Am. Jur. 2d Payment 48 ........................................................................................................ .29

36A C.J.S. Forcible Entry & Detainer 75 ................................................................................. .19


9/48

viii

Christopher Smart, Will Park City Mountain Resort have a ski season? Maybe , SaltLake Tribune, July 28, 2014 ............................................................................................... .4, 15

Nan C. Noaker, Resort Heads Cumming and Katz: talking but deadlocked , Park Record,May 30, 2014 ............................................................................................................................ .3

Restatement (Second) of Property, Land. & Ten . 14.5, cmt. c & illus. 3 (1977) ............18, 29,30


10/48

1

INTRODUCTION

Substantial damages have accrued and will continue to accrue from GPCC/GPIs use of

Taliskers property since April 30, 2011. Even though the Court ruled that GPCC/GPI have been

unlawfully detaining Taliskers property and ordered the property restored to Taliskers

possession, GPCC/GPI seek to stay that order, remain on the property and continue to generate

revenue and profits from its use. For that to be allowed, while the litigation continues in this

Court and in the appellate courts, the required bond must be enough to assure payment to

Talisker of its expected damages. As will be fully explained below and in light of the damages

from GPCC/GPIs use of the property in the past and while the litigation is c ompleted, if

GPCC/GPI want to remain in possession of Taliskers property, they must provide adequate

assurance of full payment when this Courts judgments are affirmed on appeal, which is a bond

of no less than $----- million, as summarized in the chart below. 1

Damages incurred for past use and occupation Damages during trial & appeal

FY 12 FY 13 FY 14 May-Aug Fees Subtotal 1st year 2nd year Fees Total $----M $----M $----M $----M $---M $----M $----M $----M $---M $-----M

This figure reflects rent during the period of over five years that GPCC/GPI will have been in

unlawful detainer (at approximately 50% of GPCC/GPIs earnings and management fees each

year), plus the statutorily required trebling (from September 2013), interest, and attorneys fees.

The size of the bond is merely the impact of PCMR choosing to remain on the land in hopes their1 GPCC/GPI designated its financial information as either Attorneys Eyes Only or AttorneysEyes Only Tier 2 under the protective order. The amount of damages owed, and thus, the bondamount, is derived, in large part, from these numbers. Accordingly, Talisker redacted thisinformation from the publicly filed version of this brief. Talisker is very willing to make thesenumbers public, so long as GPCC/GPIs profitability is also disclosed in order to provide fullcontext.


11/48

2

remote chance for appeal is successful, and the statutory disincentives required under Utah law

to discourage unlawful use of an other parties property.

GPCC/GPIs leases with Talisker expired over three years ago, on April 30, 2011. Since

that time, GPCC/GPI have earned in excess of $-- million from their use of Taliskers property

while paying nothing for its occupancy and use, even refusing to pay monies into escrow.

Talisker is owed the reasonable value of the use and occupation of the premises. Forrester v.

Cook , 292 P. 206, 214 (Utah 1930). Virtually all of the ski terrain at the Resort belongs to

Talisker, and according to GPCC/GPIs own experts, over 77% of the Resorts revenue is

directly attributable to their use of Taliskers property. 2 In addition, since the time that

GPCC/GPI were served with a Notice to Quit on August 28, 2013, it is mandatory upon the

court to treble the amount owed. Fowler v. Seiter , 838 P.2d 675, 679 (Utah Ct. App. 1992)

(internal quotation marks omitted). Talisker is also owed prejudgment interest at 10 percent

annually, Utah Code Ann. 15-1- 1(2), and entitled to its attorneys fees. Utah Code Ann.

78B-6-811(3). GPCC/GPI already owe nearly $-- million in damages, and the number will

continue to climb so long as GPCC/GPI occupy Taliskers property.

The damages owed to Talisker arise from GPCC/GPIs willful decision to remain in

possession of Taliskers property unlawfully, with full knowledge since April 2011 that they had

failed to provide the required notice under the lease. GPCC/GPI chose to remain in possession

of Taliskers property unlawfully after November 2012, when this Court dismissed a number of

their claims and cast doubt on the other remaining ones. GPCC/GPI chose to remain in

2 See Ex. A, Declaration of Philip Cook, Ex. 3, Declaration of Gregory D. Adams (June 12,2014) 9 (Adams Declaration); see also Ex. A, Cook Decl., Ex. 4, Declaration of Gil A.Miller (June 12, 2014), Schedule 2.1 (Miller Declaration).


12/48

3

possession of Taliskers property unlawfully after being served a Notice to Quit in August 2013,

with full knowledge that under Utah law they would be liable for treble damages if they were

found to be in unlawful detainer. And GPCC/GPI have chosen to remain in possession of the

property unlawfully, even after this Court dismissed all remaining relevant claims in May 2014.

Taliskers damage claim, including trebling, interest and attorneys fees cannot be a surprise to

GPCC/GPI and are not being f oisted on them. The damage claim results from GPCC/GPIs

calculated and deliberate business decision to remain in possession of Taliskers property

without a valid lease.

GPCC/GPI still refuse to leave and instead seek a stay of the Courts restitution or der

pending appeal. The chances that this Courts decisions will be reversed are exceedingly remote.

As the Court observed, [i]t is indeed rare to have not one, but four, Utah Supreme Court cases

more or less directly on point here, dating back more than a century with recent affirmation.

May 21, 2014, Memorandum Order & Opinion 52. Indeed, GPCC/GPIs CEO publicly admitted

that a reversal would require the Supreme Court to change the law. 3 In the meantime, both

Talisker and its new tenant, Vail, are harmed by their inability to make productive use of

Taliskers property. Vail is prevented from making upgrades and moving forward with its plan

to combine Park City Mountain Resort (PCMR) with Canyons, and both Talisker and Vail are

deprived of the substantial revenue they could earn if Vail were able to use this property for its

operations.

3 See Nan C. Noaker, Resort Heads Cumming and Katz: talking but deadlocked , Park Record,May 30, 2014 (We think the law in the state is inadequate for this situation. Half the states inthe union dont allow this kind of thing to happen, Cumming said, referring to Utahs strict leaselaws.).


13/48

4

In light of community concerns created by GPCC/GPIs threats to use their ownership of

the base to block access to the mountain, Talisker chose not to oppose the stay provided that

GPCC/GPI post a bond sufficient to ensure that Talisker can collect on the judgment it will be

owed, as required by law. See Utah R. Civ. P. 62(c); Utah Code Ann. 78B-6-812(2)(b).

Despite the tens of millions of dollars a year that GPCC/GPI have made and continue to

make from their use of Taliskers property, GPCC/GPI have indicated that they may not have

sufficient funds to pay the ultimate judgment in this case. Moreover, GPCC/GPI now suggest

that they may not be able to afford an appropriate bond. 4 A review of GPCC /GPIs financial

information confirms that the Resorts profits from the past three years have been dissipated to

pay dividends to shareholders, affiliated debt payments, and excessive management fees to its

parent. The named party that operates the Resort, GPCC (Greater Park City Company), is a

Powdr Corp. subsidiary and retains almost none of the money generated by the Resort.

According to GPCCs balance sheet (as of April 26, 2014), it has a --------------------- and only $-

million of current assets (counting its inventory and receivables owed to it). Ex. A, Cook Decl.,

Ex. 4, Miller Declaration, Schedule 3. The other named party, Greater Properties, Inc. (GPI)

is, according to sworn testimony from its president, a shell corporation for Cumming Investment

Company with no assets, other than the now-expired Talisker Leases. Ex. C, Ireland Dep. 8:5-9,

Dec. 17, 2013.

4 Pls. Stay Mem. 19 (Plaintiffs will post security in any amount required by the Court whichPlaintiffs are able to afford); Christopher Smart, Will Park City Mountain Resort have a ski

season? Maybe , Salt Lake Tribune, July 28, 2014, at A1 (Allan Sullivan, who represents[GPCC/GPI], said Monday that his client may be amenable to posting a bond if it is not toosteep.).


14/48

5

In any event, GPCC/GPIs protestations about their ability to obtain financing for a bond

are irrelevant to the calculation of a proper bond. See Ex. D, Hrg. Tr. 64:18-25, June 19, 2014.

And the concern about GPCC/GPIs willingness to provide an appropriate bond only heightens

Taliskers need for full security: the purpose of a bond is precisely to protect the judgment

against such poorly capitalized companies. For a stay to issue, GPCC/GPI must post a bond

sufficient to ensure Taliskers right to recover the damages it has incurred to date, as well as the

damages that will be owed for the period until GPCC/GPIs appeal is decided. Needles s to say,

in the unlikely event that GPCC/GPI prevail in their appeal, Talisker will not collect on the bond.

But if GPCC/GPI want to remain in possession of Taliskers property, a bond must be posted

sufficient to ensure that Talisker is not left with an empty judgment.

In Section I, we explain the legal framework for calculating the bond. In Section II, we

set forth the basis fo r Taliskers calculations of the annual reasonable value of the use and

occupation of the premises. Forrester , 292 P. at 214. In Section III, we analyze GPCC/GPIs

mitigation argument that they should be allowed to use and occupy Taliskers property for free

since May 2013 because of the Canyons transaction between Vail and Talisker. Finally, in

Section IV, we set forth the additional statutory damages that will be included in a final

judgment and also must be protected by a bond.


15/48

6

ARGUMENT

I. GPCC/GPI MUST POST A BOND SUFFICIENT TO ENSURE THAT TALISKERWILL BE ABLE TO RECOVER THE FULL AMOUNT OF THE DAMAGES ITWILL BE OWED FOR GPC C/GPIS WRONGFUL USE OF ITS PROPERTYSINCE APRIL 30, 2011.

A. Talisker Has Agreed To A Stay Of The Order Of Restitution Pending AnAppeal Despite The Appeals Lack Of Merit And The Substantial Hardshi psA Stay Imposes.

The unlawful detainer statute exists to provide a speedy resolution on the issue of

possession. Osguthorpe v. Wolf Mountain Resorts, LC, 2010 UT 29, 23, 232 P.3d 999. The

statute expressly requires that execution upon the judgment shall be issued immediately after

the entry of the judgment, Utah Code Ann. 78B-6- 811(4)(a), and that the judgment shall

include an order for the restitution of the premises. Utah Code Ann. 78B-6-811(1)(b). A stay

is an intrusion into the ordinary processes of administration and judicial review, and is not a

matter of right, even if irreparable injury might otherwise result to the appellant. Nken v.

Holder , 556 U.S. 418, 427 (2009) (internal quotation marks omitted). Taliskers decision not to

oppose a stay during the pendency of an appeal is an extraordinary concession.

That is especially so because the Co urts May 21 decision left no question about the

ultimate fate of this case. See May 21, 2014, Memorandum Order & Opinion 40 (The Geisdorf

cases apply here with full force.); id . at 54 (And despite full opportunity to conduct

comprehensive discovery, the PCMR Parties cannot point to anything sufficiently specific or

unambiguous to surmount the summary judgment hurdle); id. at 56 (Simply put, there is no

evidence pointing to any actual reliance whatsoever.). GPCC/GPI have essentially no chance of

success on appeal. On the strict compliance issue, a favorable outcome for GPCC/GPI would

require the Utah Supreme Court to overturn 100 years of settled law that was recently affirmed in


16/48

7

cases the Court described as more or less directly on point. Id . at 52. To overturn the Courts

decision on the lease renewal issues, the appellate court would have to question the Courts

interpretation of the facts on a full record and overlook GPCC/GPI s failure to provide any

facts to support their allegations.

Talisker, and its prospective tenant Vail, suffer substantial harm from being deprived of

the immediate right to possession of the subject premises. Phoenix Assoc., Inc. v. Pagoda Intl,

Inc. ( In re Pagoda Intl, Inc .), 26 B.R. 18, 22 (Bankr. D. Md. 1982). Talisker has been deprived

of its property for over three years at this point, and during that time GPCC/GPI have refused to

pay a reasonable value for the use of the property, or even to pay that amount into escrow. Cf. In

re Liggett , 118 B.R. 219, 222-23 (Bankr. S.D.N.Y. 1990) (denying stay of eviction pending of

appeal, where, among other factors, tenant did not make any payments for use and occupancy in

the months the case was pending). Meanwhile, Vail has been (and will continue to be) deprived

of its ability to realize revenue from the PCMR property to which it is entitled through its

Canyons lease with Talisker, and Talisker has consequently been deprived of receiving the

additional percentage rent that would result from that operation.

These harms are real, continuing and escalating. Despite these harms, Talisker is

sensitive to community concerns should GPCC/GPI block access, and thus does not oppose a

stay so long as GPCC/GPI post a bond sufficient to ensure Talisker will be able to collect on its

judgment after this Court is affirmed on appeal.


17/48

8

B. GPCC/GPI Are Required To Post A Bond Whether Or Not They Pursue AnInterlocutory Appeal: A Bond Is Required Under Rule 62 And The UnlawfulDetainer Statute.

At the telephonic status conference on August 6, 2014, the Court observed that there is

some uncertainty as to whether GPCC/GPI will pursue an interlocutory appeal and asked the

parties to address whether the bond amount should be decided under Utah Rule of Civil

Procedure 62 or the unlawful detainer statute. GPCC/GPI have initiated the appeals process, but

have done so in a bizarre way that indicates they may prefer to delay final resolution of

possession for as long as possible. 5 GPCC/GPIs procedural maneuvering cannot change the fact

that whichever standard is applied, a bond is required in an amount sufficient to ensure collection

of the probable damages that will be owed when a final judgment is entered. Talisker believes

that the current procedural posture requires the Court to look to Rule 62 because there is an

interlocutory appeal pending. Talisker is confident in its legal position, and welcomes prompt

appellate review of the Courts decision. In the event GPCC/GPI decide not to pursue an

interlocutory appeal, the Court should look to the unlawful detainer statute to determine the

bond. Either way, if GPCC/GPI are intent on delay, Utah law requires that they post a bond to

cover the resulting risks and costs.

5 So long as there is some remote chance that this Court may be reversed, GPCC/GPI cancontinue to assert that they shou ld remain in possession of Taliskers property. Indeed, every

additional ski season it retains possession translates to over $-- million in EBITDAR for GPCC, providing a powerful incentive to delay the litigation process for as long as possible. WhileGPCC/GPI have the right to appeal, Talisker has the right to be protected by a bond to ensurethat it will be able to recover its damages no matter how long GPCC/GPI drag out that process.Indeed, while Talisker has agreed not to oppose a stay, it should be noted that without a pendingappeal, the legal basis for a stay nearly evaporates. The Supreme Court has made clear that atrial court cannot stay its own orders indefinitely. See Taylor Natl, Inc. v. Jensen Bros. Constr.Co. , 641 P.2d 150, 154 (Utah 1982) (vacating indefinite stay of execution).


18/48

9

1. Because there is an interlocutory appeal pending, Rule 62 is theproper framework for determining a bond.

The Court entered judgment that GPCC/GPI are in unlawful detainer of Taliskers

property. Talisker does not oppose immediate appellate review of that decision or any other

decision of this Court. The current procedural posture is as follows:

GPCC/GPI allowed the twenty-day deadlines under Rule of Appellate Procedure5 to pass without seeking permission from the Utah Supreme Court to appeal onan interlocutory basis.

On July 10, 2014, GPCC/GPI filed a Notice of Appeal under Appellate Rule 4, but also filed a motion for summary disposition before the Supreme Courtquestioning the Courts jurisdiction. The Supreme Court has not ruled on themotion, and the appeal is currently docketed and pending.

In an unusually equivocal manner, GPCC/GPI also filed a motion, on June 17,2014, with this Court seeking Rule 54(b) certification, but argued against theirown motion.

Talisker does not oppose Rule 54(b) certification, and believes the Court has the authority

to do so under Bichler v. DEI Systems, Inc. , 2009 UT 63, 220 P.3d 1203, in which the Supreme

Court held: Recognizing the important public policy of providing a speedy resolution of

possession, we hold that in an unlawful detainer action with multiple claims or counterclaims, a

Rule 54(b) entry of final judgment resolving the issue of possession is proper when it includes all

claims and counterclaims that are necessary to determine lawful possession of the property. Id .

30. 6 In the event the Supreme Court determines Rule 54(b) certification was not proper,

Appellate Rule 5 provides that a ti mely appeal from the certification may be considered by the

6 Just as in Bichler , the remaining damages claims in this case have no bearing on the question of possession. Notably, the Supreme Court in Bichler , after citing the [n]ormal[] approach tofinality in Kennecott Corp. v. State Tax Commn , 814 P.2d 1099 (Utah 1991), announced thespecial application to unlawful detainer actions quoted above, motivated by the public policy infavor of speedy resolution. 2009 UT 63, 30.


19/48

10

appellate court as a petition for permission to appeal an interlocutory order. Utah R. App. P.

5(a). In other words, GPCC/GPI s failure to previously seek leave to appeal within twenty days

from the various decisions related to possession can be cured if they take the appropriate steps to

appeal after this Courts Rule 54(b) certification. Again, Talisker will not oppose any efforts to

seek immediate review of this Courts decisions.

A Rule 4 appeal is currently pending and there is a clear path under Rule 54(b) and

Appellate Rule 5 to obtain interlocutory review. Accordingly, the bond should be analyzed

under Rule 62(c), which governs stays of injunctive relief (such as an order of restitution)

pending appeal. See, e.g. , Jensen v. Schwendiman , 744 P.2d 1026, 1027 (Utah Ct. App. 1987)

(holding motion to stay order suspending driving privileges was request for order granting an

injunction during the pendency of an appeal under Appellate Rule 8(a), which tracks Rule

62(c)).

2. In the alternative, GPCC/GPI must post a possession bond under theunlawful detainer statute.

Even without a pending appeal, a bond would be required under the unlawful detainer

statute to stay the order of restitution pending a manner of enforcement hearing. Utah Code Ann.

78B-6-812(2)(b); Utah Code Ann. 78B-6-808(4)(b)(vi). Under Section 78B-6-812, the Court

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).

Section 78B-6- 808 similarly provides that [i]f the court allows the defendant [here,

GPCC/GPI] to remain in possession and further issues remain to be adjudicated between the


20/48

11

parties, the court shall require the defendant to post a bond as required in Subsection (4)(b).

Utah Code Ann. 78B-6-808(6).

C. The Purpose And Manner of Computing The Bond Is The Same UnderEither Rule 62 Or The Unlawful Detainer Statute.

The purpose and approach to determining the bond is the same under Rule 62 and the

unlawful detainer statute. First, the bond must ensure that Talisker will be able to collect on the

probable amount of judgment that will be owed. As Taliskers damages are ongoing and rapidly

accruing, it is particularly important that the bond cover both already-incurred and prospective

damages. GPCC/GPI cannot continue to reap the benefits of their unlawful occupation if they

cannot post a bond sufficient to pay for the damages already incurred and those that will be

created by their refusal to vacate. If they will not post a bond, GPCC/GPI must return possession

of the property to its owner so that the damage does not continue to grow. Second, the questions

that GPCC/GPI have raised over their ability to afford an appropriate bond only serve to

reinforce the requirement for them to post sufficient security in order to obtain a stay and retain

possession as long as they can. Third, in setting the amount of the bond, the Court must make a

preliminary determination as to the probable amount of the judgment.

1. The bond must ensure that Talisker can collect on a judgment.

Under Rule 62(c), a stay will be granted only upon such conditions as [the court]

considers proper for the security of the rights of the adverse party. Utah R. Civ. P. 62(c). 7

7 See also Utah R. Civ. P. 62(h) (granting stay of judgment certified as final under Rule 54(b)upon such conditions as are necessary to secure the benefit, thereof to the party in whose favorthe judgment is entered.); J. Perez & CIA., Inc. v. United States , 747 F.2d 813, 815 (1st Cir.1984) (We need not decide definitely, however, which subsection applies, for the dis trict court

possesses adequate power under Rule 62 to require a bond that will protect an enforceable judgment in favor of its winner, and protect the winner from any subsequent harm suffered


21/48

12

Generally, proper security consists of a bond in the full amount of the judgment, plus

protection for any harms incurred as a result of the pendency of the stay whether or not the

judgment is monetary in nature. J. Perez & CIA., Inc. v. United States , 747 F.2d 813, 815 (1st

Cir. 1984); see also United States v. OCallaghan , 805 F. Supp. 2d 1321, 1324 (M.D. Fla. 2011)

(noting long history of requiring full security during an appeal). A supersedeas bond protects

a judgment creditors interest by providing a surety to whom the creditor may look should the

appeal fail and the judgment debtors financial position so deteriorate between judgment and

disposition of the appeal that payment of the judgment by the debtor becomes impossible.

Diversified Holdings, L.C. v. Turner , 2002 UT 129, 39.

The same is true under the unlawful detainer statute. See Utah Code Ann. 78B-6-

812(2)(b). The court shall approve the bond in an amount which is 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). The

damages which may result to the plaintiff are defined by the statute and Supreme Court

precedent. Utah Code Ann. 78B-6- 811(2) provides that [t]he jury or the court, if the

proceeding is tried without a jury or upon the defendants default, shall also assess the damages

resulting to the plaintiff from any of the following: . . . (b) forcible or unlawful detainer.

Longstanding Utah Supreme Court precedent establishes that [r]ental value or reasonable value

of the use and occupation of the premises becomes an element of damages for retaining

through appellate delay. (citation omitted)).


22/48

13

possession. This is not rent , it i s damages. Forrester v. Cook , 292 P. 206, 214 (Utah 1930)

(emphasis added). 8

2. If GPCC/GPI cannot afford an adequate bond, damages cannotcontinue to accrue and no stay can issue.

GPCC/GPI have a choice to make: either return possession of the property to Talisker or

post a bond sufficient to ensure that Talisker will be paid for their use of the property. As of

now, GPCC/GPI owe more than three years of payment for their use and occupation of

Taliskers property, and the last of those years is trebled. It is also responsible for significant

attorneys fees and prejudgment interest. The amount owed is already very substantial, and

recovery of those damages is uncertain. Although they have made --------------------------- in the

past few years, GPCC/GPI refused to set any money aside in escrow and have instead paid

substantial dividends to their owners, serviced affiliated debt payments, and paid excessive

management fees to their parent corporation. As of April 26, 2014, GPCC had ---------------------

--------- and only $- million of current assets (counting its inventory and receivables owed to it).

Ex. A, Cook Decl., Ex. 4, Miller Declaration, Schedule 3. Moreover, once the order of

restitution is enforced, GPCC s ability to survive as a going concern outside of bankruptcy is in

doubt (and GPI will be left as an asset-less shell). No one disputes that GPCC will be a much

8 As discussed in Section IV, the statute provides that from the date the Notice to Quit wasserved, it is mandatory upon the court to render judgment for three ti mes the amount of

damages thus assessed. Fowler v. Seiter , 838 P.2d 675, 679 (Utah Ct. App. 1992) (quoting Forrester , 292 P. at 214); see Utah Code Ann. 78B-6-811(3). The judgment must also includethe rent, for three times the amount of the damages assessed under Subsections (2)(a) through(2)(e) and for reasonable attorney fees. Id . And, like any other money judgment under Utahlaw, unlawful detainer damages are subject to prejudgment interest at 10 percent annually. UtahCode Ann. 15-1-1(2); see also Truong v. Holmes , 2009 UT App 212, 2009 WL 2331871, at *3(Utah Ct. App. July 30, 2009) (unpublished) (applying prejudgment interest to the trebledamages portion of the unlawful detainer award in addition to the base rent portion).


23/48

14

smaller and less profitable entity. GPCC/GPIs own expert indicated lost profits of over $--

million next year alone . Deterioration at these levels calls into question GPCCs ability to

service its existing debt.

Nevertheless, GPCC/GPI want to keep the meter running until their appeal is decided. If

GPCC/GPI cannot secure Taliskers right to payment for their use of Taliskers property, no stay

can issue under either Rule 62 or the unlawful detainer statute. See In re Liggett , 118 B.R. at

222-23 (Bankr. S.D.N.Y. 1990) (denying stay of eviction pending of appeal, where, among other

factors, tenant did not make any payments for use and occupancy in the months the case was

pending); Utah Code Ann. 78B-6-812(2)(b) (court may not stay enforcement of the restitution

order unless: (i) the defendant furnishes a corporate bond). Simply put, the bond ensures that

Taliskers ultimate judgment is not likely to be worthless. 767 Third Ave. Assocs. v.

Permanent Mission of Republic of Zaire to United Nations , 787 F. Supp. 389, 396 (S.D.N.Y.

1992) (denying stay of eviction against financially troubled tenant incurring rapidly escalating

damages); see also Sletten v. Navellier Series Fund , No. 3:00-cv-0167, 2006 WL 2335566, at *2

n.1 (D. Nev. Aug. 10, 2006) (denying further stay, where judgment has now likely exceeded the

full amount of the bond). A bond should secure the judgment throughout the appeal process

against the possibility of the judgment debtors insolvency. Grubb v. Fed. Deposit Ins. Corp .,

833 F.2d 222, 226 (10th Cir. 1987); see also Triple Net Inv. IX, LP v. DJK Residential, LLC ( In

re DJK Residential, LLC ), No. 08-10375 (JMP), 2008 WL 650389, at *5 (S.D.N.Y. Mar. 7,

2008) (denying stay where party unable to post bond has not demonstrated why this Court

should deviate from the ordinary full security requirement.).


24/48

15

In an interview with the Salt Lake Tribune, GPCC/GPI s counsel conceded, as he must,

that [w]e have to post a bond to get a stay of the eviction order. Christopher Smart, Will Park

City Mountain Resort have a ski season? Maybe , Salt Lake Tribune, July 28, 2014, at A1. See

also Hrg. Tr. 64:18- 25, June 19, 2014 (explaining that if the bond is more than the defendant

can afford . . . Im not aware that that should prevent the judgment from going forward.); id .

65:13- 19 (MR. SHAPIRO: Right, and just as the Co urt indicated, and if the Court decides at

that point that there should be a further stay upon posting of a sufficient bond, and theyre unable

to do that, then presumably theres not a stay. THE COURT: That would be correct. Thats how

it works.).

Moreover, GPCC/GPI s arguments about ability to pay ring hollow when its principals

Powdr Corp. and the Cumming family have the financial wherewithal to post a bond. See

Aldasoro v. Kennerson , 915 F. Supp. 188, 192 (S.D. Cal. 1995) (requiring impoverished

plaintiffs to post bond for a stay, where litigation was funded by federally funded legal services

organization). The Cummings and Powdr Corp. cannot be allowed to pay themselves millions of

dollars from GPCC/GPI s revenues, and then insulate themselves from judgment by placing their

GPCC subsidiary in bankruptcy. If the plaintiffs want to gamble on an appeal, they must do so

with their own (or their corporate parents) money, not Taliskers.

3. The Court must estimate the probable amount of damages that will beowed to Talisker at the end of the appellate process.

GPCC/GPI s requested stay comes at a time before the Court has finally adj udicated the

damages claims. That is so because the number one priority in the unlawful detainer context is

to return possession of property to its rightful owner as expeditiously as possible. Osguthorpe,

2010 UT 29, 23. The statute contemplates a bifurcated process where possession is determined


25/48

16

and enforced, and the damages are worked out later. See, e.g. , Wells Fargo Bank NA v. Cox ,

2012 UT App 136, 3, 279 P.3d 841; Richards v. M&M Capital, LLC , 2012 UT App 59, 3,

273 P.3d 396. This case is somewhat unusual because GPCC/GPI have chosen to remain in

possession of the property (with the trebled meter running), after the Court determined they have

no right to possession. As noted above, GPCC/GPI cannot enjoy the property without payment

for that period, dissipate corporate assets, and then declare themselves judgment-proof through

bankruptcy. Thus, the law requires GPCC/GPI to post a bond sufficient to ensure Talisker is

able to recover its damages. If it cannot, then it must return the property to Talisker so that

damages that likely can never be collected do not continue to accrue.

Although bonds most often are used to protect final monetary judgments, it is also

common for a court to be in the position of setting a bond to protect against damages that will be

decided later. Indeed, when this arises in the unlawful detainer context, even before issues of

possession are decided, the statute requires courts to estimate the probable amount of damages.

See Utah Code Ann. 78B-6-808(2)(b)(iv) (setting standard for possession bond). A similar

issue arises in other contexts, including the issuance of preliminary injunctions, where the court

must set a bond to protect the enjoined party for the likely harms resulting from an improperly

issued injunction. See, e.g. , Guzzetta v. Serv. Corp. of Westover Hills , 7 A.3d 467, 469 (Del.

2010) ([T]he trial court should set the bond at a level likely to meet or exceed a reasonable


26/48

17

estimate of potential damages). 9 The current situation in which GPCC/GPI have essentially

sought to enjoin the return of Taliskers property is closely analogous, although with the

obvious difference that here Talisker already has a judgment in its favor.

In setting an appropriate bond, courts have discretion to employ a variety of means in

various contexts to estimate probable damages. The goal in this context is not to calculate the

precise amount of damages owed, but rather to arrive at an estimate that allows for a bond

sufficient to ensure collection of the eventual judgment. See, e.g. , Triangle Oil & Gas, Inc. v.

Petsec Energy, Inc ., No. Civ. A. 06-0251, 2006 WL 1751209 (W.D. La. June 20, 2006) (setting

injunction bond of $700,000, based on briefing). 10 Moreover, because Talisker might not

recover anything beyond the bond, the Court should err on the high side. See Mead Johnson &

9 See also, e.g. , Cambridge Mut. Fire Ins. Co. v. Spinosa , 972 N.E.2d 1063, 2012 WL 3599828,at *2 (Mass. App. Ct. Aug. 23, 2012) (The Superior Court has inherent equitable authority toorder a bond as security for a likely liability for a liquidated or measurable amount ofdamages.); President Casinos, Inc. v. Columbia Sussex Corp. ( In re President Casinos, Inc .),360 B.R. 262, 266 (B.A.P. 8th Cir. 2007) ([T]he bond must bear a rational relationship to thedefendants probable damages.). 10 See also, e.g. , Equip. Leasing Co. v. W. Union Tel. Co ., 786 F.2d 794, 801 (7th Cir. 1986)(Easterbrook, J., concurring) (finding full hearing inappropriate where hearing would be socomplex, and of so little value in relation to the gains from a little extra precision); PharmaciaCorp. v. Motor Carrier Servs. Corp ., Civ. No. 04-3724 (GEB), 2008 WL 852255, at *4 (D.N.J.Mar. 28, 2008) (setting supersedeas bond of $3 million six times current damages despite noclear way to ascertain scope of prospective damages); SMC Corp., Ltd. v. Lockjaw, LLC , 481 F.

Supp. 2d 918, 930 (N.D. Ill. 2007) (setting injunction bond of $500,000, based on estimated lossof 15% of profits); N. Am. Prods. Corp. v. Moore , 196 F. Supp. 2d 1217, 1232 (M.D. Fla. 2002)(setting injunction bond of $500,000, based on estimated allocation of gross revenues); Gordon

Johnson Co. v. Hunt , 109 F. Supp. 571, 576 (N.D. Ohio 1952) (approximating bond byestimating revenues and profit margin over six months). Cf. Eide v. Bierbaum , 472 N.W.2d 193,194 (Minn. Ct. App. 1991) (The bond amount represents a prospective view of dama ges and nota determination of actual damages. As a result, we will not review the amount of the bond withthe same degree of scrutiny involved in reviewing a determination of actual damages.).


27/48

18

Co. v. Abbott Labs ., 201 F.3d 883, 888 (7th Cir. 2000) (explaining standard for preliminary

injunction bond).

II. THE CALCULATION OF THE REASONABLE VALUE OF GPCC/GPIS USEAND OCCUPATION OF TA LISKERS PROPERTY

As noted above, Talisker is entitled to recover the reasonable value of the use and

occupation of the premises by GPCC/GPI. Forrester v. Cook , 292 P. 206, 214 (Utah 1930).

See also Pingree v. Contl Grp. of Utah, Inc ., 558 P.2d 1317, 1322 (Utah 1976) (reasonable

rental value). 11 Three related principles guide the analysis.

First , the damages are restitution for GPCC/GPIs wrongful use of the property and

therefore must focus on the value that GPCC/GPI derived from the property. See Restatement

(Second) of Property, Land. & Ten . 14.5, reporters note 2 (1977) (landlords entitlement to

recover reasonable value during a holdover tenancy simply requires the tenant to pay for what

he got); AHCI, Inc. v. Lamar Adver. of Tenn., Inc ., 898 S.W.2d 191, 195 (Tenn. 1995) ([I]n

accordance with the traditional equitable doctrines of quantum meruit or unjust enrichment, a

tenant is liabl e for fair market rental value); Am. Anthracite & Bituminous Coal Corp. v.

Leonardo Arrivabene, S.A ., 280 F.2d 119, 126 (2d Cir. 1960) ([T]he measure of compensation

to which the lessor is entitled is . . . the fair value of the benefit conferred upon the estate . . .

rather than the compensation of the creditor for the loss to him.).

Second , the value that GPCC/GPI received stems from the use that they made from

Taliskers property and not what other uses might be made of that property by someone else in a

different circumstance. Determining the value GPCC/GPI derived from the use of the property

11 These damages include not only the fair rental value of the real estate, but also depreciationand any other harm to personal property. Aris Vision Inst., Inc. v. Wasatch Prop. Mgmt., Inc. ,2006 UT 45, 20, 143 P.3d 278.


28/48

19

is not a hypothetical exercise. Taliskers property was used as a vital asset in an integrated

resort, and the value GPCC/GPI received from that property is reflected in GPCCs audited

financial statements. See 49 Am. Jur. 2d Landlord and Tenant 278 (In determining rental

value, it is proper to consider that the premises involved has a greater value for a certain purpose

than for another, even though such rental value would far exceed that for the original use of the

premises.); see also Salt Lake City S. R.R. Co. v. Utah State Tax Commn, 1999 UT 90, 21,

987 P.2d 594 (reasoning that in taxation context unitary appraisals value the synergistic nature

of a businesss collective property.); Beaver Cnty. v. WilTel, Inc ., 2000 UT 29, 40, 995 P.2d

602 ([F]air market value reflects the benefit stream created by unitary operation of tangible

property.).

Third , the assets of a company are of value chiefly because of their earning capacity.

Hogle v. Zinetics Med., Inc ., 2002 UT 121, 32, 63 P.3d 80 (internal quotation marks and

alternations omitted). [T]he reasonable value of the rents and profits, or the rental value, of the

land is an element of damage which is generally to be taken into consideration. 36A C.J.S.

Forcible Entry & Detainer 75; see also In re Integrated Health Servs., Inc ., 289 B.R. 32, 36

(Bankr. D. Del. 2003) (adopting experts opinion that fair rental value was approximately 95.7%

of earnings before interest, taxes, depreciation, amortization, and rent, or 70-85% of such

earnings before deduction of management fees). 12 Now that the Court has ruled GPCC/GPIs

12 The Courts dismissal of Taliskers claim for disgorgement of profits does not change theanalysis. As a general matter, even if a defendants profits cannot be directly recovered, theymay be good evidence of damage to the plaintiff. See, e.g. , TruGreen Cos., L.L.C. v. Mower

Bros., Inc. , 2008 UT 81, 17, 199 P.3d 929 (considering profits as a basis for damages resultingfrom the breach of a non-compete clause). Moreover, the Court did not preclude anyconsideration of profits, only their disgorgement as a remedy for Taliskers unjust enrichment


29/48

20

continued possession to be illegal, it is Talisker, not GPCC/GPI, that should be benefitting from

its occupied property. GPCC/GPI are not entitled to profit from their wrongdoing.

Consistent with these principles, and as set forth in greater detail in the accompanying

declaration, Taliskers expert has calculated the reasonable value of GPCC/GPIs use and

occupancy, reconciling standard cost-, income-, and market-based valuation approaches. See

Salt Lake City S. R.R. Co. , 1999 UT 90, 14.

Under the cost approach, discussed in Section II.B., reasonable rent is based onland value plus the current cost of reproducing or replacing improvements.Although GPCC/GPI were on the land unlawfully, this approach also credits themwith a reasonable net profit for operating the business.

Under the income approach, discussed in Section II.C, a reasonable rent isdetermined by allocating the income streams attributable to Talisker, andsubtracting out any expenses incurred by GPCC/GPI. Again, althoughGPCC/GPI were on the land unlawfully, this approach also credits them with areasonable net profit for operating the business.

Under the market approach, discussed in Section II.D, comparable commercialreal estate transactions with known rental prices are identified, and adjusted toaccount for differences between the comparable property and the Talisker

property.

claim. Talisker is not seeking to disgorge all of the profits that GPCC/GPI earned, only the portion of their earnings derived from their use and occupation of Taliskers property. Nor is

Talisker seeking to recover any above-market windfalls that GPCC/GPI may have received. Cf. Janigan v. Taylor , 344 F.2d 781, 786 (1st Cir. 1965) (It is more appropriate to give thedefrauded party the benefit even of w indfalls than to let the fraudulent party keep them.). Infact, even with respect to the monies GPCC/GPI earned from Taliskers property, Talisker hascredited GPCC/GPI a five-percent management fee to compensate for their wrongful operationof the premises, something it does not need to do. Cf. Sheldon v. Metro-Goldwyn Pictures Corp. ,106 F.2d 45, 51 (2d Cir. 1939) ([A ] plagiarist may not charge for his labor in exploiting what hehas taken.).


30/48

21

A. Resort Income

As the first step of both the cost and income approaches, it is necessary to determine the

amount of income generated by the entire resort that will then be allocated between the property

owners. 13 Taliskers expert has termed this amount of resort income adjusted EBITDAR. 14

This reflects the value of the tenants use of the property itself (which flows to the landlord as

rent) and removes the value of the operation of the resort (which flows to the operator through

management fees). A standard valuation approach for commercial real estate is to calculate

reasonable rent as gross rents and profits minus the expense of management and operation.

Forrester , 292 P. at 211 (internal quotation marks omitted). The Supreme Court of Virginia has

thus explained:

The annual fair economic rent is an amount that a typical buyershould be willing to pay for the right to use and occupy the

premises for one year. Such a buyer might reasonably be expectedto pay annually for the . . . leasehold interest a price that he couldrecoup from the operation of the [business] for one year after

paying operating expenses and setting aside a reasonable net profit.

Shaia v. City of Richmond , 153 S.E.2d 257, 265 (Va. 1967).

Taliskers expert computed adjusted EBITDAR based on the reported EBITDA on

GPCCs financial statements, and made three adjustments: 15

13 This step is unnecessary in the market approach, as the tenants reasonable net profit isimplicitly factored into the rent set for the comparable lease.14 EBITDAR is a standard measure of income, and is an acronym for earnings before interest,taxes, depreciation, amortization, and rent.15 Because the question is the reasonable value of GPCC/GPIs actual use and occupancy,Taliskers expert has relied on GPCC/GPIs actual fi nancial data in formulating an estimateunder the cost and income approaches. Such a methodology is not dependent on speculationabout PCMRs future growth, and provides a reliable estimate of PCMRs value over the pastthree years.


31/48

22

(1) The Resorts financials include rents paid (or due) as an expense, whichimproperly decreases overall resort income for the purposes of estimatingreasonable rental value. Rents paid (or due) to PPI, GPI, and Talisker must beadded back in to avoid double-counting. The question before the court is whatGPCC/GPI should be paying for Taliskers property, not what they are currently

paying (or owe) under related-party or below-market leases.

(2) GPCC/GPIs management fees exceed industry standards. While Taliskersexpert has credited GPCC/GPI with a reasonable management fee, or reasonablenet profit, for operating the resort, GPCC/GPI managements average cut of -% ofrevenues is unreasonably high well above what is standard in the industry. 16 Allocating 5% of revenues to management is more consistent with standardindustry practice. See generally Forrester , 292 P. at 211 (operator entitled to afair compensation for the necessary time and labor involved in the care andmanagemen t of the premises) (internal quotation marks omitted).

(3) Talisker has credited GPCC/GPI for capital expenditures that would ordinarily beneeded to operate the business. Notably, it appears that GPCC/GPI have not beenmaking the investments in the Res orts infrastructure that would be expected froma ski resort operator with a long- term commitment to the property, but Taliskersexpert has nonetheless estimated that average expenditures of 5% of revenuewould be necessary to maintain a resort with PCMR s improvements in propercondition. 17

After these adjustments, the Resorts adjusted EBITDAR ranges from $---- million to $---

---- million, over the past three years. See Ex. A, Cook Decl., Schedule I- 1. Taliskers expert

has used cost and income approaches to accomplish the next step: allocating that value between

the Talisker property and the GPCC/GPI-controlled property. See Osborn v. Tax Commn , 2009

UT App 222, 7, 217 P.3d 274 (reasoning that simply because the . . . sites being valued cannot

be sold separately does not mean there is no way to allocat e the fair market values for those

acres.); cf . T- Mobile USA, Inc. v. Utah State Tax Commn , 2011 UT 28, 5 n.3, 254 P.3d 752

16 Vails Northstar lease, for example, includes a 4% management fee.17 Notably, this is higher than the estimate of ---% , provided by GPCC/GPIs expert, Mr. Miller.


32/48

23

(explaining that in determining value of property for tax purposes, the value of the property is

first calculated as a unit and then apportioned by county or state).

B. Method One: The Cost Approach

Under the cost approach, Taliskers expert loo ked at the value of the assets that Talisker

and GPCC/GPI each contributed to the overall operation of the resort, and divided the adjusted

EBITDAR accordingly. The key assets of the Resort include the land (primarily owned by

Talisker), improvements to the land (owned by both parties), and personal property (owned by

GPCC/GPI). Using a conservative estimate of $8,000 per acre for the PCMR ski terrain (based

on the hypothetical assumption that it were vacant), and excluding the currently undeveloped

White Pine lands, the land contributes approximately $23 million to the equation. See Ex. A,

Cook Decl., Schedule C-1. 18 The depreciated value of Taliskers other assets is approximate ly

$---- million, compared to $---- million in improvements and personal property for GPCC/GPI.

See Ex. A, Cook Decl., Schedule C-2. Together, Taliskers assets comprise -----% of the land

and property value of the entire resort. Using this allocation percentage, reasonable rent for the

past three years ranges from $---- million to $---- million per year. See Ex. A, Cook Decl.,

Schedule C-3.

C. Method Two: The Income Approach

Taliskers expert also looked at the various sources of resort revenue, which are broken

out by department on GPCCs financial statements. Instead of an overall aggregation

percentage, Taliskers expert individually allocated the income from each of these departments

18 The actual market value of this property as improved would be significantly higher, as shown by the annual rent for the PPI land of $----- per acre, which implies a sale value of $------ peracre for the PPI land. See Ex. A, Cook Decl. 10 n.16.


33/48

24

to determine Taliskers share. The reliability of this approach is confirmed by GPCC/GPIs own

expert, Mr. Miller, who used a similar methodology except with more Talisker-favorable

assumptions.

The first step of this approach is estimating the income attributable to each of the

departments. GPCCs financials provide revenue breakdowns, but not expenses. Relying on

industry p rofitability averages, with appropriate adjustments to factor in GPCCs actual

expenses, Taliskers expert calculated the profit attributable to each of the departments. See Ex.

A, Cook Decl., 16.

The second step is allocating the individual income streams between Talisker and

GPCC/GPI.

For mountain- based income streams (ski lift access and lessons),Taliskers expertallocated income on the basis of skier usage, using lift capacity (guests per hour)and vertical transport feet per hour (VTF/H) 19 as proxies. Taliskers expertallocated these capacity measures based on the percentage of the lift located onTalisker property, resulting in an overall allocation of 77.03% to Talisker, whenusing lift capacity, and 83.16%, when using vertical transport feet per hour. Bothmeasures are lower than the allocation percentage selected by Mr. Miller.

For the food and beverage income stream, Taliskers expert allocated income based on the location of the PCMR restaurants, and their relative size. Thisresulted in an overall food and beverage allocation of 45% to Talisker.

For all other income streams (retail, rental/repair, summer, and other), Taliskersexpert allocated the vast majority to GPCC/GPI, recognizing that the base is the

primary source of those revenues.

Under these assumptions, Taliskers overall allocation of income averaged approximately --%,

using the lift capacity allocation, or approximately --%, using the VTF/H allocation (with some

19 VTF/H is an industry-standard measure of skier capacity, calculated by multiplying liftcapacity by vertical rise, for each lift in the resort.


34/48

25

variation by year). See Ex. A, Cook Decl., Schedules I-3, I-4. Again, both of these numbers are

less than GPCC/GPIs experts opinions that 77% of the Resorts revenu e was attributable to

Taliskers property. At these allocation percentages, reasonable rent for the past three years

ranges from approximately $---- million to $---- million per year, using lift capacity, or

approximately $---- million to $---- million, using VTF/H. See id .

D. Method Three: Market Approach

Taliskers expert has also identified three market comparables, the values of which are

largely consistent with the estimates from the income-based approach. 20

1. Northstar 21

Northstar is a mountain resort located in Lake Tahoe, California, with over 3,000 skiable

acres. In 2010, Vail entered into a lease with CNL to operate the Northstar resort. The

consideration was comprised of an annual rent with both fixed and variable components

(summing to $---- million in 2010), and a lump sum payment of $60.2 million. Ex. A, Cook

20 To the extent GPCC/GPI try to rely on Forest Service permits as comparables, that approach isunsupportable because it is based on regulation and not arms-length transactions. All resorts inPark City are operated on private land. The Forest Services process for setting fees is notmarket-based. The Forest Service does not attempt to conduct an individualized assessment ofthe market value of the ski terrain of each ski area. Furthermore, the permit has numerousrestrictions and terms that do not apply to a private lease. See, e.g. , U.S. Forest Service Manual2721.6 (Aug. 4, 2011) (among other conditions, requiring authorization for costly improvementsand permitting inspection for safety); U.S. Forest Service Handbook 2709.11, chp. 10 (Sept. 25,2013) (setting forth permit application and authorization process); U.S. Forest Service Handbook

2709.14, chp. 60, section 61.3 (Apr. 15, 2011) (requiring permit- holder to prepare and annuallyrevise an operating plan that covers all operations authorized by the permit, subject to ForestService approval).21 Taliskers expert relied solely on publicly available information for its assessment of both

Northstar and Canyons and was not provided access to any of Vails confidential or proprietaryinformation. This exercise is not about Vails internal processes, but how these publictransactions support a reasonable market value for GPCC/GPIs use and occupation of Talisker

property.


35/48


36/48

27

transactions value. See Ex. A, Cook Decl., Schedule S-6. This results in an implied rent of

approximately $---- million for Canyons alone. Ex. A, Cook Decl., Schedule S-7.

As with the Northstar comparable, Taliskers expert estimated a comparable rent for the

entirety of PCMR, using several units of comparison. Factoring in these same units of

comparison, Taliskers expert estimated that the total rent for PCMR would be approximately

$---- million, or approximately 39% more than the implied rent for Canyons. The Talisker

portion of that total was estimated in the same way as Northstar, resulting in a reasonable rent

estimate of $---- million per year. See Ex. A, Cook Decl., Schedule S-8.

This analysis also permits direct valuation of the PCMR property. If $---- million is

allocated to the Canyons component, that leaves $---- million of the annual rent to be allocated to

the Talisker-owned portion of the PCMR property itself. Because this is a contingent interest, it

necessarily includes a litigation discount for the risk of not being able to use the property and the

delay in obtaining those rights. The difference between the value of the contingent interest and

the reasonable rent based on the Canyons comparable reflects a discount of approximately 14%.

In any case, this sets a market-based floor for what the reasonable rent of the Talisker property

would be: if a third party in the market is willing to pay over $-- million per year for a contingent

interest, the value of the actual interest unlawfully held by GPCC/GPI must be more than that.

This final point is critical, because rather than a landlord trying to estimate historical market rent

being a purely theoretical exercise, the landlord in this case (Talisker) brought in a prospective

tenant for the same property, providing an arms-length confirmation of its value.


37/48

28

3. PPI Lease

Park Properties, Inc., a corporation initially formed by GPCCs creditors and ultimately

acquired by the Cumming family in 2007, owns approximately 206 acres of ski terrain located

between Taliskers land and the GPCC/GPI base. GPCC leases this land from PPI for $--------

annually, for a per acre price of $----- . Multiplying Taliskers 2,852 acres (excluding the White

Pine lands) by this amount yields an annual rent of approximately $---- million.

E. The Annual Value of GPCC/GPIs Use Of Taliskers Property

The final step in arriving at a valuation is to reconcile the approaches discussed above

into a best-fit estimate. Relying on upon all three of the dif ferent methodologies, Taliskers

expert arrived at a best fit value of $---- million for 2011-12, $----- million for 2012-13, and

$XXX million for 2013-14, with a 2% cost of living increase in revenues for each subsequent

year.

III. GPCC/GPIS MITIGATIO N ARGUMENT IS WITHOUT MERIT

In a letter dated June 4, 2014, related to a discovery dispute, GPCC/GPI argued that

Talisker is not entitled to any damages for unlawful detainer, including the reasonable value of

GPCC/GPIs use of the property, since May 2013 because such damages have no doubt been

fully mitigated by Taliskers agreement to lease the property to Vail. See Reid v. Mutual of

Omaha Ins. Co ., 776 P.2d 896, 906 (Utah 1989). Letter dated June 4, 2014, from A. Sullivan to

J. Lund. Thus, GPCC/GPI argue that they owe nothing for their use of Taliskers property sinceMay 2013, and that they can continue to occupy the property rent-free. This argument is

preposterous.


38/48

29

First and foremost, Talisker cannot mitigate the harm it suffers from GPCC/GPIs

unlawful possession so long as GPCC/GPI remain on the premises. Mitigation in the landlord-

tenant context applies where a tenant vacates early and the landlord is tasked with trying to re-

lease the property to offset the unpaid rent for the period remaining on the lease. See, e.g. , Reid

v. Mutual of Omaha Ins. Co. , 776 P.2d 896 (Utah 1989). GPCC/GPI have not vacated, making

mitigation inapplicable.

Second, GPCC/GPIs argument is contrary to the collateral source rule, which provides

that a wrongdoer may not have his or her damages reduced by proof that the plaintiff has

received or will receive compensation or indemnity for the loss from an independent collateral

source. Mahana v. Onyx Acceptance Corp. , 2004 UT 59, 37, 96 P.3d 893 (affirming district

courts refusal to use a damaged partys previous receipt of bond proceeds to offset the

compensatory damages award) (internal quotation marks omitted); see also Great Am. Ins. Co. v.

R.R. Furniture Salvage of Mobile, Inc. , 162 So. 2d 488, 495 (Ala. 1964) (It is not a defense to

the merits in favor of one withholding money due that the plaintiff has received compensation

from a third party, and this applies in contract as well as in tort.); 60 Am. Jur. 2d Payment 48

(same). GPCC/GPI are not entitled to use the property rent-free by taking credit for payments

made by Vail or any other third party.

Third, that Talisker has secured a new prospective and contingent tenant is of no matter.

Authorities recognize that landlords have the right to proceed against holdover tenants even after

a new tenant has been secured. See Restatement (Second) of Property, Land. & Ten . 14.5, cmt.

c & illus. 3 (1977). In such circumstances, any potential for double recovery is addressed by the

landlords obligation to account to the incoming tenant for any amount recovered from the


39/48


40/48

31

of proceeds from a claim vitiates the underlying claim. To illustrate, GPCC/GPI s argument is

essentially as follows: (1) Talisker has a claim against GPCC/GPI for $5; (2) Talisker separately

agreed with Vail that if Vail pays it $3 today, it will assign the proceeds from its $5 claim to Vail

when it is received in the future; (3) According to GPCC/GPI, it now owes Talisker only $2.

This is a perverse concept of mitigation, to say the least.

IV. ADDITIONAL STATUTORY DAMAGES AND FEES MUST BE INCLUDED INTHE BOND AMOUNT

Taliskers damages for GPCC/GPIs unlawful use and occupation are au gmented by

various statutory provisions, consistent with the unlawful detainer statutes policy of

expeditiously restoring landlords to possession of their property. These amounts must also be

included in the bond.

A. To Provide Proper Security, The Bond Must Include All Components Of TheJudgment

Because GPCC/GPI is in illegal possession and refuses to vacate, Talisker is statutorily

entitled to treble damages, attorneys fees, and prejudgment interest. See infra Section IV.B.

For the bond to serve its purpose of protecting the ultimate judgment against GPCC/GPIs

insolvency, it must cover all of these amounts. 22 It may be inconvenient and expensive for

GPCC/GPI or their principals to post a full bond, but an under-compensatory bond would

override the reasoned policy judgments of the legislature.

22 Although Utah Rule of Civil Procedure 62(j) presumes a monetary judgment, it providesguidance on what proper security for a stay of injunctive relief must, at a minimum, include.Rule 62(j) makes clear that a supersedeas bond must cover both attorneys fees and prejudgmentinterest. See Utah R. Civ. P. 62(j)(2)(A) (the presumptive amount of a bond for compensatorydamages is the amount of the compensatory damages plus costs and attorney fees, as applicable,

plus 3 years of interest at the applicable interest rate). The rule does not expressly discussother statutory damages, such as the mandatory trebling of unlawful detainer damages, but asexplained below, such damages should also be included.


41/48


42/48

33

judgment is affirmed. Utah R. Civ. P. 62(j)(1). There is no question th at the judgment in this

case will include three times the amount of damage assessed for unlawful detainer. The only

way to assure payment of Taliskers judgment is to include treble damages in the amount of the

bond.

Excluding treble damages would frustrate the statutory policy of encouraging an

expeditious return of possession to the landlord and would provide inappropriate incentives. 23 If

GPCC/GPI do not have the funds today to pay the expected damages they owe Talisker that have

accrued so far, they have nothing to lose by appealing. If they lose their appeal, they will still be

unable to pay. It is only Talisker that loses, as a fourth or fifth year goes by without receiving

appropriate compensation or access. The legislature made the policy judgment to protect

property owners against such recalcitrant tenants by imposing mandatory treble damages (along

with attorneys fees and prejudgment interest) for the unlawful detainer.

Attorneys Fees : The legislature also made the judgment to deter dilatory litigation

tactics by forcing a recalcitrant tenant to consider the risk of paying the landlords attorneys fees

in the event the tenant is found to be in unlawful detainer. Thus, Talisker is entitled to recover

its attorneys fees under Utahs unl awful detainer statute. Utah Code Ann. 78B-6-811(3). This

recovery is not limited to unlawful detainer-specific legal work; when multiple claims are

involved, Utah courts award fees for all claims based on related legal theories involving a

common core of facts. Golden Meadows Props., LC v. Strand , 2010 UT App 257, 35, 241

23 GPCC earned over $-- million in EBITDAR last year, and if it continues to use and occupyTaliskers property, is expected to earn an even greater amount next year. As discussed above,the annual use and occupancy damages are ----------------- the amount of profits that GPCC willearn, ranging from $---- million to $---- million. Without trebling, the costs of appeal aredwarfed by the profits to be gained by GPCC by further delay.


43/48

34

P.3d 375. As every claim has involved interpretation of the leases and because determination of

possession has been the central premise of this litigation, Taliskers unlawful detainer

counterclaim is inextricably intertwined with the other claims, warranting a full award of the fees

Talisker has incurred in this matter. 24 See Ex. B, Declaration of Monique Tuttle (setting forth

attorneys fees incurred to date).

Prejudgment Interest. Finally, the legislature determined that a defendant is not entitled

to an interest free loan for the use of monies that it owed to the plaintiff. Utah imposes

prejudgment interest at 10 percent annually. Utah Code Ann. 15-1-1(2). Prejudgment interest

is appropriate in cont ractual cases like this one, where the damage is complete and the amount

of the loss if fixed as of a particular time, and that loss can be measured by facts and figures.

Bjork v. April Indus., Inc ., 560 P.2d 315, 317 (Utah 1977). In unlawful detainer cases, Utah

courts have applied prejudgment interest to the treble damages portion of the award, not just the

base rent. Truong v. Holmes , 2009 UT App 212, at *3 (unpublished). The Leases provide that

rent is due in arrears by June 30, sixty days after the close of the prior financial year, April 30.

As a result, GPCC/GPIs unpai d rents begin to accrue interest on June 30 after the end of the

24 For a lawsuit of this complexity and involvement, approximately ------- hours of work at an

average rate of $---- per hour is entirely reasonable. See Utah R. Profl Conduct 1.5. By way ofcomparison, a public records search indicates that GPCC/GPIs counsel, Weil, Gotshal &Manges LLP, submitted a fee request at a blended rate of $639.85 for work performed in 2012.See Third Interim Fee Application, In re AMR Corp. No. 11-15463 (Bankr. S.D.N.Y.) (Dkt.6492) (filed Jan . 31, 2013). This fee award also necessarily includes reasonable out -of-pocketexpenses incurred by attorneys and ordinarily charged to their clients, which totalapproximately $-------- in this case, or less than 4% of total billing. Clearone Commcns, Inc. v.Chiang , No. 2:07-CV-37-TC-DN, 2009 WL 5216856, at *7 (D. Utah Dec. 30, 2009).


44/48

35

each ski season. As of the date of the hearing, GPCC/GPIs damages will have accrued

approximately $----- million in interest. 25

* * *

GPCC/GPI have been allowed to remain on Talisker's property, in unlawful detainer, for

over three years, while making millions in profits and transferring nearly all of that money out of

the corporate entity. To allow GPCC/GPI to appeal and continue to remain on the property

without requiring a bond that represents the full amount of Talisker's damages, would provide

GPCC/GPI a gigantic windfall, as Talisker is forced to wait for one or two more years to try and

recoup those amounts, and all the while GPCC /GPIs shareholders and affiliated entities

continue to have use of those funds for their own purposes. See Utah R. Civ. P. 62(j)(4) (If the

court finds that the judgment debtor h as dissipated assets, the court may set the bond under

subsection (j)(1) without regard to the limits in subsection (j)(2)).

25 As of August 27, 2014, interest will have run on the damages from the 2011-12 ski season fornearly 2 years, 2 months, at 10% simple interest. Interest will have run on damages for the2012-13 ski season for nearly 1 year, 2 months, and on (trebled) damages for the 2013-14 skiseason for nearly 2 months.


45/48

talisker filing on bond for park city mountain resort

Documents