Lawsuit • Talisker Corp. moves to dismiss action by Park City Mountain Resort.
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Park City • Officially, it was one ski resort operator suing another ski resort operator, but what transpired in Park City's 3rd District Court Tuesday looked more like hardball.
Alan L. Sullivan, a Salt Lake City-based attorney for Park City Mountain Resort, said Canyons Resort operator Talisker Corp. "has been transparent in its effort to take over Park City Mountain Resort one way or another."
PCMR filed suit March 9, alleging it had met its obligations for extending its lease of 3,700 acres of ski terrain, but that its landlord and the operator of neighboring Canyons Resort would not renew the lease and has sought a new agreement that would effectively drive PCMR out of business.
The suit says PCMR has invested more than $100 million on ski lifts, lodges and facilities, about $7 million of that in 2011. The suit seeks $7 million in damages.
But New York City-based attorney Daniel Beller argued during the 3 ½-hour hearing that PCMR had not renewed its lease with Talisker by the expiration date of April 30, 2011, and had no standing to sue the Canyons Resort operator.
He described PCMR's complaint as "whining" and "complete nonsense," and asked Judge Ryan Harris to dismiss the lawsuit.
According to court filings, PCMR sent written notice of its intent to renew the lease on May 2, 2011 two days after the deadline.
"If there was a breach [of contract] it was insubstantial and harmless," Sullivan said.
Since the early 1960s, PCMR and its predecessors have leased ski terrain from United Park City Mines. Talisker acquired United Park City Mines in 2004.
In 1975, Park City Ski Area and United Park City Mines amended an agreement to clarify that the lease would end on April 30, 1991, but could be extended by three 20-year terms to 2051. Ian Cumming's Powdr Corp. purchased Park City Ski Area in 1994 and re-named it Park City Mountain Resort.
Sullivan told the judge that the two resorts had ongoing discussions on an interconnect ski lift that would link the resorts and verbal assurances the lease would be extended. He also pointed to a Utah Tax Commission hearing where United Park City Mines representatives told an administrative law judge that the lease was valid until 2051.
After PCMR believed it had renewed the lease in 2011, it spent $7 million on ski lifts and other facilities during the summer of 2011, Sullivan said. Talisker said nothing until December about the lease expiring.
"We allege Talisker had the duty to tell PCMR the lease had expired," Sullivan said. "But Talisker continued discussions on an interconnect between PCMR and Canyons. Talisker's silence was misleading and fraudulent."
It became clear to PCMR in mid-February that Talisker's stance had shifted, Sullivan said. A Feb. 16 letter from Talisker CEO Jack Bistricer was an "ultimatum" that PCMR would pay a drastic increase in rent or cease mountain operations.
"Jack Bistricer makes clear that Talisker has unilaterally increased the rent rates to the extent that Park City Mountain Resort could no longer operate at a profit," Sullivan said.
The letter is not part of the court record and its contents are not public. Sullivan did not disclose the proposed lease terms.
Last ski season PCMR paid $155,000 in rent, according to court documents.
By contrast, Canyons Resort paid its landlord, Wolf Mountain, an estimated $3 million.
Talisker is not responsible for PCMR's failure to ensure its own well-being, Beller said.
"The Utah Supreme Court has ruled ... strict compliance with an option is required for the extension of a lease," he said. "It's well understood they knew how to exercise the option to extend the lease."
PCMR's public statements that there will be no skiing on the mountains abutting Old Town Park City aren't true, Beller said. If PCMR doens't operate the mountain, Talisker or a third party will, he said.
Although PCMR owns the base facilities, Beller suggested that a business arrangement could be made for another operator to lease them. If that isn't possible, skiers could reach PCMR from Canyons Resort ski lifts, he said.
The judge said he would take the matter under advisement and rule within 60 days on the defendant's motion to dismiss the lawsuit. Talisker has guaranteed that PCMR will operate the resort through the 2012-13 ski season.