A Utah District Court ruled Wednesday that Park City Mountain Resort officials failed to renew their historic lease for a majority of their ski terrain and the landowner is allowed to lease the ski area's upper terrain to a new operator.
That means Vail Resorts just won the rights to more than two-thirds of the land beneath Utah's most popular ski area. And it means that Park City Mountain Resort owner Powdr Corp. will go down in history as captaining the ski industry's most costly clerical error: a days-late filing to renew their decades-old, sweetheart lease could forever change their flagship ski area, which has seen Powdr invest more than $100 million.
Powdr Corp. argued it was an "honest mistake" when the resort operator was a couple days late filing paperwork to renew its lease for land beneath Park City Mountain Resort. It was paying landowner Talisker Corp. about $150,000 a year for the land, per the series of 20-year leases first forged in the 1970s. For comparison, Vail Resorts is paying Talisker $25 million a year plus a percentage of revenue every year to lease the adjacent 4,000-acre Canyons ski area.
Talisker refused to sign a new lease with Powdr and went looking for a new tenant. Powdr sued Talisker to force a new deal. Talisker leased Canyons to Vail Resorts on the condition that the continent's largest resort operator takes over the Park City Mountain Resort legal battle, calling Vail Resorts a "dramatically better operator" than Powdr.
Things turned fiery when Vail Resorts tried to evict Powdr from the Park City ski area. Vail chief Rob Katz launched a letter-writing campaign, publicly lobbying Powdr chief John Cumming to sell his base area land. Cumming said he would rip out his chairlifts on the upper land if Vail won the lawsuit. He might, he said, convert his remaining acreage at the base of the ski area into a full-time Camp Woodward, modeled after the action sports training facility founded at Copper Mountain, which Powdr acquired in 2009.
In an 82-page ruling, District Court Judge Ryan Harris said Powdr's plea that there are "enormous public consequences" with ending their lease of the land did not warrant making exceptions to legal rules and precedent set in several previous Utah lease disputes. Harris ruled on eight motions, siding almost entirely with Talisker and Vail Resorts.
Vail Resorts on Wednesday issued a brief statement saying it was pleased.
Talisker attorney John Lund said his client was pleased the court not only confirmed that Park City Mountain Resort's lease had expired when it failed to renew on April 30, 2011, but also that Talisker did not violate any lease terms regarding Park City Mountain Resort's rights.
"Talisker looks forward to bringing in Vail Resorts as its new tenant and operator of the terrain," Lund said in a statement.
Cumming has said that he would not allow Vail Resorts to access his private land at the base of Park City ski area if the court ruled against him.
"It's now time for Park City Mountain Resort to move on and work out a realistic solution for access to the ski terrain from Park City," Lund said.
A defiant Cumming on Wednesday said: "We will not walk away and allow a Vail takeover."
Cumming, who founded Powdr Corp. in 1994 with the acquisition of the 3,300-acre Park City Mountain Resort, said his company's "repeated offers to buy or lease" the Talisker-owned land beneath the ski area "for far in excess of market value" were rebuffed.
In a statement, Cumming said Vail's hope to gain operating ownership of Park City ski area demonstrates "a fundamental misunderstanding of what this litigation could yield for them."
Vail can't operate a resort on the land, Cumming said, because it does not have access to the Powdr-owned base area or parking lots essential for ski operations.
"And they are not for sale," Cumming said.
Park City Mountain Resort attorney Alan L. Sullivan said they would appeal the decision.
"We are committed to ensuring that Park City Mountain Resort has its day in court so it can show that it acted responsibly and in good faith and that its right to use the lands at issue has been extended," Sullivan said in a statement.
Lund pointed out that all of Park City Mountain Resort's claims over the three-year battle have been dismissed, including its recent request to have the court reconsider a previous ruling.
"We do not believe an appeal by Park City Mountain Resort has any merit and we sincerely believe that it would be best for all concerned for Park City Mountain Resort to stop using the legal system to cause further delay and uncertainty and refocus instead on a positive and constructive solution," Lund said. "We look forward to the Court proceeding expeditiously on the next steps in the process."
The next steps involve a potential trial on Powdr's claim that Talisker fraudulently failed to tell Powdr that its Park City ski area lease had expired after March 1, 2011. Harris wrote in his decision that he had hoped the parties would "resolve the situation amicably for the good of everyone, including the community."
And indeed, if Vail Resorts hopes to access the Powdr-owned base area village of Park City, it will require negotiations between the two operators.
Sullivan said the appeals process will likely last a year, meaning Wednesday's decision will not disrupt the 2014-15 ski season at Park City Mountain Resort.
Jason Blevins: 303-954-1374, email@example.com or twitter.com/jasonblevins