September 2, 2021
Utah Supreme Court
2021 UT 54 (Click for full text)
The Utah Supreme Court upheld dismissal of a breach-of-contract claim for exceeding the scope of a contractual parking easement as beyond the 6-year statute of limitations for contracts, and concluded that in so limiting the claim, the court did not wrongfully grant an effectively greater easement interest than had been contracted for by the parties.
Background: Kiernan and Hidden Valley agreed to develop their neighboring properties into a shopping center in the 1990’s. As part of their contract, the parties agreed to each maintain a parking ratio of four parking spaces per 1,000 square feet of floor area, which would ensure that both parties bear a proportionate burden of providing parking. The contract also included two anti-waiver provisions, stating that either party’s failure to enforce any provision “shall not be construed as a waiver.” In 1999, in order to obtain approval from Draper City to begin construction, Hidden Valley had to modify its plan and construct fewer than four parking spaces per 1,000 feet. Construction finished in 2002, and Kiernan was immediately aware of the contract violation. Despite knowledge of the violation, Kiernan did not file for breach until 2017, fifteen years later. Kiernan claims that, because the harm caused by the breach constitutes a continuing breach, the anti-waiver provision should hold more weight than the statute of limitations and he should therefore still be entitled to damages. During discovery, Kiernan also discovered that Hidden Valley had recently restriped its parking lot, temporarily removing four additional parking spaces.
Background: Kiernan and Hidden Valley agreed to develop their neighboring properties into a shopping center in the 1990’s, and made an agreement to each maintain a certain parking ratio that would ensure a proportionate burden of providing parking, while also conveying a cross-parking easement on the respective parcels. The contract also included a provision that either party’s failure to enforce any provision should not be construed as a waiver. Hidden Valley finished construction on its parcel in 2002, but failed to meet the parking ratio. Despite knowledge of the violation, Kiernan did not file for breach until 2017, fifteen years later. The court dismissed the claims for the 2002 breach, applying the 6-year statute of limitations applicable to written contracts, while finding that anti-waiver provision meant that Kiernan continued to have a right to challenge any timely breach beyond the post-2002 status quo. Kiernan appealed, arguing that the harm constituted a continuing breach such that the anti-waiver provision should not be defeated by the statute of limitations. Additionally, Kiernan argued that by limiting his remedy to post-2002 status quo, the court had wrongfully granted Hidden Valley a greater easement interest when it did not meet the elements for a prescriptive easement (no continuous use for more than 20 years).
Holding: The Utah Supreme Court upheld the district court’s ruling that the statute of limitations limits Kiernan’s recovery to the post-2002 status quo. Parties “may not contract around the statute of limitations.” Additionally, the Court rejected Kiernan’s prescriptive use argument that the expiration of the statute of limitations effectively (and unjustly) grants Hidden Valley a greater easement right than for which the parties had contracted, holding that “Hidden Valley’s easement interest was created and defined by the terms of the [agreement]. It was Kiernan’s failure to pursue those claims within the statute of limitations that resulted in Hidden Valley receiving a cross-parking easement in exchange for a smaller parking contribution than originally contemplated in the [agreement].”