## Facts

- Utah Coal and Lumber Restaurant, Inc. owned a historic commercial building in Park City, Utah and leased it in 1993 to Outdoor Endeavors Unlimited (White Pine Touring) for a sporting goods store.
- The lease term was five years, with three successive five-year renewal options (potentially twenty years total).
- The premises were in serious disrepair; White Pine accepted the building “as is” and assumed responsibility for major remodeling.
- White Pine made more than $105,000 in permanent improvements between May and October 1993, intending to recoup the investment through long-term occupancy; Utah Coal knew White Pine expected to exercise all renewal options.
- The lease required written renewal notice “not more than 120 days nor less than 60 days” before the term expired.
- The renewal-notice window was May 13, 1998 to July 11, 1998; White Pine gave notice 11 days late due to business and personal crises.
- White Pine asked Utah Coal to waive the deadline; Utah Coal instead offered renewal only on significantly more favorable terms, and then sued for unlawful detainer, treating White Pine as a holdover tenant.
- White Pine counterclaimed for declaratory relief, asserting equitable excuse from strict compliance and that the lease had been renewed.

## Issues

1. Whether equity may excuse a tenant’s failure to meet a lease renewal-option notice deadline when the delay is slight, the default is inadvertent, the tenant faces disproportionate forfeiture, and the landlord suffers no material prejudice.
2. Whether summary judgment for the tenant was proper on undisputed facts applying that equitable doctrine.

## Decision

- The Utah Supreme Court affirmed summary judgment for White Pine.
- The court adopted an equitable exception to strict enforcement of renewal-option deadlines to prevent forfeiture in limited circumstances.
- On the undisputed facts, White Pine’s 11-day delay was slight, resulted from inadvertence, caused no substantial prejudice to Utah Coal, and strict enforcement would impose a substantial and disproportionate forfeiture given White Pine’s permanent improvements and expected long-term tenancy.
- The court noted that Utah Coal’s attempt to renegotiate for substantially better terms supported the view that strict enforcement would operate primarily as a forfeiture device rather than to avoid legitimate harm.

## Legal Principles

- Options to renew leases generally require strict compliance with time requirements; time is ordinarily of the essence.
- A court of equity may relieve a tenant from a late exercise of a renewal option to avoid forfeiture when:
  - the delay is slight;
  - the tenant’s default is due to honest mistake, inadvertence, or excusable neglect (not bad faith or gross negligence);
  - denial of relief would cause a substantial, disproportionate forfeiture to the tenant; and
  - the landlord has not suffered material prejudice from the delay (including detrimental reliance such as re-letting or irreversible plans inconsistent with renewal).
- Equitable relief is fact-specific and does not apply where the delay is substantial or the landlord is materially harmed.

## Conclusion

The court held that a tenant’s slightly late renewal notice may be excused in equity to prevent disproportionate forfeiture when the delay is minor and inadvertent and the landlord suffers no material prejudice, and it upheld summary judgment renewing the lease on that basis.


Utah Coal & Lumber Rest., Inc. v. Outdoor Endeavors Unlimited, 40 P.3d 581 (Utah 2001)