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Black Tail Development, LLC v. Oregon TV, LLC

Court of Appeals of Oregon

August 29, 2018

BLACK TAIL DEVELOPMENT, LLC, an Oregon limited liability company, Plaintiff-Respondent,
v.
OREGON TV, LLC, a foreign limited liability company, dba KEZI TV, Defendant-Appellant, and KMTR TELEVISION, LLC., a foreign limited liability company, Defendant-Respondent.

          Argued and submitted December 11, 2017

          Lane County Circuit Court 15LT13883; Jay A. McAlpin, Judge.

          John E. Pollino argued the cause for appellant. Also on the briefs were Shayna M. Rogers and Garrett Hemann Robertson PC.

          Alexandra P. Hilsher argued the cause for respondent Black Tail Development, LLC. On the brief were Amanda M. Walkup, Todd R. Johnston, and Hershner Hunter, LLP.

          No appearance for respondent KMTR Television, LLC.

          Before Lagesen, Presiding Judge, and DeVore, Judge, and James, Judge.

         Case Summary:

         This interlocutory appeal addresses whether an arbitration provision in a commercial lease requires a landowner to arbitrate with broadcasting tenants rather than proceed with their eviction on arguably arbitrable matters. One of those tenants appeals from denial of its motion to compel arbitration over "subrents" received from subtenants. The trial court denied the motion to compel arbitration after concluding that the landowner sought only recovery of [293 Or.App. 543] possession of the premises and that the eviction proceeding did not raise issues within the scope of a limited arbitration clause. Held: Based on the unambiguous language of the lease, landowner's allegations of breach of the lease are arbitrable matters with one exception. The trial court was required to order arbitration on those arbitrable matters. As to the one nonarbitrable allegation, the court may determine, in its discretion, if that allegation is severable or should likewise be subject to stay.

         Reversed and remanded.

         [293 Or.App. 544] DeVORE, J.

         This interlocutory appeal addresses whether an arbitration provision in a commercial lease requires a landowner to arbitrate with broadcasting tenants rather than proceed with their eviction on arguably arbitrable matters.[1]One of those tenants appeals from denial of its motion to compel arbitration over "subrents" received from subtenants. The trial court denied the motion to compel arbitration after concluding that the landowner sought only recovery of possession of the premises and that the eviction proceeding did not raise issues within the scope of a limited arbitration clause. We review for legal error. Citigroup Smith Barney v. Henderson, 241 Or.App. 65, 69, 250 P.3d 926 (2011). We conclude that landowner's allegations raised issues within the scope of the arbitration provision. We reverse and remand.

         The dispositive facts are undisputed. The landowner, Black Tail Development, LLC (Black Tail), owns hilltop property near Eugene. Defendants Oregon TV, LLC (OTV) and KMTR Television, LLC (KMTR) own and operate television stations, respectively KEZI and KMTR, leasing space on the property for their broadcasting towers. Defendants' predecessors leased the premises for a number of years.

         In 1998, defendants' predecessors and Black Tail negotiated a Renewal, Extension and Combination of Ground Leases (lease). Sections 3.1 and 3.2 of the lease provided a monthly "base rent" of $2, 500 with prescribed increases over the years. Section 3.4 added "percentage rent" of 45 percent of any subrents from subtenants. "Subtenants" meant anyone to whom defendants rented space to be attached to defendants' equipment. Section 3.4 included provisions for audits related to subrents, arbitration of controversies over subrents, and record-keeping related to subrents.

         In 2014, OTV succeeded to its predecessor's interest, and, in the course of that process, OTV sought Black Tail's consent to the assignment.[2] In response, Miller, a manager [293 Or.App. 545] for Black Tail, sought information about occupants of the premises. According to Miller, the lease required tenants to provide copies of all subleases, collect and disburse subrents, and maintain accurate records about subrents from subtenants. Miller believed that OTV and its predecessor, in breach of the lease, had failed to provide such information. According to Buckler, a representative of OTV, Miller's investigation for Black Tail was prompted by a lease-barter arrangement created in the past between OTV's predecessor and a third-party entity, Silke Communications, Inc. (Silke). According to Buckler, in June 2014, OTV's predecessor had provided to OTV and Black Tail copies of at least 12 subleases, including the arrangement with Silke, as well as photographs, inventory information, and spreadsheets. Additionally, OTV had received some responsive documents from Silke that OTV did not share with Black Tail because Black Tail refused to sign a confidentiality agreement. In January 2015, Black Tail notified defendants that it was terminating the ...


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