Can a landlord negotiate with competitors during an existing lease term? Triple J Parking v. SCSB Explained

In Triple J Parking v. SCSB, the Utah Court of Appeals addressed whether a landlord breaches a non-competition provision by negotiating a future lease with a competitor while the current lease remains in effect.

Background and Facts
Triple J Parking leased approximately six acres near the Salt Lake City airport from SCSB LLC for nearly nine years under a ground lease agreement. During this period, Triple J invested millions of dollars in property improvements to operate its park-and-ride business. The lease contained a non-competition clause prohibiting SCSB from competing within a two-mile radius but was silent regarding compensation for tenant improvements. When lease renewal negotiations failed in September 2016, SCSB terminated the agreement. While Triple J’s lease was still operative, SCSB negotiated a separate lease with a competing parking business to commence after Triple J vacated the property.

Key Legal Issues
The court addressed two primary claims: (1) whether SCSB’s negotiations with a future competing tenant violated the non-competition provision, and (2) whether such conduct breached the implied covenant of good faith and fair dealing. Triple J sought to recover millions in improvement costs as damages.

Court’s Analysis and Holding
The Court of Appeals affirmed the dismissal under rule 12(b)(6), applying the correctness standard of review. Regarding the non-competition clause, the court emphasized that “competing” under the lease required SCSB’s involvement in “ownership, management, operation or control of” a parking facility. Since SCSB merely negotiated a future lease without operating any competing business during Triple J’s lease term, no breach occurred. The court rejected Triple J’s argument that negotiating future leases constituted prohibited competition under the plain language of the contract.

Practice Implications
This decision reinforces that courts will not rewrite contracts through the implied covenant of good faith and fair dealing. The covenant cannot create rights unsupported by the contract’s express terms. For practitioners, this case highlights the critical importance of explicitly addressing tenant improvement compensation in lease agreements. The court noted that “silence in the lease on the issue of improvements has consequences as a matter of law,” leaving tenants without recourse absent express contractual provisions.