Cartan Tours, Inc. v. ESA Services, Inc.

Cartan Tours, Inc. (Cartan) (plaintiff), a tour company, entered into a contract with ESA Services, Inc. (ESA) (defendant), a hotel operator, to rent 372 hotel rooms in Salt Lake City, Utah, for the duration of the 2002 Winter Olympic Games (Olympics). Cartan timely paid the full $2.4 million contract price to ESA. Cartan’s contract with ESA contained a force-majeure clause stating that Cartan would get a full refund if any material acts, including terrorism, occurred “affecting the ability of the Olympic Games to be held”. After the September 11, 2001 terrorist attack, and the subsequent commencement of the war-on-terror in Afghanistan, Cartan filed an action for a declaratory judgment regarding its obligations under the contract and its right to a refund under the force-majeure clause. Cartan argued that the Olympics, and Cartan’s associated ability to sell Olympic tour packages, were substantially and detrimentally impacted by the recent terrorist attacks and the public’s perception that the Olympics could be a target. ESA filed an answer and moved for a judgment on the pleadings, arguing that the force-majeure clause was not triggered because the 2002 Olympics were going to be held as planned. The trial court agreed and granted ESA a judgment on the pleadings. Cartan appealed, arguing that a judgment on the pleadings was inappropriate because (1) the force-majeure clause was ambiguous, which required the court to consider extrinsic evidence to interpret it; and (2) a judgment on the pleadings cannot be based on evidence extrinsic to the pleadings.