Bad land deal leads to lawsuit
October 8, 2007
DENVER ” A Connecticut man is suing an Aspen attorney for malpractice over a land deal that apparently went sour in 2006.
Leathem Stearn is suing the lawyer, John D. LaSalle, for $7.8 million, over accusations that LaSalle failed to adequately perform his “due diligence” on a complicated property transaction.
According to the lawsuit, filed in U.S. District Court in Denver on Oct. 2, Stearn hired LaSalle to safeguard his interests in a deal with Jay Weinberg, developer of the Aspen Equestrian Estates subdivision near Carbondale.
Weinberg allegedly was negotiating with Stearn to buy a lot from Stearn on Glenn Dee Road outside Aspen for a price of $8.6 million. The sale closed in September 2005.
According to Denver attorney Charles Welton, who represents Stearn, the deal involved Weinberg’s use of a promissory note from another developer, John Watson of California and his firm, Local Service Corp., which had purchased the Aspen Equestrian Estates subdivision from Weinberg in 2004.
The note, valued at $3.3 million, was to be secured by the deeds to 12 lots in the subdivision, which Watson had renamed Aspen Farm.
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According to the lawsuit, Weinberg and Watson claimed the lots were worth $300,000 apiece, and all together equaled the value of the note. But LaSalle, according to the lawsuit, told Stearn the lots were worth $500,000 apiece, well in excess of the value of the promissory note. Stearn claims LaSalle told him that “the best outcome for [Stearn] would actually be for the maker of the note, Local Service Corp., to default on the note.” Then, LaSalle allegedly told Stearn, he could “sell the lots at a price in excess of $500,000 each, for a profit of over $200,000 per lot.”
But when Local Services Corp. later defaulted on the note, the suit alleges, Stearn discovered the lots were worth somewhere between $169,000 and $225,000, and would not cover the value of the note.
The suit accuses LaSalle of failing to do his job, which was to protect Stearn’s interests, and asks for a total of $7.85 million in damages, which includes the value of the defaulted note plus interest; Stearn’s legal costs; Stearn’s outlay in homeowners association dues and taxes; and the difference between the value of the lots Local Services Corp. claimed and the value LaSalle claimed.
LaSalle did not respond to requests for comments Friday.
Stearn is asking for a jury trial, which would take place at the U.S. District Courthouse in Denver.
John Colson’s e-mail address is email@example.com