Business Monday: How Aspen Constructors went bankrupt
February 4, 2018
Defective construction work on the master bedroom of a West End home has pushed an Aspen company into bankruptcy.
Legal records in Pitkin County District Court and the U.S. Bankruptcy Court of Denver weave together the business plight of Aspen Constructors, a builder of high-end homes that declared Chapter 11 protection Dec. 29.
Located at the Aspen Business Center, Aspen Constructors remains in business, but its financial picture has been hampered by a Denver arbiter's award of $1.3 million to West Hallam LLC, a limited liability company that owns the home and hired the firm as a general contractor in September 2012.
That award, which was issued last June and includes damages of $337,488 and attorney fees of $756,939, is easily the biggest unsecured claim listed by Aspen Constructors on its bankruptcy petition. Next is a claim of $390,000 from ANB Bank in Carbondale, while four- and five-figure debts round out the tally.
Now the company contends in court records that it has lost more than $22 million in business because of the arbiter's judgment.
Michael Tanguay, who founded Aspen Constructors in 1988, declined to comment for this story.
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His company's bankruptcy comes nearly four years after Fort Lauderdale, Florida-based West Hallam LLC in 2014 cast blame on Aspen Constructors and a subcontractor for shoddy work and construction defects — mainly the defective installation of marble and staining marble — in the West End home.
The arbiter's ruling is under seal; however, the judgment's impact on Aspen Constructors is expressed in a lawsuit the company filed in August in Pitkin County District Court. The fallout has included a sullied reputation that has hurt business, alleges the suit, which was filed against the construction firm's carrier, Cincinnati Insurance Co., and a subcontractor, Argento Marble, and its carrier, Employer's Mutual Casualty Co.
The judgment is "severely straining Aspen Constructors' resources and jeopardizing Aspen Constructors' survival as an ongoing business concern," the suit clams.
It also argues that ever since the arbiter's "scathingly negative decision, Aspen Constructors has lost at least three new construction projects, including one for the well-known Aspen landmark property the Sardy House, a contract value of approximately $12,000,000, as well as a project in the McLain Flats area of Aspen, at a contract value of approximately $10,000,000 and a new home in the Aspen Highlands valued at approximately $5,000,000."
The lawsuit contends Cincinnati Insurance Co., through which Aspen Constructors has had a commercial general liability policy since 2013, originally agreed to provide a defense to the firm during the arbitration process. The defense work, however, was incompetent, alleges the suit.
Cincinnati Insurance also declined to cover any of the $1.3 million judgment, the suit says.
Agento's work on the master bedroom led to the judgment, the suit contends. Additionally, its insurance carrier, Employer's Mutual Casualty, refused to provide a defense during arbitration, the suit alleges.
West Hallam LLC bought the property for $6.1 million in August 2010, according to property records. Aspen Constructors' job included an extensive remodel of the historic Victorian home, which features five bedrooms and six-and-a-half bathrooms.
The latest litigation isn't the only legal saga with which the 320 W. Hallam St. property is associated; it's also where Aspen police arrested actor Charlie Sheen on Christmas Eve 2009 on domestic charges involving his then-wife.