Former business partner sues president of Related WestPac |

Former business partner sues president of Related WestPac

Katie Redding
The Aspen Times
Aspen, CO Colorado

SNOWMASS VILLAGE ” Before Pat Smith was president of Snowmass Village developer Related WestPac, he was a friend and business partner of Jeff Klein. In fact, Klein says he first introduced Smith to redevelopment in Snowmass.

Now, Klein is suing Smith for failing to complete a contracted house ” or make an in-lieu payment of $3.25 million ” according to a complaint that is pending in Pitkin County District Court.

“By the way,” Klein said, “Pat and I are still friends. It’s as amicable a lawsuit as you can imagine.”

Klein, Smith and three other partners originally proposed a Snowmass revitalization project that was much smaller than the current Base Village renovation, Klein said.

After acquiring the Snowmass Center, Silvertree Hotel, Snowmass Mall and the Conoco building, the group created a master plan that called for demolishing and rebuilding the structures. When Related bought out the group, however, Klein elected to leave the project; Smith stayed and became president of Related WestPac.

According to the terms of the buyout, Klein was given an initial cash sum and the promise of an interest in a four-home compound called Brush Creek Estates, above the Woodbridge Condominiums. Moreover, Klein says Smith ” not Related WestPac ” personally guaranteed that the home would be built within 30 months of the agreement.

“I can’t really say I was treated unfairly by Related,” said Klein, who sued Smith in April. “If [the guarantee] was from Related, I’m sure it would have been paid already.”

By the terms of the agreement, if the home could not be built within 30 months of the buyout, Klein could demand an in-lieu cash payment from Smith within 75 days, according to the complaint.

In 2007, Klein says he received an e-mail from Smith stating that the homes would not be built for three or four more years. Smith said that since the luxury housing development had become part of the Base Village plan, the timeline had changed, according to Klein.

On Nov. 12, 2007, Klein responded to Smith saying that he wanted the in-lieu cash payment, according to the complaint. Klein says he wants a house in Snowmass, and if the Brush Creek Estates won’t be built soon, he wants to buy an existing Snowmass home. He arrived at the $3.25 million figure after looking at comparative sales for luxury houses with a view in Snowmass, he said.

But Smith has told him he doesn’t have the money to give, said Klein, who added that he finds Smith’s penury to be both odd and concerning.

“It’s just strange to me that Pat could be moving forward on a billion-dollar project and claim to be out of money,” he said.

Klein said he has tried both settling the matter for less money and trading the promised house for other property. But Smith has told him he doesn’t even have the money to settle, he said.

“Communications have been so poor that I finally turned it over to the attorney up there,” he said. “Pat basically ignored us and thought he could put us on the back burner.”

Klein added that Smith’s greatest fault as a contractual partner is also his greatest flaw as a developer.

“I love Pat, and he’s as good a developer as there is,” he said. “[But], he ignores what your input is and what you want to do and what your rights are.”

For his part, Smith says that it hasn’t yet been 30 months since he signed the original contract, so he is not obligated to pay Klein. He added that an in-lieu price would be difficult to establish, since the development has not yet been approved by the town of Snowmass. The value of the fractional interest could arguably be affected by whether and how the development is approved.

“We have no way to base a value until something is approved,” he said.

Moreover, Smith disputed Klein’s contention that he wasn’t willing to trade property, saying he offered Klein the opportunity to trade other properties but that none of his offers have been accepted. Instead, Klein continues to ask for money, Smith said.

Smith speculated that Klein might be “in some tough times, looking to extract capital rather than a residence.”

“He was asking for money because I don’t think he wants real estate right now,” he said.

Klein also said he’s filed a lis pendens on the Snowmass Center property ” an action that places property involved in litigation under the court’s jurisdiction ” in order to make sure the land won’t be sold or developed until the lawsuit is settled.

On July 22, Judge James Boyd granted Klein’s request for arbitration. The two parties are required to file a status report by February 2009.

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