Judge sets Aspen trial in David Burke-Mark Hunt dispute
A Mark Hunt-led landlord group and the proprietors of a high-profile New York chef’s restaurant are at an impasse after months of failed negotiations.
Pitkin County District Judge Gail Nichols on Thursday set a jury trial for July 27 to 31 after both sides — landlord 204 S. Galena St. LLC and Rocky Aspen LLC, the corporate title of David Burke Kitchen — said discussions to hatch a deal have been futile. The trial will determine whether the restaurant can remain a tenant at the building — it entered into a lease agreement in April 2013 but has yet to open its doors — and who’s responsible for mounting unpaid bills to contractors. The outstanding amount is up to nearly $900,000, said Denver attorney Lee Johnston, one of the lawyers for plaintiff 204 S. Galena St. LLC, which is controlled by Hunt, the prominent Aspen developer.
“We have tried for months to resolve this dispute, but to no avail,” Johnston said.
Lawyers on both sides weighed in during a conference call presided over by Nichols in her chambers. While the judge set a trial date, she encouraged both parties to try mediation.
“My impression is that on both sides there are sophisticated real estate lawyers and they have worked hard to resolve this,” Nichols said. “I’m going to order mediation with a third party, but I will qualify it that if both parties say that mediation won’t be fruitful, they don’t have to do it.”
Doomed from the start?
With initial plans to open in February 2014, David Burke Kitchen was supposed to be the crowning tenant for the corner building Hunt built in replacement of the old Gap building at the corner of Galena Street and West Hopkins Avenue.
But it’s been plagued with setbacks.
On Dec. 5, Hunt’s 204 S. Galena St. LLC took legal steps to evict the reality TV-star chef’s restaurant for allegedly not paying its November rent of $44,583 for the 5,535-square-foot dining space and $11,667 for the 4,012-square-foot lounge spot, which would be located in the building’s basement.
Burke Kitchen remains on the hook for December, January, February, March and April rent, Johnston said during the conference call.
“This is a case about a tenant who has simply run out of money and can’t meet his obligation, can’t pay his rent and the contractors and subcontractors he’s hired,” said Johnston, who also accused Burke Kitchen’s attorneys of engaging in delay tactics by filing a countersuit.
In the meantime, construction on the restaurant has been sporadic because both contractors and subcontractors have walked off the job and filed mechanics’ liens against the building owner, Johnston said in arguing against a jury trial.
Burke Kitchen’s Aspen attorney Chad Schmidt countered, “We disagree with Mr. Johnston’s characterization of the case and the events that have happened to date.”
And cash flow isn’t a problem, said New York lawyer Luke McGrath, also counsel for Burke Kitchen.
“It’s safe to say that (Burke Kitchen) hasn’t run out of money,” he said, adding that “the court has been getting a one-sided view and we’ll tell our story at the appropriate time.”
Shady dealing alleged by Burke Kitchen
On April 3, Burke Kitchen issued its formal response to the eviction and breach-of-contract suit. The response offers a virtual blanket denial of the allegations and an accompanying countersuit accuses the landlord of breach of contract and breach of covenant of good faith and fair dealing.
Burke Kitchen claims that when it initially negotiated with Hunt to operate a restaurant, Hunt based part of the lease agreement on the eatery hiring Centaur Construction Co. to handle the restaurant and lounge’s project. But instead of focusing on the restaurant, Centaur’s construction efforts went toward the rest of the building.
“Centaur held up (Burke Kitchen’s) work, focused on Landlord’s work, and demanded payment for what Centaur called (Burke Kitchen’s) work, when the monies paid by (Burke Kitchen) were actually used to subsidize Landlord’s work,” the countersuit alleges.
Centaur overbilled Burke Kitchen “and sham billing was done with full knowledge and at the instruction of Landlord while Centaur acted as Landlord’s agent and servant,” the countersuit says. The countersuit also alleges Centaur’s restaurant work was shoddy and incomplete.
Burke Kitchen has a pending lawsuit against Centaur in Pitkin County District Court. Centaur also is suing Hunt’s landlord group and Burke Kitchen, saying it stopped work Jan. 29, 2014, because of unpaid bills that added up to $607,605, according to court documents.
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