Judge approves receiver in Aspen Mountain Lodge dispute | AspenTimes.com

Judge approves receiver in Aspen Mountain Lodge dispute

A judge ruled Wednesday in favor of a proposed receiver to supervise financial transactions of Aspen Mountain Lodge until the court sorts out a legal dispute over control of the condo-hotel’s board of directors.

Judge Anne Norrdin issued her oral ruling during a morning conference call with the involved parties, following a seven-hour hearing Tuesday in Garfield County District Court.

“The hearing yesterday made clear to me that there is a pretty unique set of circumstances,” the judge said, previously noting her job is to find “the most equitable remedy while the larger issues are resolved.”

The receiver, Aspen property manager Ron Erickson, will be charged with managing the Alpine Bank accounts. Prior to the legal flare-up at hand, those funds were under the control of the condo association president and Aspen Hotel Management, which runs the West Main Street lodge.

Alpine Bank froze the accounts — which amount to more than $250,000, as well as a $200,000 line of credit — in September. The bank said it took its action because of a disagreement over control of the association’s board of directors and its money, which is used to handle the lodge’s operations.

“The bank is an innocent bystander that has unfortunately been part of these proceedings for the better part of three months,” Alpine Bank attorney Chris Bryan said at Tuesday’s hearing.

On Sept. 19, Bryan filed what’s called a “complaint in interpleader” with the goal of having a judge determine who could access the disputed funds. Subsequently the money was placed in the custody of the court registry, with attorneys for the unit owners in dispute having to approve each transaction before it was completed. Each transaction has “caused a minor fire drill” due to multiple parties involved in their approval, Bryan said.

Those transactions have included checks cut to lodge employees and vendors, Bryan said.

“This is not a tenable situation,” he said. “It’s bad for the bank and bad for the association; and, I would posit, it’s worse for the third-party vendors.”

With a receiver now in the picture, Alpine Bank can remove itself from the dispute.

In the meantime, the court’s next step will be figuring out who has control of the board of the directors for The Aspen Homeowners’ Association, which is run by the lodge’s unit owners.

Pitted in the dispute is the so-called old board against the new board.

Brothers Aaron and Michael Brown, who run two other inns in town and have approvals to build Lift One Lodge on the western portal of Aspen Mountain, claim they are the board’s respective vice president and president. Their attorney, Aspen lawyer Maria Morrow, argued as much Tuesday. She said their board status should not be in dispute because the voting results were clear at the board’s annual election held May 31.

That was when the Browns took control of the board by voting on behalf of an LLC that Michael Brown had controlled at the time — Mountain Lodge Holdings. Twenty of the lodge’s 38 units were under the ownership of Mountain Lodge Holdings, and Michael Brown argued he was entitled to cast votes on the LLC’s behalf to elect both him and his brother, according to court pleadings. Also elected to the board as treasurer was William Sheehan, who previously had been the board’s president.

Through the law firm Balcomb & Green PC, Sheehan and the two previous officeholders have disputed those election results, claiming the LLC could only vote one person into office under the condo association’s bylaws.

Attorney Lucas Van Arsdale, on behalf of the old board, argued multiple times Tuesday the Browns’ election amounted to a “hostile takeover.”

“It’s unfortunate that Mr. Brown did not succeed in his hostile takeover in compliance with the law, but the fact is he did not,” Van Arsdale said.

He noted, also several times, that because neither Brown attended the hearing, they could not demonstrate they were qualified to handle the money in dispute.

“The Brown brothers have not put any evidence that they are qualified to manage the association’s funds,” he said. “In fact, they’re not even here today.”

Morrow countered because the election results were validated June 1, they were a done deal.

“It’s not rigging; it’s just plain math,” she said. “Twenty out of 38 is a majority.”

The Browns elected themselves out of concerns over the lodge’s financial health, Morrow said, citing a capital reserves study from 2017 showing the association had no backup funds.

Yet Sheehan, over the course of his three-hour testimony, said the association regrouped financially by raising its annual assessments to $216,000, an amount collected monthly from the unit owners.

The receiver issue also had both sides at odds.

The Browns contested it, while Van Arsdale’s clients had advocated for one through a court motion.

Morrow argued Michael Brown should be given signor-status on the accounts, and also suggested transferring the money to another financial institution so Alpine Bank would no longer be involved. And because Sheehan was part of the new board that validated the election results, he had “unclean hands” and could not instigate legal action for a receiver, she argued.

The judge disagreed, and set Dec. 12 for a status conference in the matter, adding that the near goal is “to get this whole dispute to an end.”

rcarroll@aspentimes.com


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