Penthouse couple dismiss Hunt from federal suit
December 15, 2015
The owners of an $8 million penthouse on restaurant row in downtown Aspen have dismissed developer Mark Hunt from their federal lawsuit while ramping up their case against the remaining defendants.
New York married couple Michael Sedoy and Natalia Shvachko introduced court papers last week letting Hunt off the case but contending that their existing claims against the remaining defendants don't mirror their previous action in Pitkin County District Court.
Their motion was in reply to legal efforts made by the remaining defendants — JW Ventures and its members John Provine, James Farmer and Charles Cunniffe; Pelham Holding Corp.; Aspen law firm Oates, Knezevich, Gardenswartz, Kelly & Morrow PC; and the Bootsy Bellows nightclub and its owner Andrew Sandler — to dismiss the lawsuit.
Sedoy and Shvachko own a penthouse at 308 E. Hopkins Ave. They bought two condos from JW Ventures for $6.27 million in June 2011, later spending another $2 million to combine them into a penthouse, their federal suit says.
The rest of the property — two commercial and three affordable-housing units — was foreclosed on last month by lender Alpine Bank after JW Ventures owed an delinquent balance of nearly $4.9 million. The bank, the only participant in the foreclosure auction, with a bid of $5.5 million, has no intentions to keep it. Hunt filed a notice to redeem earlier this month, meaning he has first chance at buying the property from the bank. Hunt, who placed a $500,000 lien on the property after lending that amount to JW Ventures two years ago, would have to pay nearly $5.6 million to acquire the building, according to documents filed last week with the Pitkin County Treasurer's Office.
The couple initially tried to get a judge's order to stop the sale when they filed their federal complaint in Denver U.S. District Court on Sept. 30.
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But they later withdrew that effort, dismissing both Alpine Bank and the Pitkin County Treasurer's Office from their complaint.
Their lawsuit still, however, claims then-building-owner JW Ventures violated a court injunction by allowing Bootsy Bellows to operate as a nightclub. For his part, Sandler has insisted Bootsy Bellows also has a regular menu and routinely serves meals, making his business eligible to operate in the space once occupied by Syzygy.
The federal complaint also contends the $1.28 million lien the couple placed on the building — filed after a Pitkin County judge ordered JW Ventures in May to pay them that amount — should have priority over other liens on the property, including those from all of the defendants except for Bootsy Bellows and Sandler.
The ruling, which came after a trial in October 2014, determined JW Ventures wrongly assured the couple when they bought their units that they would have exclusive rights to the building's front entrance, east stairway and main elevator. Additionally, the judge ruled the couple violated a city of Aspen ordinance by barring renters of affordable-housing units in the building from using the access.
The defendants want the case dismissed.
"Some federal lawsuits should be filed in state court instead of federal court," Denver attorney Philip W. Bledsoe wrote in a motion to dismiss the case against Pelham Holding Corp., which is a holding company controlled by Farmer of JW Ventures. "This lawsuit not only belongs in state court — it was actually filed and litigated to judgment in state court."
Sedoy and Shvachko, however, contended in their motion that's not the case, partly because their federal fraud claim is new; it wasn't filed in Pitkin County District but was filed in the federal suit.
The fraud claim accuses JW Ventures of misrepresenting that the couple would have exclusive access to the east entry. While fraud wasn't a claim in the Pitkin County lawsuit, the judge did rule that JW Ventures misled the couple with that access assertion.