Standoff over ski lodge sale
September 5, 2008
ASPEN ” A group of businessmen who bought and redeveloped an iconic Aspen ski lodge earlier this decade are fighting over how to divvy up the proceeds of a potential sale.
Basalt resident David Fiore and his Western Peak LLC filed a lawsuit in Pitkin County District Court this week against Little Red Ski Haus LLC to try to secure management and development fees he claims he is owed.
Some of the same partners Fiore is suing over the Little Red Ski Haus business deal filed a federal lawsuit against him in July over control of the Roaring Fork Mobile Home Park in Basalt. Fiore and his original partners bought the Little Red Ski Haus in 2001 and the trailer park two years later. They redeveloped the ski lodge but their redevelopment plans in Basalt stalled before their relations soured.
Fiore’s lawsuit says he and Western Peak were appointed by the ownership group of the ski lodge to oversee day-to-day management of the property and supervise a major renovation. Little Red Ski Haus LLC voted to pay him $36,000 annually in management fees and an unspecified amount for overseeing redevelopment, the lawsuit claimed.
The agreement was modified in October 2007 so that Fiore would get 5.5 percent of the sales price in addition to the $36,000 annual management fee. Fiore claims in the lawsuit he had the “opportunity to earn substantially greater profits through leading a sale of fractional interests” of the units at the Ski Haus.
“Plaintiff’s efforts have substantially increased the value of the Little Red Ski Haus to Little Red Ski Haus LLC,” the lawsuit says. “Most significantly it was extensively renovated and re-entitled, including entitlements for sale of fractional interests of the property.”
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The business partnership started unraveling in spring 2008. The members of Little Red Ski Haus LLC voted to remove Fiore and Western Peak as the manager of the lodge and “acted to prevent the sale of fractional interest units,” the suit says. The change in direction came primarily from new investors who didn’t participate in the original plan, according to Fiore.
The Little Red Ski Haus ownership group also voted to terminate all agreements with Fiore and Western Peak, the lawsuit claims. Since that decision, there has been a dispute over what compensation Fiore and Western Peak should receive for their services once the lodge is sold.
The Little Red Ski Haus, at 118 E. Cooper Ave., is listed for sale at $10.75 million. Fiore fears that if a sale goes through before the dispute over his fees is resolved, he won’t receive payment for his services.
“[Little Red Ski Haus LLC] has no other material assets or operations, most of its members reside out of state, and several of its members are experiencing financial difficulties and may be effectively judgment proof,” Fiore’s lawsuit says.
Fiore wants a judge to rule that the ownership group breached its contract with him and Western Peak, and he wants the dispute resolved for an amount of money to be determined in a trial. He also seeks a permanent injunction preventing Little Red Ski Haus LLC from distributing proceeds from a sale of the lodge without resolving the fee dispute.
A judge hasn’t taken action yet.