Aspen Club faces second foreclosure action
The general contractor overseeing the redevelopment of the Aspen Club has taken legal action to collect nearly $19 million it is owed on a mechanic’s lien.
Denver firm PCL Construction Services Inc. launched litigation against the Aspen Club after business-hours Wednesday in Pitkin County District Court.
PCL is attempting to foreclose a $17.7 million lien it filed against the Aspen Club on Sept. 26. The total principal on that amount now stands at $18.8 million, according to the complaint. The filing of a mechanic’s lien is the first step a contractor takes to collect on a debt when it is not promptly paid.
PCL also filed a breach-of-contract claim against the fitness and residential club.
“PCL is entitled to foreclose its lien and sell the Property,” the complaint says.
Along with Aspen Club and its affiliates, PCL’s complaint also identifies numerous subcontractors who are lienholders — nearly two full pages in its complaint — and other parties as defendants.
PCL is making a run at a foreclosure through the judicial process, while FirstBank began foreclosure proceedings last week through the Pitkin County Treasurer’s Office. FirstBank, which holds the deed of trust on the Aspen Club Property, claims it is owed $30 million on a $45 million loan Aspen Club took out in May 2016.
“We were ready to wait awhile to let Michael Fox (owner of the Aspen Club) to get recapitalized,” said PCL regional manager Michael Harms, adding that “our foreclosure is in response to FirstBank’s action last week.”
Unlike traditional litigation, the defendants in PCL’s case, aside from the Aspen Club and its associated parties, are not liable for any damages, two lawyers knowledgeable of the case said Thursday.
“Anyone with an interest in that property, whether it’s a bank or a subcontractor, they have to be a party to that case,” Aspen attorney Jeff Wertz said.
Wertz, on behalf of Basalt-based Smuggler Finishes, filed a mechanic’s lien for $25,730 against the Aspen Club on Oct. 2. Smuggler Finishes is run by John Pulman, who said the amount owed to him isn’t much compared to what others are seeking.
“I’m just a small tadpole,” he said.
Since the filing, Wertz and Pulman have forwarded the matter to Glenwood Springs attorney Mike Sawyer, who said he has taken on seven or eight additional lien claimants in addition to the Glenwood Springs-based Gould Construction Inc., which filed a $1.7 million mechanic’s lien Sept. 25.
“In a mechanic’s lien foreclosure action, you are required to name all of the parties that have a recorded interest in the property, so that means what PCL filed will essentially name every sub that’s owed money on that project,” Sawyer said.
Aspen Club has until Feb. 20 to file a notice of intent to cure its debt to FirstBank. The earliest date a foreclosure sale could occur is March 7.
Fox, who could not be reached for immediate comment Thursday, previously has said he is working on a plan to pay back the contractors and the bank and bring the project back up to speed. Numerous subcontractors stopped work at 1450 Ute Ave. at the end of August. Harms said PCL is expected to finish winterizing the site Friday to preserve its integrity until construction — provided the debt-collection matters are settled — resumes.
“There is a lot of positive sentiment that the project will continue this spring,” Harms said.
The Aspen Club closed in April for the redevelopment project, which calls for a remodeled 40,000-square-foot Aspen Club & Spa building. Also included is a 54,000-square-foot lodge with 20 timeshares, which comprises 36,000 square feet of townhouse units and 18,000 square feet of club units. Another 13,600 square feet of development would account for 12 multi-family affordable-housing units.
The timing of when the construction began and when Aspen Club received the FirstBank loan are relevant because of which parties will receive preference in collecting their debts, said Sawyer, adding he believes construction work began first. Once the dirt is dug at a project site it’s considered the beginning of construction activity for all involved, Sawyer said.
If that is the case, PCL and the subcontractors would gain priority in collecting what they are owed, he said.
“PCL, I suspect, will seek an injunction against the public trustee (the county treasurer) from processing the foreclosure until the court has ruled on the priority of the mechanic’s liens,” Sawyer said. “The court may say these mechanic’s liens have higher priority than (FirstBank’s) deed of trust.”
If Fox’s assertions that the debts will be paid off before FirstBank takes the Aspen Club to a foreclosure sale, all of that won’t matter. But the litigation and liens are the course of doing business for now, Sawyer said.
“There are a lot of people in the valley who on faith and credit added value to that property,” he said. “And if there isn’t a refinance or some way to work this out where all the contractors get paid, that property will provide the basis for them getting paid.”
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