
Attorneys for 29 condo owners in the Capitol Peak Lodge claim in a lawsuit that Aspen Skiing Co. “participated in a joint scheme” with other Base Village developers to defraud condo buyers.
The suit claims that Skico, along with Intrawest, The Related Cos., Related WestPac and other corporate entities involved with Base Village, purposely overstated the size of the condos in the Capitol Peak Lodge in order to charge buyers more and increase profits.
The lawsuit also claims that entities associated with Related later took steps to conceal the true size of the condos from buyers by failing to list the size of the units on an official condo map and by providing overstated figures to the Pitkin County assessor.
Skico’s attorneys at the Denver law firm of Dufford and Brown have moved to dismiss the claims against Skico in the suit, which has been unfolding in Pitkin County District Court since June 2011.
“The amended complaint fails to allege any particular conduct of Aspen Skiing Co. in relation to the allegation of misrepresentation or concealment,” Skico’s attorneys claim, adding that “Aspen Skiing Co. was not a party to the contracts for sale of the condominium units.”
The owners of Skico, the Crown family, formed a partnership with Intrawest called Intrawest Brush Creek Development Co. LLC to develop Base Village, before selling the project to entities controlled by The Related Cos. and Related WestPac in 2007.
An official with another entity formed by the owners of Skico and Intrawest — Base Village Phase 1A Development Co., LLC — signed purchase and sale agreements in 2006 with prospective buyers of the 82 condos in the three Capitol Peak Lodge buildings at the bottom of Snowmass Ski Area.
When buyers later closed on their condo sales in 2008, they did so with Base Village Owner LLC, an entity controlled by The Related Cos. and Related WestPac, not Skico.
But the attorneys for the 29 condo owners who have filed suit, Matt Ferguson of Garfield and Hecht in Aspen and Michael Reiser of Walnut Creek, Calif., assert that Skico acted as a developer and an agent in the Capitol Peak Lodge sales and so had an active role in the deal.
“Skico’s insinuation that it had no involvement in the development and sales of the units in the Base Village project is disingenuous,” a brief filed by Ferguson and Reiser on Feb. 21 stated. “ … Skico aided and abetted and participated in a joint scheme with all other Intrawest defendants in an effort to defraud plaintiffs.”
The attorneys for the condo owners have grouped the nine different defendants named in their lawsuit into the “Intrawest defendants” and the “Related defendants,” depending on which phase of the project they were involved with.
Skico, given its association with Intrawest and its sales entity, Playground, has been deemed to be an “Intrawest defendant.”
When asked for comment on the claims in the lawsuit, Dave Bellack, a senior vice president and in-house counsel for Skico, responded by saying “We don’t believe that the Aspen Skiing Company had anything to do with any of the allegations of these plaintiffs.”

Like the Viceroy suit?
Ferguson and Reiser also represented over 60 prospective buyers of condos in the Viceroy hotel over a similar claim that the size of the condos in that building were also overstated.
In March 2011, District Court Judge Denise Lynch determined the Viceroy condos had in fact been smaller than advertised and ruled that would-be buyers could get out of their contracts and get their deposits back.
As in the Viceroy case, Ferguson and Reiser claim that the Capitol Peak Lodge developers used “bait and switch” tactics that violated the federal Interstate Land Sales Full Disclosure Act, commonly referred to as ILSA.
Under ILSA, they claim that Skico clearly was functioning as a “developer” and/or an “agent” in the sale and marketing of the condos.
They cite a number of letters to prospective buyers citing Skico, including one that refers to the “Base Village Partnership of Aspen Skiing Co. and Intrawest” and another letter sent to buyers and signed by Jim S. Crown in his role as director of the Intrawest Brush Creek Land Co., which was formed by Intrawest and by corporate entities controlled by the Crown family, which also owns Skico.
“While plaintiffs did not allege that Skico directly sold the units to plaintiffs, the allegations are clear that Skico offered to sell and advertised for sale, the units within the Base Village projects,” attorneys for the condo owners told the court. “ … Skico held itself out to plaintiffs as the developer and seller of the Base Village project by actively promoting its name as the face of the developer of the Base Village project.”
Given that, the attorneys argue, Skico has liability under ISLA because of the fraudulent actions of its partnership with the other “Intrawest defendants.”
Attorneys for Intrawest at Rothgerber Johnson and Lyons discounted their client’s purported infractions of ILSA, however.
“ILSA was not intended to insure buyers of luxury resort condominiums against market risk, but has nonetheless become an ‘increasingly popular means of channeling buyer’s remorse,’” they said, quoting another source on the topic.
In the suit over the Capitol Peak Lodge units, Ferguson and Reiser also claim that the developers failed to fully disclose their intention to issue $47.8 million in bonds to help cover construction costs on the project, and that they did not fully disclose information about the resulting property tax burden for condo buyers, which the plaintiffs’ attorneys say are 240 percent higher than it is for condo owners in Snowmass Village just outside of Base Village.
The attorneys also allege it was wrong for the Related defendants to issue the bonds in 2008 in the face of shaky finances for the project, which meant that the other condos planned for the project would not get built, and therefore would not help pay down the debt from the bonds.
“ … by April 2008, Related defendant knew of the high likelihood that the Base Village project would not be constructed beyond the first phase of the Viceroy hotel, and that as such, the issuance of the metro district bonds would cause the plaintiffs’ units to become significantly less valuable, due to the fact that the plaintiffs’ units would be subject to a financially insolvent metro district without sufficient property owners to adequately serve the metro district bond debt,” Ferguson and Reiser state.
Defendants beg to differ
Motions to dismiss the Capitol Peak Lodge suit have been submitted to Judge James Boyd from all the defendants in the case, including Skico, Intrawest and The Related Cos.
Attorneys for Intrawest and Related both say the claims from the Capitol Peak Lodge owners should be dismissed because proper disclosures about the “approximate” size of the units, and about potential additional property taxes from bond sales, was duly given in the purchase and sales agreements signed by buyers.
They also argue that the suit should be dismissed because the owners waived their right to file suit as individuals, because the owners closed on their units and accepted the units as is, and because in at least nine instances, the owners closed on their condos more than three years before the lawsuit was filed.
Attorneys for the defendants also say that the Capitol Peak Lodge buyers have filed a “copy-cat” lawsuit suit trying to capitalize on the victory by the prospective Viceroy owners. But, they say, Capitol Peak Lodge is no Viceroy.
“Plaintiffs’ case is fundamentally different from the Viceroy litigation because the Viceroy plaintiffs rejected the allegedly non-conforming condominium units proffered to them and sued for a refund of their deposits,” stated attorneys representing Related at Ballard Spahr in Denver. “In sharp contrast, plaintiffs here accepted their units, took title to them, and remained in possession for two-and-a-half to three-and-a-half years before suddenly purporting to notice that the units varied ‘substantially’ from what had been promised to them.”
And, attorneys for the defendants point out, it was only after the Viceroy lawsuit that they filed their own suit.

Approximate differences in size?
They also point out that the purchase and sales agreements signed by the prospective condo buyers clearly state that all measurements of condos are “‘approximate’ and that ‘final dimensions, square footage, and floor plans may vary.’”
But Ferguson and Reiser argue that it wasn’t until the condo owners got bills in 2009 from their homeowners association that they realized the actual size of their units differed from the “approximate” size of their promised units.
For example, Bruce Smith of Orlando, Fla., the lead plaintiff in the suit, was told the approximate size of his two-bedroom condo that he paid $1.4 million for would be 1,178 square-feet.
When built, it turned out to be 1,102 square-feet, or 76 square feet and 6.5 percent smaller than advertised.
So instead of paying $1,171 per square foot, Smith ended up paying $1,252 per square foot, which could be considered a cost increase of $95,164.
Ferguson and Reiser point out that every one of the condos bought by their clients was smaller than advertised, from between 42 square feet to 195 square feet smaller, or from between 4.5 to 15 percent smaller.
In all, Reiser said they estimated their clients essentially overpaid for the collective condos by about $3 million.
Referring to the defendants’ admonishments that buyers were duly told their units were of an approximate size, Reiser and Ferguson wrote that “ … when selling Aspen/Snowmass real estate at $1000’s per square foot, with people’s life savings on the line — approximating by ALWAYS overstating by significant amounts cannot be fairly disclaimed under Federal or Colorado law.”
They also claim, in response to defendants saying that they warned buyers about potentially higher property taxes in the metro districts, that they were relying on a “You-Should-Have-Known-We-Were-Lying-To-You” defense.
“Given defendants superior knowledge of a:) statutory, industry, and federal lending/appraisal standards for the measurement of the square footage of condominiums, b) the extraordinary special district taxes that were to be hatched by these developers and certain to attach to plaintiffs’ units; and c) the virtual certainty that the bonds issued by the Related-controlled metro district would end up in default (which default has now occurred), defendants knew exactly what they were doing in failing to fully disclose those material facts to plaintiffs,” Ferguson and Reiser argue in a Feb. 29 brief. “They were maximizing profits with false product sizes. They were also actively and knowingly transferring their known risks on an unwitting customer.”
Editor’s Note: The story above was published in collaboration the Snowmass Sun on Wednesday, March 7, 2012.
Capitol Peak Lodge lawsuit document trove
There are a growing number of legal briefs in the case, Bruce L. Smith, et al v. The Related Companies, Case No. 2011 CV 168 in Pitkin County District Court.
Below are some of the most relevant documents filed with the court to date, which are posted in Document Cloud.
The original lawsuit, or “complaint,” was filed in Pitkin County District Court on June 29, 2011, with 24 plaintiffs. The complaint from the plaintiffs was amended on Aug. 1, and then again on Dec. 5, 2011. So the prevailing complaint is the one from December – the “Second Complaint and Jury Demand.” It is a 52-page document and is broken into parts one and two below.
Second Amended Complaint, Part 1
Second Amended Complaint, Part 2
In response to the lawsuit, there have been a number of “motions to dismiss” filed, including motions from Aspen Skiing Co., Intrawest, and The Related Cos. Attorneys for Aspen Skiing Co. have actually filed two motions to dismiss, one on Oct. 21, 2011, and one on Jan. 10, 2012. Both are posted below.
SkiCo Motion to Dismiss, Oct. 21, 2011
Skico Motion to Dismiss, Jan. 10, 2012
Attorneys for the plaintiffs (the 29 condo owners in Capitol Peak Lodge) responded on Feb. 21, 2012, to SkiCo’s Motion to Dismiss. That legal brief is linked below:
Plaintiff’s Response in Opposition to Defendant Aspen Skiing Company, LLC’s Motion to Dismiss
Attorneys for Intrawest and various corporate entities affiliated with Intrawest also filed a motion to dismiss, on January 23, 2012. It is below:
Attorneys for The Related Cos. filed a Memorandum of Law in support of their Motion to Dismiss on Jan. 9, 2012. It is a 60-page document and is in three parts below:
Memorandum of Law in Suport of Motion to Dismiss Second Amended Complaint – Part 1
Memorandum of Law in Support of Motion to Dismiss Second Amended Complaint – Part 2
Memorandum of Law in Support of Motion to Dismiss Second Amended Complaint – Part 3
In addition to Related’s memo, attorneys for Base Village Owner LLC and Related WestPac Real Estate LLC have also filed two memos in support of their motion to dismiss, one on Oct. 21, 2011, and one of Jan. 9, 2012. They are below.
Base Village Owner was the entity that took the lead on the development of Base Village. Related WestPac Real Estate is tied to Related WestPac, the entity formed by the partnership of The Related Cos., or at least a corporate entity it controls, and California developer Pat Smith.
Memo in Support of Defendants Base Village Owner LLC and Related WestPac Real Estate LLC to Dismiss First Amended Complaint, Oct. 21, 2011.
Memo in Support of Defendants Base Village Owner LLC and Related WestPac Real Estate LLC to Dismiss First Amended Complaint, Jan. 9, 2012
In response to the various motions to dismiss, attorneys for the plaintiffs filed two more briefs. One was a consolidated response to the Related motions to dismiss, and another focused on the nuances of the ILSA law in response to the motion from Intrawest to dismiss. They are both below:
Plaintiffs’ Consolidated Response in Opposition to Related Defendants’ Motion to Dismiss Second Amended Complaint.
Plaintiffs Resonse in Opposition to Defendant’s (Intrawests’) Motions to Dismiss Plaintiffs’ Second Amended Complaint.
As part of the Second Amended Complaint, attorneys for the plaintiffs filed a number of exhibits.
The exhibits below include a purchase and sale agreement as well as a list of the 30 condos purchased by the 29 plaintiffs and the differences in size between what they thought they were buying and what the received. The developers have responded that buyers were duly informed that the size of their condos was approximate.
Exhibit F of this collection of exhibits is a highlight. Exhibit D, also below, is the Base Village Purchaser’s Guide, which
<a href=”h includes the notation that condo sizes are “approximate.”
Exhibits A-C and E-J Second Amended Complaint
Exhibit D to Second Amended Complaint
Also relevant to the story is the Capitol Peak Condominium Map, which is on file in the Pitkin County Clerk and Recorder’s Office.