On March 30, 2011, Judge Denise K. Lynch, Pitkin County District Court, Colorado, applied the Interstate Land Sales Full Disclosure Act (“ILSA”) in favor of Garfield & Hecht, P.C.’s (“G&H, P.C.”) purchaser clients. The Court held that the developer (a Related Companies (NYC) development entity) of the massive and stalled Base Village Project in Snowmass Village, Colorado violated ILSA §1703(a)(1)(C) by selling luxury hotel/condominium units (“Units”) in a Viceroy Hotel with untrue statements about the actual square footage of the Units as filed with the U.S. Department of Housing and Urban Development (“HUD”). This March 30th ruling follows another favorable March 1st summary judgment ruling in favor of G&H, P.C.’s clients finding that each had a right of rescission under ILSA because the Units offered for sale were not clearly identifiable, ILSA §1703(d)(1).
The March 30, 2011 order was also entered in the consolidated lawsuits titled Michael Keefe et al. v. Base Village Owner, LLC, et al., pending in the Pitkin County Colorado District Court, Case No. 09 CV 273. The developer provided each purchaser with a HUD Property Report and a Unit Plan prior to construction that represented the Units square footage. After the Viceroy Hotel was built, the developer recorded a Condominium Map that contained substantially less as-built square footage for each Unit, varying between 6.734% to 23.413% of lost square footage. The developer’s untrue statements in the HUD Report resulted in estimated losses of square footage valued at $8 Million.
Judge Lynch rejected (1) the developer’s argument that there are different methods for measuring square footage, and (2) a receiver’s argument that square footage is not a material item of concern to purchasers. Instead, Judge Lynch adopted G&H, P.C.’s ILSA § 1703(a)(1)(C) argument and found that a “reasonable buyer of a condominium unit would consider the square footage of the unit to be important in making a decision as to whether to buy the unit.” The District Court found that the discrepancy was a material fact and that the developer made untrue statements about the size of the Units in its HUD Report. The purchasers are now entitled to a return of their deposits (nearly $15 Million), their damages, including attorneys’ fees, costs, prejudgment interest, appraiser fees and travel costs to and from the Units.
Matthew C. Ferguson and Chad J. Schmit, partners with the Aspen, Colorado based law firm of Garfield & Hecht, P.C. are acting as lead counsel in the consolidated lawsuit involving the approximately sixty-five (65) purchasers. For more information concerning this ruling or the nature of this lawsuit, please contact G&H, P.C. attorneys Matthew C. Ferguson at email@example.com or Chad J. Schmit at firstname.lastname@example.org.