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VRC, LLC v. RCR Vail, LLC

United States District Court, D. Colorado

November 21, 2014

VRC, LLC, a Colorado limited liability company, Plaintiff,
v.
RCR VAIL, a Colorado limited liability company, LARRY PETERSON, an individual, SLIFER SMITH & FRAMPTON - VAIL ASSOCIATES REAL ESTATE, LLC, a Delaware limited liability company, Defendants

For VRC, LLC, a Colorado Limited Liability Company, Plaintiff: Kerry Haverkamp Wallace, Goodman & Wallace, P.C., Edwards, CO.

For RCR Vail, LLC, a Colorado limited liability company, Defendant: Annie T. Kao, LEAD ATTORNEY, Marc Andrew Bonora, Vail Resorts Management Company Legal Department, Broomfield, CO; Laura M. Sturges, Robert Charles Blume, Gibson Dunn & Crutcher, LLP-Denver, Denver, CO.

For Larry Peterson, an individual residing in Colorado, Slifer, Smith & Frampton/Vail Associates Real Estate, LLC, a Delaware limited liability company, Defendants: Curtis W. Shortridge, Shortridge Fitzke & Hultquist, P.C., Englewood, CO.

MEMORANDUM OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT

Richard P. Matsch, Senior District Judge.

Defendant RCR Vail, LLC (" Defendant Seller") is an affiliate of Vail Resorts Development Company (" VRDC") whose ultimate parent is Vail Resorts, Inc. Defendant Slifer Smith & Frampton--Vail Associates Real Estate, LLC (" Slifer") is a real-estate brokerage company whose majority member is Vail Resorts, Inc. Defendant Larry Peterson is a real-estate broker who worked for and/or with Slifer during the events in question. Together, Defendants developed, marketed, and sold a luxury condominium project called The Ritz-Carlton Residences, Vail (" Vail Ritz"), which is located west of Lionshead Village at the base of Vail Mountain. On January 29, 2007, Defendant Seller entered into an Exclusive Right-To-Sell Listing Contract with Defendant Slifer to help sell units at the Vail Ritz. [Doc. 67, Ex. B at 2.]

Plaintiff VRC, LLC is a Colorado limited liability company formed for the purchase of one of the Vail Ritz condominium units to be used by its members. On April 25, 2007, Plaintiff signed a Purchase and Sale Agreement (" PSA") to purchase a $3.2 million condominium (" the Condo" or " Unit 100") at the Vail Ritz and paid $407, 509.13 to Defendant Seller as an earnest money deposit.

The Vail Ritz was substantially completed in August 2010. Defendant Seller notified Plaintiff that the closing date on Unit 100 was scheduled for October 15, 2010. Plaintiff did not appear at the closing. Pursuant to the PSA, Defendant Seller retained Plaintiff's earnest money deposit.

In this civil action, Plaintiff brings ten claims against Defendant Seller for misrepresenting, concealing and/or omitting various material facts about the Vail Ritz: (1) two claims under the Interstate Land Sales Full Disclosure Act (" ILSA"), 15 U.S.C. § 1701 et seq .; (2) four common-law claims alleging fraud or misrepresentation; (3) three claims under the Colorado Consumer Protection Act (" CCPA"), Colo. Rev. Stat.§ 6-1-113(2)(b); and (4) one equitable claim for unjust enrichment. [Doc. 1 at 12-39.] Defendant Seller has moved for summary judgment of dismissal. [Doc. 67.] At a motions hearing held on October 7, 2014, the Court dismissed Plaintiff's First Claim for Relief (ILSA § 1703(a)(2)(D)) as untimely and Plaintiff's Tenth, Eleventh and Twelfth Claims for Relief, brought pursuant to the CCPA, for lack of significant public impact. [Doc. 79.]

Plaintiff asserts three common law claims against Defendants Slifer and Peterson for fraud and misrepresentation; a claim under Colo. Rev. Stat. § 12-61-807(2)(b)(VI), imposing certain duties on real estate brokers; and a negligence per se claim premised on a violation of the same Colorado statutory provision.

Defendants Slifer and Peterson have moved for partial summary judgment. [Doc. 66.] In their Motion, Defendants Slifer and Peterson ask only that Plaintiff not rely on certain evidence to support its common law claims.

FACTUAL BACKGROUND

The following statements are not in genuine dispute unless otherwise indicated. Robert Vogl was the managing member of Plaintiff VRC through a separate company, RVRC, LLC. Vogl has degrees from California State University in business administration and economics. He is an investment banker and a business consultant and is involved in " merger and acquisition activity" ranging from approximately $3 million to $40 million. [Doc. 66 at 2.] At all relevant times, he lived in Vail.

Defendants Slifer and Peterson marketed the Vail Ritz according to Defendant Seller's plan, emphasizing the Ritz Carlton brand, the Vail Ritz's proximity to a proposed ski lift and ski-village development project known as " Ever Vail, " and the Vail Ritz's proposed amenities. Defendant Seller opened a Vail Ritz Preview Center in Lionshead Village in late 2005/early 2006. The Preview Center was operated by representatives of Defendant Slifer (including Defendant Peterson) who were given talking points regarding the Vail Ritz. [Doc. 72, Ex. 8.] The Preview Center contained a topographical model showing the Vail Ritz in the EverVail development and a new ski lift just to the west of the Vail Ritz, as well as wall displays of the Vail Ritz's proposed amenities. Brochures and handouts were also available.

The Defendants' knowledge regarding the importance of showing the Vail Ritz as part of a larger development is reflected in e-mails from the fall of 2006. On October 31, 2006, Katie Veine, Director of Marketing for VRDC, e-mailed Jack Hunn and Kelly Gosnell of VRDC regarding the topographical model at the Preview Center. Veine stated:

I had a conversation a couple weeks ago with Larry Peterson regarding the way West LionsHead is displayed on the topo table. Currently the model includes horizontal development 'blobs.' Are we far enough along within the approval process to show vertical building masses? Larry believes this will help tell the story and make The Ritz look more within the future plans rather than at the western end.

[Doc. 72, Ex. 16.] Jack Hunn agreed that the topographical model should be updated as Veine described. [ Id. ] In another November 2006 e-mail, Katie Veine told Vail Ritz brochure designers that she preferred a map depicting the Vail Ritz as part of the " West Lionshead" development because:

[a] big part of the sales story (and in hindsight we probably should have included more information on it) is the West LionsHead development. The West LionsHead [development] is what The Ritz buyers are purchasing...a new town. The map that includes The Ritz does not include all of West LionsHead therefore not telling the whole story.

[Doc. 72, Ex. 22.]

Defendants were also discussing how to frame the Vail Ritz's amenities at this time. Kelly Gosnell of VRDC e-mailed the brochure designers and said: " as you're making revisions -- since we won't be having a restaurant we should probably remove 'dinner in Vail's most popular restaurant' from the copy." Ann Kifer, one of the designers, responded: " That really didn't indicate that [the Vail Ritz] had a restaurant. It was intended to higjhlight [sic] Vail amenities. But if you want to eliminate it we will." Katie Veine, VRDC's marketing director, replied: " Keep restaurant . . . I read it as you meant it Ann." [Doc. 72, Ex. 20.]

Brokers of the Vail Ritz were instructed in early 2007 to tell prospective buyers that " [w]e hope for an answer from the Town [of Vail] in the Spring of 2007" as to whether the proposed ski lift would move forward; and " current plans anticipate that the lift will be operated beginning in the 2008-2009 ski season."

Before entering into the PSA, Plaintiff received marketing materials from Defendants. A 2005 brochure stated that the Condo was to be built " directly adjacent to a proposed new" ski lift, which was " subject to United States Forest Service and Town of Vail approval" [Doc. 67-11 at 1]; that the Vail Ritz would be " staffed by ladies and gentlemen whose sole purpose is to provide impeccable and unobtrusive service" [Doc. 67-10 at 1]; and referred to a " media room" as one of the common spaces at the Vail Ritz [id. at 6]. Another brochure, created in late 2006, stated that the Vail Ritz was " within walking distance of a proposed new ski lift" [Doc. 68-3], that the new ski-village development " may include" a " [n]ew high-speed ski lift to Vail Mountain[, ]" and that " [a]ll plans and information, including proposed ski lift, are subject to government approvals" [Doc. 68-7 at 4]. In terms of amenities, the 2006 brochure stated that " the ladies and gentlemen of The Ritz-Carlton are among the most highly trained service providers in the hospitality industry" [Doc. 68-5 at 1]; included a picture of a person getting what looks to be a head massage [id. at 2]; and listed " [r]esidence catering services and in-room dining program" and " [s]pa treatments at on-site treatment rooms or within residence" as additional services " subject to extra fees, seasonal hours, and availability" [Doc. 68-8 at 5]. There was an asterisk next to those services stating that they were " outsourced." [ Id. ]

Robert Vogl testified at Plaintiff's Rule 30(b)(6) deposition that he could not specifically recall reviewing these brochures. [Doc. 67 ¶ ¶ 12-13.] Vogl said that he did not keep copies of the materials he received and could not specify what misrepresentations were made in them. [Doc. 71 ¶ 4; Doc. 71, Ex. 3 ¶ 13.]

Vogl visited the Vail Ritz Preview Center before executing the PSA. In his affidavit, Vogl says that he saw the ski lift depicted in the topographical model at the Preview Center and that the ski lift was not labelled as " proposed." [Doc. 71 ¶ ¶ 9-10.] Vogl testified at his deposition that unidentified individuals at the Preview Center (he did not know their names or affiliations) gave him the impression that the Vail Ritz would have a full-service spa [Doc. 67, Ex. F at 68:9-17]; a " state-of-the-art media room or theater on-site" [id. at 69:23-70:6]; " a full-service restaurant on-site" [id. at 70:7-9]; and room service [id. at 70:12-15].

At a pre-construction sales lottery held for prospective buyers in February 2007, Vogl selected Unit 100 for purchase on behalf of Plaintiff.

Defendant Seller provided Plaintiff with a 500-page binder of documents relating to the purchase of Unit 100 on April 6, 2007. [Doc. 67, Ex. K.] The binder included an unsigned copy of the Purchase and Sale Agreement. The most salient provisions of the PSA are:

1. Seller estimated that the Unit " will be Substantially Completed by November 30, 2009[]"; and stated that the Unit would be " Substantially Completed no later than January 31, 2010, unless a later date is mutually agreed upon by the parties[]";
2. Defendant Seller had entered into a licensing agreement with The Ritz-Carlton Hotel Company, LLC, which allowed Defendant Seller to use the " Ritz-Carlton" name;
3. The Ritz-Carlton would provide property management services pursuant to a Management Agreement with ...

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