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Sedoy v. Provine

United States District Court, D. Colorado

February 27, 2017

MICHAEL SEDOY and NATALIA SHVACHKO, Plaintiffs,
v.
JOHN PROVINE, and CHARLES CUNNIFFE, Defendants.

          FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER OF JUDGMENT

          R. Brooke Jackson United States District Judge

         This case was tried to the Court from January 23, 2017 to January 26, 2017.

         I. FINDINGS OF FACT

         A. The Parties.

         1. Plaintiffs Michael Sedoy and Natalia Schvachko (“the Sedoys”) are a married couple who primarily reside in New York City. PX-99 at ¶¶1-5 (Order After Trial, City of Aspen v. Michael Sedoy, et. al., No. 13-cv-30047 (Pitkin Cnty., Colo. Dist. Ct. May 15, 2015)). In 2011 they began to look at properties in downtown Aspen, Colorado with plans to permanently relocate their family to that area. Id. at ¶5.

         2. Defendant John Provine is a real estate entrepreneur in the Aspen area. Id. at ¶8. Along with former defendant James Farmer and Walt Harris, Mr. Provine founded an Aspen-based real estate redevelopment limited liability company called “JW Ventures, LLC.” Id. at ¶6. Mr. Provine served as co-manager of that business with Mr. Farmer. Id.

         3. Defendant Charles Cunniffe is an architect by trade. Id. at ¶11. In 2008 Mr. Cunniffe joined JW Ventures as a full member after working with the company designing the building plans for the property that is the subject of this dispute: 308 E. Hopkins Ave. in downtown Aspen, Colorado. Id.

         B. Timeline of Events.

         4. In 2005 JW Ventures (comprised of Mr. Provine, Mr. Farmer, and Mr. Harris) purchased the existing property located at 308 E. Hopkins Ave in Aspen, Colorado. Id. at ¶12. The company purchased this property, which is located on Aspen's renowned “Restaurant Row, ” with plans to demolish the existing structure and construct a new three-story, mixed-use building. Id. at ¶¶12-13. They hired Mr. Cunniffe to design the project. See Id. at ¶¶23-24.

         5. As will be discussed in greater detail below, Mr. Cunniffe's original building plans called for a commercial space on the ground floor (“Unit 101”), a commercial space on the lower basement level (“Unit LL1”), three affordable housing units (“AHUs”) on the second floor, and two condominiums-one on the second floor (“Unit 201”) and one as a third floor penthouse (“Unit 301”). Id. at ¶13. These condominiums have often been referred to as the “free market units” because they were to be sold on the open market. See id.

         6. Mr. Cunniffe's plans also noted that the building would feature two different entrances, each providing access to separate entryways, halls, elevators, and stairwells. Id. at ¶¶ 27, 33. One entrance was considered the main or “east” entrance. Id. at ¶ 24. It provided access to the east entryway, hall, stairs, and elevator. See Id. The other entrance, known as the “west” entrance, allowed for entry to the building through the alleyway. Id. It provided access to the west entryway, hall, stairs, and elevator. See Id. The original building plans provided that all occupants of the building would have access to both entrances to enter and exit the building. Id. at ¶33.

         7. In early 2006 JW Ventures, via Mr. Cunniffe, sought the approval of these building plans by the Historic Preservation Commission (“HPC”) of the City of Aspen. Id. ¶ 24. On July 12, 2006 the HPC adopted Resolution 18, which recommended approval of these plans. Id. at ¶28. Next, on October 30, 2006 JW Ventures submitted its application to the City's Planning & Zoning Commission (“P&Z”) for its approval. Id. at ¶29. P&Z adopted Resolution 18 on April 17, 2007. Id. at ¶34. JW Ventures then presented its development proposal to the Aspen City Council. Id. at ¶35.

         8. Soon after JW Ventures submitted its proposal to the City of Aspen, the City approved Ordinance 27. Id. at ¶¶36-37. Ordinance 27 allowed JW Ventures to build its mixed-use building with several important conditions. Id. These conditions included that JW Ventures record a subdivision agreement that met the requirements of the City's Land Use Code, as well as all conditions of P&Z, and that JW Ventures submit a final condominium plat (also known as a condominium map) upon substantial completion of the project. Id. That plat needed to be approved and signed by the Community Development Director of the City. Id. Furthermore, Ordinance 27 required, among other things, that JW Ventures' building permit application comply with the Americans with Disabilities Act (“ADA”) and the International Building Code (“IBC”), which the City of Aspen had adopted in 2003. Id. at ¶¶36-37, 41.

         9. On April 28, 2009 the City issued JW Ventures a building permit based on the building plans prepared by Mr. Cunniffe. Id. at ¶¶42-46. As mentioned before, these building plans showed that the east entryway, stairs, and elevator were accessible by all occupants of the building. Id. at ¶¶16-22. The plans also noted that the east elevator would provide handicap access to the commercial space in the lower basement level. Id. The west elevator would be used primarily by the commercial units for moving goods. See id.

         10. After JW Ventures received their building permit, it prepared the condominium plat required by Ordinance 27. See Id. at ¶57. Curiously, that map conflicted with JW Ventures' original building plans in many respects. For instance, the condominium map labeled the east entryway, hall, stairs, elevator as “limited common elements” (“LCE”) for Units 201 and 301. Id. ¶57; DX-306 (condominium plat). This meant that these portions of the building were apparently reserved for the exclusive use of the owners of those free market units and were not for use by tenants of the AHUs. See PX-99 at ¶60; C.R.S. § 38-33-103(5). The condominium map also made it clear that tenants of the AHUs could not use the west elevator, which was designated as an LCE and a service elevator for the two commercial units in the building. See DX-306. The west entryway, hallway, and stairs, however, were designated as “general common elements” or “GCEs” (at least on the ground level), meaning that any tenant, including those living the AHUs, had unrestricted access. Id.; PX-99 at ¶¶58-59; C.R.S. § 38-33-103(3).

         11. The first time JW Ventures submitted its condominium map to the City for approval, the City returned the map to the company after finding a minor error unrelated to the parts of the map described above. PX-99 at ¶¶71-75. This was in 2009. Id.

         12. Roughly around that same time, plaintiffs began to consider buying a property in Aspen to permanently relocate their family from New York City. They began to get serious about this plan in 2011, enlisting the help of Aspen real estate broker Tim Estin and local attorney Chris LaCroix to aid them in their home-buying process. Id. ¶¶93-95. Plaintiffs told Mr. Estin that they wished to relocate to downtown Aspen so that they could mimic the urban lifestyle they had come to love in New York. At the same time, however, they informed Mr. Estin that privacy was a major concern for them with whatever property they ended up choosing.

         13. Also in 2011, roughly two years after JW Ventures first submitted its condominium map to the City, JW Ventures resubmitted its condominium plat for 308 E. Hopkins Ave. to the City. PX-99 at ¶¶76-79. Aside from making the change the City had earlier requested, in all other respects, particularly with respect to the designated usage of the east and west entrances, the new map JW Ventures resubmitted was the same as the 2009 map. See id.

         14. Shortly after JW Ventures resubmitted its revised condominium plat in early 2011, the Community Development Director of the City of Aspen approved it. Id. As would become clear many years later after the state court case involving this property described infra, by approving the map the City was merely confirming that the map met the standards as set forth in the City's Land Use Code. See Id. at ¶79. It was not evaluating whether the designations of certain portions of the building as LCEs, namely the east entryway and elevator, was legal. See Id. As the City's approval on the map explained in small print, the building's design was still subject to Ordinance 27 and therefore numerous other City regulations regarding accessibility, ingress, and egress. Id. at ¶80; DX-306. JW Ventures recorded the signed condominium map with the Pitkin County Clerk and Recorder on February 28, 2011. PX-99 at ¶83; DX-306.

         15. In the spring of 2011 JW Ventures began to experience financial difficulties. PX-99 at ¶90. Specifically, the company got behind on its mortgage payments after Ute and Syzygy, the two restaurants occupying the commercial units run by JW Ventures member Walt Harris, could not consistently pay their full rental obligations each month. See Id. By this point, JW Ventures had also not yet sold the two free market units in the building. Id.

         16. Also in spring of 2011 the Sedoys contacted JW Ventures and expressed an interest in purchasing both of the free market units at 308 E. Hopkins Ave. Id. at ¶93. Negotiations over the properties soon began in earnest. Id. Attorney Leonard Oates represented JW Ventures during these negotiations. Id. at ¶96.

         17. As these negotiations were ongoing, Mr. Provine apparently accompanied Ms. Schvachko and Mr. Estin on tours of the property. I use the word “apparently” because Mr. Provine vigorously denies that these tours ever occurred. Nevertheless, Ms. Schvachko testified that not only did these tours occur, but that Mr. Provine represented to her during them, as well as on numerous phone calls, that the owners of the free market units would have exclusive use of east entryway, hall, stairs, and elevator (as the condominium map indicated), except for occasional elevator use by handicapped patrons of the basement commercial unit. Mr. Estin corroborated Ms. Schvachko's account, testifying that Mr. Provine “absolutely” made such representations to Ms. Schvachko. As will be described in greater detail below, I find that it is unnecessary to ...


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