The construction of Overlook Preserve has been halted until a judge decides whether its developers were fraudulent and breached fiduciary duties.
In January, the city approved the 23-acre Overlook Preserve for 15 single-family-home lots. The development is located south and east of Overlook Drive and north of Burgess Creek Road on land that was slated for the third and final phase of The Ranch at Steamboat development.
The Ranch at Steamboat Condominium Association has filed two lawsuits, asking for an injunction to prevent development.
The first suit, filed Feb. 5, asked the court to reverse the city's approval.
In March the association filed its second suit hoping to stop the development on grounds that the Overlook Preserve's principal owners, who were also principals of The Ranch's property management company, had concealed their development plans from the association and breached their fiduciary duties while serving as property managers for the condominium association.
When the land was bought from Roland Colorado LTD last fall, the Overlook Preserve's principal owners were Martin Able and Mike Seiden. Roland constructed phases I and II of The Ranch in the late 1970s.
A hearing on the issue was held June 3 and 4. On Thursday, 14th District Judicial Court Judge Paul McLimans ordered the injunction. In the order, the court stated Abel "sought to use information he acquired through his relationship with Roland to his own advantage and to the resulting direct disadvantage of his longstanding client, the (association)."
The court's injunctive order means the developers cannot start construction or begin selling the lots until the court makes a final decision on the case.
It is also an indication that the association's case has merit, said Tim Rastello, who is a director of the condominium association.
His firm Holland & Hart also represents the association along with local attorney Chris Atwell.
When the case goes to trial, Rastello said the court will decide whether the property should be placed in a constructive trust. Doing so would allow the homeowners association to purchase the property for $800,000, the same price Overlook Preserve paid for it.
The condominium association hired Sable Management, with principals Abel, Donna Mae Hoots and Seiden, as The Ranch's property management company.
Hoots said none of the Overlook Preserve principals or their lawyers would comment on the judge's order.
According to the court order, in 1999, Abel discussed with the association its interest in purchasing the Phase III property and its desire to preserve the land for open space or green space.
At that time, Abel said the property was not for sale and would not be sold for less than $2 million. The Ranch association was told there were no development plans for Phase III.
After 1999, the board did not directly approach Abel about purchasing the Phase III property.
In May 2000, Abel was informed that the association was ending its property management contract with Sable Management.
At the next month's board meeting, Abel disclosed to the association that he was affiliated with Roland. He also told the association that he was not in favor of the Phase III property being developed. Abel later said the association misunderstood him, and that he meant he did not favor development of the property as it was configured at that time.
According to the court order, that July, Abel made an offer to purchase the Phase III property for $800,000. He had previously learned that was the property's appraised value. In August, Abel met with an architect to discuss developing Phase III.
In October 2001, Overlook Preserve LLC entered into a contract to purchase the property.
In May 2002, the contract between the homeowners association and Sable Management ended.
The court found at no time did Abel inform the association of the new appraisal, the contact made with the architect, the offer made to purchase the property and the contract to purchase the property.
The court noted that while Abel was serving as the association's property manager, he had fiduciary obligations to it and the statements he made at the June 2000 board meeting had a "sedative effect" on board.
"The court finds it to be a virtually unavoidable conclusion that Mr. Abel simply concealed all information regarding the 'new' and highly significant development," the order read.
A trial date is not set, but pending the outcome of this case, Rastello said the association's first lawsuit against the city and the developers might be a moot point.
That lawsuit claimed the Overlook Preserve development is part of a planned unit development agreement the city approved in 1979 for the entire The Ranch project. Under the PUD agreement, The Ranch homeowners would have to approve any major changes to the plan by a two-thirds majority vote.
The original plan would have added 70 units in six separate buildings to the existing 88 condominium units, tennis courts and swimming pool at The Ranch. During the city approval process, the association and another group of more than 60 surrounding neighbors said Overlook Preserve extended into land they had believed for more than 20 years was designated as open spaces.