MOUNTAIN VILLAGE – The owners of the Rosewood Telluride Resort and Hotel have filed a lawsuit against Minneapolis-based CarVal Investments for breach of contractual obligations. The suit alleges that the lender failed to release prescheduled capital payments needed to begin construction of the 450,000-square-foot mixed-use development in Mountain Village.
The lawsuit was filed on June 3, a week before the ownership group of the Rosewood Telluride project filed for chapter 11 bankruptcy and one day before the property was to be sold as a foreclosure at the San Miguel County Courthouse.
Rosewood’s ownership group consists of West Galena Holdings LLC, West Galena Real Estate LLC, and Lot 129 LLC. Former Telluride resident Aaron B. Honigman serves as manager of the ownership group, which is based in Detroit.
At the heart of the lawsuit is a $50 million loan that was secured from Ramsfield Hospitality Finance and CarVal Investments, an international private equity firm. The loan encompassed Rosewood Telluride as well as the Courcheval condominium project. According to Honigman, negotiations with the lender have unsuccessful.
“We have made every effort to negotiate in good faith,” Honigman said. “However, as the dialogue progressed it became apparent that timely resolution could not be achieved. As such, we were left with no other choice but to act – quickly and decisively – in order to protect the integrity of this development and its contractors.”
The five-and-a-half-acre development was approved by the Mountain Village Town Council in March 2007 and spans over two large lots and includes 75 hotel rooms, 67 condos, 17 employee dorms, and five employee apartments. It will also have a number of spaces for commercial/retail development. The proposed five-star hotel would be located on the north and south side of County Club Drive on the northwest corner of the Peaks Hotel and Spa.
The lawsuit comes as the latest hurdle for major developments in Mountain Village that could bring needed “hot beds” or hotel rooms to the region. Of four large development projects that have been approved by the Mountain Village Town Council, the Capella Telluride project is the only one currently under construction. Both the Rosewood and the Silverline II projects have stalled before actual ground-breaking, while an expansion of The Peaks has been on hold since the property owner announced it was for sale. Despite filing for Chapter 11, Honigman says he is dedicated to the Rosewood project.
“Rosewood Telluride remains a viable and important project to the region,” he said. “We intend to see it through to completion.”
With the lawsuit filed and bankruptcy court involved, a resolution could be years in the future. County Treasurer Janice Stout must impose a week-to-week stay of the foreclosure on the property until she receives notification from the bankruptcy court to lift the stay. Once the stay has been lifted, a new foreclosure date will be set within 29-49 days.