North 40 Residents Prevail In Court Over APCHA

North 40 Residents Prevail In Court Over APCHA

The owners of a home in the North 40 employee-housing neighborhood can keep their property after a judge ruled Wednesday that a hearing officer overstepped his authority and both misapplied and misinterpreted the law when he ordered them to put it up for sale.

The 21-page decision, written by 9th Judicial District Judge Anne Norrdin, said hearing officer Mick Ireland went “beyond the authority granted to him” in an “abuse of discretion” with his order made Sept. 12, 2022. As well, Norrdin said Ireland’s conclusion that the couple committed fraud was “unsupported by competent evidence.”

The couple, Cameron and Tricia McIntyre, were the subject of an investigation the Aspen-Pitkin County Housing Authority started in 2019 that ultimately led Ireland to conclude, following hearings held in April and July 2022, that they violated housing rules.

Specifically, Ireland determined the McIntryes tried to secretly own a free-market townhome on Park Circle through a limited liability company and by doing so, violated the master deed restriction for the North 40, an employee-housing subdivision near the Aspen Airport Business Center that comprises 59 single-family residences and 13 townhomes. 

Ireland’s ruling fell in line with a notice of violation APCHA gave the couple in March 2022, alleging they owned the townhome in breach of housing regulations. The notice also said the couple controlled the LLC that owned the townhome and ran afoul of housing rules as the LLC’s alter-ego. 

The McIntyres appealed Ireland’s order to sell in the form of a Rule 106 challenge filed in Pitkin County District Court in October 2022. In court pleadings, they argued that Ireland showed bias during the hearings, made improper legal findings and overlooked evidence showing the McIntyre couple’s two sons share ownership in the LLC behind the townhome.

In the meantime, the litigation put a timeout on Ireland’s ruling that they sell the North 40 home within 90 days of his decision. The judge’s decision now vacates Ireland’s ruling. 

“The McIntyres are elated that the Pitkin County District Court came to the correct conclusion in this case and vacated and set aside hearing officer Mick Ireland’s overreaching decision,” said a statement from their attorney, Chris Bryan of Garfield & Hecht PC. “It is disappointing, however, that APCHA wasted everyone’s time and significant sums of taxpayer dollars trying to force the McIntyres out of the home that they have owned and lived in for more than 20 years.”

Ireland is a former Aspen mayor and Pitkin County commissioner who writes a weekly opinion column for the Aspen Daily News. In mid-2020, APCHA hired him as a hearing officer for compliance cases. He declined to comment for this story. 

Norrdin’s ruling called out Ireland for “piercing the corporate veil” by concluding the McIntyres created the LLC to buy and own the free-market townhome and shield them from limited liability. The notice of violation also asserted that APCHA had the authority to pierce the corporate veil, Norrdin wrote. 

Noting that APHCA and Ireland exceeded their discretion and authority, Norrdin’s ruling said that “as far as the court’s research has been able to indicate, corporate veil piercing is a remedy employed by courts, not a fact-finding mechanism available to administrative agencies.”

Property and court records identify the LLC as CMTR, which bought the three-bedroom, three-bath townhome on Park Circle for $1.2 million in 2017. The McIntyres acquired the North 40 property in 2000 and built a home there in 2002, according to property records. 

“For limited liability companies like CMTR, corporate veil piercing is fraught, and trial courts are cautioned to ‘tread carefully,’” Norrdin’s ruling said.

Notably, the courts have held that a three-part inquiry must be held to determine whether to allow piercing the corporate veil, Norrdin wrote. First, the court must determine that the entity is the alter-ego of the person at issue in the dispute. Second, it must find the entity was used by the person to carry out fraud. Third, it must consider the fairness of holding a shareholder or insider responsible for the acts of an entity. 

Neither APCHA nor its hearing officer checked any of those boxes, Norrdin’s ruling said. She also pointed out that the deed restriction for the North 40 home, which the couple built in 2002 after buying the property in 2000, was bound to APCHA regulations from 1996-97, which predate current rules and North 40’s master deed restriction. 

“Nothing in the record indicates that the (McIntyres’) sons … owed any duties to APCHA under the Deed Restriction or the applicable 1996/1997 APCHA Guidelines,” the ruling said. “More recent versions of the APCHA guidelines might restrict the property ownership of all household members, not just owners of the deed restricted unit, but that is not true of the 1996/1997 APCHA Guidelines or the Deed Restriction at issue here.”

Tricia McIntyre’s involvement in the LLC also was not a red flag, Norrdin wrote.

“(The two sons’) apparent decision to allow their mother to manage their real estate interests was not unlawful, and such arrangements are not unique or unusual, nor is owning real estate through a corporate entity,” the ruling said. 

CMTR LLC also was not a party to any of the APCHA proceedings, though Ireland made conclusions about its ownership structure, the ruling said. 

“Here, the Hearing Officer’s finding that Patricia ‘controlled’ CMTR did not provide sufficient support for a conclusion that Patricia owned CMTR or the real estate it holds, nor was it sufficient as a matter of law to establish that Patricia’s ‘control’ was used to perpetrate a fraud or defeat a lawful claim,” Norrdin wrote. “The failure to satisfy this prong means that the Hearing Officer’s determination was an abuse of discretion.”

APCHA counsel Tom Smith said he was reviewing the ruling and would bring it up with the authority’s board of directors at its next meeting, behind closed doors. 

“Obviously the APCHA board has to make a decision whether they want to appeal any adverse decision rendered by district court, and clearly this is one,” he said. “And I’m going to discuss the case in executive session with the board at their meeting next Wednesday.”

Smith declined to comment about what his legal advice to the board could or would be, citing attorney-client privileges. 

“The ultimate outcome of course was adverse to APCHA,” he said. “Obviously I don’t agree with it, because if I had agreed we wouldn’t have defended the case in the first place.

“She rejected some of our arguments, particularly on the issue of piercing the corporate veil, and so APCHA’s going to have to decide whether they want to decide that on appeal or not.” 

Bryan’s statement for the McIntyres said they “intend to avail themselves of all legal remedies in light of the District Court’s thorough and well-reasoned decision — the McIntyres will ask the court to order APCHA to reimburse the McIntyres’ costs and attorneys’ fees they incurred in having to fend off APCHA’s misguided and legally unsound prosecution.

“Moving forward, we hope the District Court’s decision compels APCHA (and other governmental entities) to stop trampling citizens’ due process and property rights.”

 

By: Rick Carroll| Aspen Daily News I February 29, 2024


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