New motion in Prospect lawsuit asks judge to throw out claims against individuals

Says conflict is between Metro Districts, not people

Several of the individuals who were named as defendants in a lawsuit between Prospect Subdivision’s Reserve Metropolitan District No. 2 and the subdivision’s developer in April are asking the judge to throw out the claims being made against them.

Attorneys representing Ethan Mueller, Erica Mueller, Michael Kraatz, Ken Stone and Jim Ruthven, who are collectively referred to in the suit as Former Board Members, filed a motion to dismiss the “counterclaims” made against them as individuals in April, saying the lawsuit involves the development company, the town and a the boards of directors, but not the individuals.
The motion to dismiss also asks the judge to throw out that part of the lawsuit because the individuals named (i.e., the Former Board Members) were acting in their official roles and protected by the common law official immunity doctrine—they are not to be held liable for performing the duties for which they were elected or chosen.
There are now several matters being considered in Gunnison District Court after the town of Mt. Crested Butte and Prospect’s controlling board, Reserve Metro No. 1, filed suit in February against the subdivision’s financing district, consisting of the subdivision’s property owners.
According to the initial suit, the financing district overextended its allowed mill levy to pay for legal counsel, with which they hoped to gain some autonomy from the developer and challenge the collective debt that had accrued during development.
Additionally, the judge is considering if, as the financing district, or Reserve Metro District No. 2, alleges in its counterclaims, the controlling district was improperly formed and managed during a time of bond sales and development after the Mueller family and Triple Peaks took ownership of Crested Butte Mountain Resort.
And then there is the matter of who owns the debt. Currently the judge is considering whether the agreement signed by people upon purchasing Prospect property indicated the debt would be borne by the developer or the homeowners.
The motion to dismiss the counterclaims, as they pertain to the individuals, was filed May 9 and attacks the lawsuit on technical grounds, saying, “District No. 2’s ‘counterclaims’ against the Former Board Members are not counterclaims, because none of the [individuals] have brought claims as plaintiffs in this suit against District No. 2.”
Beyond the technicality, however, the motion calls the judge to dismiss the suit because the accusations being made against the individuals are misleading. According to the motion, the official immunity doctrine asserts public officials, acting on official business, cannot be held liable for performing their official function.
At issue for the judge is also whether the official immunity doctrine even extends to quasi-governmental bodies, like a subdivision’s control district.
The motion then takes issue with the claim that the individuals committed a “violation of the public trust,” saying the individuals didn’t receive anything of value or private gain and only acted as any public official does when they sign a contract or do business with a private company.
“In all such cases, one or more private entities—such as a bank, vendor construction company, etc.—benefit from the expenditure of public funds and the opportunity to do business,” the motion says.
The motion to dismiss goes point by point through the counterclaims and explains why the defendants never committed a “breach of fiduciary duty” when they removed property from the financing district, as the counterclaims state.
The motion also addresses the claim District No. 2 made in the counterclaims against the Infrastructure Acquisition and Reimbursement Agreement that is central to the dispute, saying District No. 2 wasn’t party to the agreement and therefore has no standing to dispute its validity. And they otherwise did nothing wrong in forming the contract, the motion says.
In considering the motion to dismiss, the judge will have the opportunity to decide what claims go forward in the suit. No deadline is set for when that decision might be made.