McWhinney wins Promenade fraud case, appeal pending

LOVELAND and DENVER — McWhinney Holding Co. LLLP has prevailed in its lawsuit against its partners in the development of the Promenade Shops at Centerra with the trial court awarding damages to McWhinney.

At least one defendant, however, gave notice that he would appeal, thus potentially extending a case that began a decade ago.

The latest developments in the case include a jury verdict May 6 in U.S. District Court in Denver in which jurors held Terry McEwen, at one time a principal in Poag & McEwen Lifestyle Centers LLC, liable for damages in the case. Poag & McEwen was the original partner with the McWhinney company in the 2004 development of the lifestyle center that was intended to be the centerpiece of the 3,000-acre Centerra development in Loveland. McWhinney and Poag & McEwen each held 50% ownership of the Promenade Shops.

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Jurors determined that McEwen aided in the breach of Poag & McEwen’s corporate fiduciary obligations, fraudulently concealed from McWhinney critical information about the development and engaged in a civil conspiracy, among other charges. 

The jury awarded $156 million damages and determined that 15%, or $23.4 million, was caused by McEwen’s misconduct and the remainder by Dan Poag, Joshua Poag and other defendants in the suit.

On May 7, U.S. District Judge R. Brooke Jackson ordered the judgment in favor of McWhinney Holding Co. and other McWhinney entities that were party to the lawsuit. Interest on the damages and attorney costs is yet to be determined.

A month later, on June 4, McEwen appealed the judgment to the U.S. Court of Appeals, which has yet to take action on it.

“McWhinney has no comment at this time regarding the settlement, other than it is pleased with the recent overall results and decisions,” according to an emailed comment from the company.

The case has a long, tortured history that included hundreds of filings beginning May 27, 2011, in Larimer County District Court. The original McWhinney v. Poag & McEwen case ended in August 2017 with a $42 million judgment awarded to McWhinney. 

Poag & McEwen appealed to the Colorado Court of Appeals, lost Jan. 14, 2021, and filed an appeal in March to the Colorado Supreme Court. On May 10 of this year, the Supreme Court dismissed the appeal upon a motion from Poag & McEwen due to an undisclosed negotiated settlement with McWhinney.

McWhinney would not reveal the nature of the negotiated settlement.

During the course of the first trial, attorneys for Poag & McEwen attempted to shield financial and operational information from disclosure, but information eventually was disclosed that formed the basis for a new case, which McWhinney filed in November 2017, this time against the Poags and McEwen as individuals, as well as numerous other parties and entities created to, as alleged in the suit, shelter assets from the jurisdiction of Colorado courts.

The second McWhinney suit sought damages of $92.2 million, voidance of asset transfers, attachment of those assets and damages 1.5 times the value of the assets or 1.5 times the amount necessary to satisfy the claim.

At the heart of the second case, McWhinney alleged that as early as 2006, Terry McEwen withdrew from the Poag & McEwen company in order to retire. This retirement was kept secret from McWhinney, which had a clause in the management agreement that it — McWhinney — would assume managerial control over the lifestyle center if McEwen ceased to be a majority stakeholder in Poag & McEwen.

McEwen had negotiated a $40 million buyout from Dan Poag and his son Josh Poag, money that they arranged to leverage from the Promenade development without disclosing it to McWhinney, according to court documents. McWhinney learned of the retirement deal in 2015 during the course of the first trial.

While McWhinney was able to settle with Dan and Josh Poag, McEwen continued the suit that resulted in the $23.4 million judgment. Attorneys for McEwen did not respond to a request for comment.

While pre- and post-judgment interest has yet to be determined, McWhinney has requested $18.5 million, plus attorney fees.