Future Legends: Lender, general contractor conspired to put project in financial distress
WINDSOR — Facing liens and lawsuits over non-payment of construction work from a variety of contractors and subcontractors, Future Legends owner Jeff Katofsky claims in a legal filing that a lender suing for non-payment of $45 million in loans conspired with the project’s general contractor to put Future Legends in financial distress.
Weld District Court Judge Shannon Lyons on Wednesday granted Future Legends’ request to pursue the issue in further court pleadings.
“In effect, the motion alleges there was a conspiracy between the lender, U.S. Eagle, and the general contractor, Jaco, to place Future Legends in financial distress, thereby enabling U.S. Eagle to pursue a receivership. The allegation is very serious and deserves full briefing,” Lyons wrote Wednesday.
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The briefing came with a host of affidavits on the issue from Katofsky, but they have not been made public. The rest of the pleading alleges that Jaco General Contractor Inc. failed to adhere to a master contractor agreement.
Katofsky would not reveal evidence of the alleged conspiracy when contacted by phone Thursday. He said he and his attorney were working on a briefing to that effect and would file it most likely next week. “It’s a substantial amount of paperwork,” Katofsky said.
Future Legends is the sports complex that is the home of the Northern Colorado Owlz minor-league baseball team, and the Colorado Hailstorm, a professional league under the U.S. Soccer League 1. The complex was supposed to bring 1 million people a year via youth sports tournaments and fans of Katofsky’s professional sports teams. Construction, however, has been at an all-stop for the last year.
The complex is composed of one completed structure, the collegiate stadium, and a partially completed dome, under which the Hailstorm and youth leagues play soccer and other sports; and a partially constructed dormitory and the professional stadium, which is intended to host grander events but for now is only a concrete slab with two walls being held up by boards. The dome has no operating water, and bathrooms do not work. Portable toilets line the north side of the dome.
But Windsor’s youth sports and youth soccer leagues played there all summer, and the Owlz played and practiced there all summer. The town of Windsor has given the complex one last chance to fix myriad public safety issues by Oct. 31, before pulling its temporary occupancy permits. Katofsky said he has fixed some minor problems and is working on the larger issues, but the dome, for example, being in receivership prevents him from fixing the non-working bathrooms there.
Katofsky and Future Legends have been sued for more than $56 million in several lawsuits, and the project is encumbered by multiple outstanding liens totaling more than $13.9 million. In a claim filed Aug. 30, New Mexico-based U.S. Eagle Federal Credit Union claiming nonpayment of six loans, three of which were U.S. Department of Agriculture-backed, is seeking $45 million.
Lyons earlier this month appointed a receiver to manage the dome, the partially constructed stadium and the dormitory. The receiver, Michael Staheli of Cordes & Co. in Denver, said it would take a couple of weeks of factfinding before he could move anything forward.
On Wednesday, Lyons clarified his order on receivership, identifying the encumbered properties by their legal addresses rather than physical addresses because they may have inadvertently been mixed in with parcels in the same addresses that were encumbered by another lender.
Future Legends’ alleges in its most-recent court filing that Jaco as general contractor on the project violated the master agreement they both signed, which stated Jaco would defend Future Legends in the event that liens were filed against it, and Jaco was obligated to pay any liens filed during its governance of the project, with either a bond or collateral held by the bank.
“Here, liens were unnecessarily placed on the Future Legends property because Jaco refused to make timely draw requests on the various U.S. Eagle collateral, and U.S. Eagle failed to provide said funds that were borrowed and part of the loan and available at the time of presentment of the subcontractor invoices (and loan is still available),” according to Future Legends’ most recent court filing. “Thus, subcontractors were unpaid and were forced to place liens on the property.
“Had U.S. Eagle paid the necessary funds, liens would not have been placed on the property. Future Legends contends that this scheme was contrived by U.S. Eagle and Jaco to place Future Legends in financial distress, and to place U.S. Eagle in a position which it could declare Future Legend in default under the loans,” the document states.
According to a master agreement that both signed prior to work, Jaco as the general contract was required to “defend and indemnify the owner from all loss, liability, damage or expense … “ if liens were filed on the project, the court filing states.
Jaco filed its own lien in February 2024 seeking $3.48 million, attaching it to 22 Future Legends properties. Future Legends is working to get that lien discharged, calling it a “blanket lien,” which Future Legends’ stated in the court filing was improper and not filed in good faith.
“Specifically, each of the twenty-two (22) individual properties burdened by the Jaco Lien is inappropriately and unjustifiably encumbered by a lien in the full alleged amount owed of $3,485,777.46. Multiplying it out, the total lien amount is $76,687,104.12, an amount that has no relation to the amount, if any, owed to Jaco for work performed at the project. Consequently, as an excessive lien, the Jaco Lien must be forfeited as a matter of law,” the Future Legends pleading states.
Lyons has not ruled on that request in Weld District Court..
Jaco is the project’s second general contractor behind Greeley-based Hensel Phelps Construction Co., which filed a lien in July 2021 against Future Legends for nonpayment of services totalling for $1.79 million. Hensel Phelps sued in September 2021, alleging that Future Legends stopped making payments a year into the project, and owed the contractor roughly $1.4 million.
Future Legends cross-claimed that Hensel Phelps filed an excessive lien, made false and disparaging remarks against Future Legends to subcontractors and harmed relationships, and it also alleged that Hensel Phelps worked with a group of investors to try to take over the Future Legends project. Before Hensel Phelps filed its response to the claims, the parties settled the case in October 2021, and the Hensel Phelps lien was recorded satisfied and dismissed in January 2022.
Representatives of Jaco General Contractor declined to comment for this story. Attempts to reach attorneys for U.S. Eagle Federal Credit Union were unsuccessful.
Case No., 2023CV030946, Coloscapes Concrete Inc et al v. Jaco General Contractor Inc et al, filed Nov. 22, 2023 in Weld District Court. Combined with case Nos. 2024CV30033 and 2024CV30470 also filed in Weld District Court. (US Eagle Federal Credit Union files cross-claim for $45 million; judge places Future Legends Sports Complex structures in receivership).
Case No. 21CV30555, Hensel Phelps Construction Co. v. Future Legends LLC, et. al, field Sept. 15, 2021, in Weld District Court.
Case No. 21 CV30515, Future Legends LLC v. Hensel Phelps Construction Co, et. al., filed Sept. 1, 2021, in Weld District Court.
This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2024 BizWest Media LLC.
Future Legends owner Jeff Katofsky claims in a legal filing that a lender suing for non-payment of $45 million in loans conspired with the project’s general contractor to put Future Legends in financial distress.
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WINDSOR — Facing liens and lawsuits over non-payment of construction work from a variety of contractors and subcontractors, Future Legends owner Jeff Katofsky claims in a legal filing that a lender suing for non-payment of $45 million in loans conspired with the project’s general contractor to put Future Legends in financial distress.
Weld District Court Judge Shannon Lyons on Wednesday granted Future Legends’ request to pursue the issue in further court pleadings.
“In effect, the motion alleges there was a conspiracy between the lender, U.S. Eagle, and the general contractor, Jaco, to place Future Legends in financial distress, thereby enabling U.S. Eagle to pursue a receivership. The allegation is very serious and deserves full briefing,” Lyons wrote Wednesday.
The briefing came with a host of affidavits on the issue from Katofsky, but they have not been made public. The rest of the pleading alleges that Jaco General Contractor Inc. failed to adhere to a master contractor agreement.
Katofsky would not reveal evidence of the alleged conspiracy when contacted by phone Thursday. He said he and his attorney were working on a briefing to that effect and would file it most likely next week. “It’s a substantial amount of paperwork,” Katofsky said.
Future Legends is the sports complex that is the home of the Northern Colorado Owlz minor-league baseball team, and the Colorado Hailstorm, a professional league under the U.S. Soccer League 1. The complex was supposed to bring 1 million people a year via youth sports tournaments and fans of Katofsky’s professional sports teams. Construction, however, has been at an all-stop for the last year.
The complex is composed of one completed structure, the collegiate stadium, and a partially completed dome, under which the Hailstorm and youth leagues play soccer and other sports; and a partially constructed dormitory and the professional stadium, which is intended to host grander events but for now is only a concrete slab with two walls being held up by boards. The dome has no operating water, and bathrooms do not work. Portable toilets line the north side of the dome.
But Windsor’s youth sports and youth soccer leagues played there all summer, and the Owlz played and practiced there all summer. The town of Windsor has given the complex one last chance to fix myriad public safety issues by Oct. 31, before pulling its temporary occupancy permits. Katofsky said he has fixed some minor problems and is working on the larger issues, but the dome, for example, being in receivership prevents him from fixing the non-working bathrooms there.
Katofsky and Future Legends have been sued for more than $56 million in several lawsuits, and the project is encumbered by multiple outstanding liens totaling more than $13.9 million. In a claim filed Aug. 30, New Mexico-based U.S. Eagle Federal Credit Union claiming nonpayment of six loans, three of which were U.S. Department of Agriculture-backed, is seeking $45 million.
Lyons earlier this month appointed a receiver to manage the dome, the partially constructed stadium and the dormitory. The receiver, Michael Staheli of Cordes & Co. in Denver, said it would take a couple of weeks of factfinding before he could move anything forward.
On Wednesday, Lyons clarified his order on receivership, identifying the encumbered properties by their legal addresses rather than physical addresses because they may have inadvertently been mixed in with parcels in the same addresses that were encumbered by another lender.
Future Legends’ alleges in its most-recent court filing that Jaco as general contractor on the project violated the master agreement they both signed, which stated Jaco would defend Future Legends in the event that liens were filed against it, and Jaco was obligated to pay any liens filed during its governance of the project, with either a bond or collateral held by the bank.
“Here, liens were unnecessarily placed on the Future Legends property because Jaco refused to make timely draw requests on the various U.S. Eagle collateral, and U.S. Eagle failed to provide said funds that were borrowed and part of the loan and available at the time of presentment of the subcontractor invoices (and loan is still available),” according to Future Legends’ most recent court filing. “Thus, subcontractors were unpaid and were forced to place liens on the property.
“Had U.S. Eagle paid the necessary funds, liens would not have been placed on the property. Future Legends contends that this scheme was contrived by U.S. Eagle and Jaco to place Future Legends in financial distress, and to place U.S. Eagle in a position which it could declare Future Legend in default under the loans,” the document states.
According to a master agreement that both signed prior to work, Jaco as the general contract was required to “defend and indemnify the owner from all loss, liability, damage or expense … “ if liens were filed on the project, the court filing states.
Jaco filed its own lien in February 2024 seeking $3.48 million, attaching it to 22 Future Legends properties. Future Legends is working to get that lien discharged, calling it a “blanket lien,” which Future Legends’ stated in the court filing was improper and not filed in good faith.
“Specifically, each of the twenty-two (22) individual properties burdened by the Jaco Lien is inappropriately and unjustifiably encumbered by a lien in the full alleged amount owed of $3,485,777.46. Multiplying it out, the total lien amount is $76,687,104.12, an amount that has no relation to the amount, if any, owed to Jaco for work performed at the project. Consequently, as an excessive lien, the Jaco Lien must be forfeited as a matter of law,” the Future Legends pleading states.
Lyons has not ruled on that request in Weld District Court..
Jaco is the project’s second general contractor behind Greeley-based Hensel Phelps Construction Co., which filed a lien in July 2021 against Future Legends for nonpayment of services totalling for $1.79 million. Hensel Phelps sued in September 2021, alleging that Future Legends stopped making payments a year into the project, and owed the contractor roughly $1.4 million.
Future Legends cross-claimed that Hensel Phelps filed an excessive lien, made false and disparaging remarks against Future Legends to subcontractors and harmed relationships, and it also alleged that Hensel Phelps worked with a group of investors to try to take over the Future Legends project. Before Hensel Phelps filed its response to the claims, the parties settled the case in October 2021, and the Hensel Phelps lien was recorded satisfied and dismissed in January 2022.
Representatives of Jaco General Contractor declined to comment for this story. Attempts to reach attorneys for U.S. Eagle Federal Credit Union were unsuccessful.
Case No., 2023CV030946, Coloscapes Concrete Inc et al v. Jaco General Contractor Inc et al, filed Nov. 22, 2023 in Weld District Court. Combined with case Nos. 2024CV30033 and 2024CV30470 also filed in Weld District Court. (US Eagle Federal Credit Union files cross-claim for $45 million; judge places Future Legends Sports Complex structures in receivership).
Case No. 21CV30555, Hensel Phelps Construction Co. v. Future Legends LLC, et. al, field Sept. 15, 2021, in Weld District Court.
Case No. 21 CV30515, Future Legends LLC v. Hensel Phelps Construction Co, et. al., filed Sept. 1, 2021, in Weld District Court.
This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2024 BizWest Media LLC.
Future Legends owner Jeff Katofsky claims in a legal filing that a lender suing for non-payment of $45 million in loans conspired with the project’s general contractor to put Future Legends in financial distress.
