Court actions continue in Loveland nursing home case

LOVELAND — Although a 120-bed Loveland nursing home’s debt has been paid and a court-appointed receiver discharged, court actions continue to swirl around it.

North Shore Associates LLP, owner of the property on which the North Shore Manor nursing home sits at 1365 W. 29th St., had battled for control of the nursing home for more than a year with Wapello Holdings LLC and J. Robert Wilson, who owns nursing-home operator Columbine Management Services Inc. and owned 15% of North Shore Associates. The majority owners, who have 85% of the shares, claimed that Wilson improperly used his control as managing partner to divert money from the organization by overcharging for supplies and services. Wilson sought payment for those supplies and services.

Wapello sued NSA, but in a filing last week in Larimer District Court, NSA sued Wilson, his attorney John O’Brien of the Denver law firm Spencer Fane LLP, and Tulsa-based Bank of Oklahoma, alleging that they’re guilty of “aiding and abetting fraud.” Filing as a defendant and “third-party plaintiff,” NSA demanded a jury trial and payment of damages.

Included in its complaint was a lengthy version of the conflict’s background, claiming that Wilson engaged in “multifaceted betrayal and manipulation.”

NSA’s narrative described Wilson’s rise from a “promising and earnest entry-level worker” to becoming a co-owner and fiduciary of both real estate holding company and landlord NSA and North Shore Manor, the skilled-nursing facility operating on NSA’s property.

“In the 1990s, Wilson was elected as the president and CEO for NSM,” NSA wrote to the court. “In the early 2000s, Wilson was named managing partner of NSA, and his partners went so far as to amend their partnership agreement to bestow upon Wilson certain authority no other partner possessed — the power to encumber NSA’s property.”

Wilson’s partners “trusted him for decades as their fiduciary and experienced operator in Colorado,” NSA wrote, but added that the view they “and the Loveland community had of Wilson as a benevolent caretaker proved to be nothing more than a convenient facade. 

“Unbeknownst to Wilson’s partners, by the time that the last of the original partners in North  Shore had passed and were succeeded largely by their children, Wilson had already set in motion his illicit plan to seize all of North Shore’s value for himself and squeeze out the second-generation of partners whom he viewed as entitled and merely ‘heirs.’ ”

NSA alleged that Wilson formed a series of his own companies to act as vendors to North Shore Manor and also “founded several other skilled nursing facilities in the area that are now North Shore’s competitors. By causing NSM to contract almost exclusively with his vendors, Wilson was able to overcharge and siphon from North Shore what is likely to prove to be millions of dollars.”

After the COVID-19 pandemic, NSA alleged, Wilson decided to retire, but what he and attorney O’Brien “sought to hide from North Shore and particularly Wilson’s second-generation partners, was that Wilson’s vision for cashing out included selling the North Shore property and business out from under them.” Wilson’s partners, it said, “learned for the first time in the end of 2022 that not only had Wilson taken out millions of dollars of loans against North Shore’s property to foster his personal banking relationships, but one such loan — a 2016 loan from Bank of Oklahoma — would be coming due for nearly $2 million in a matter of months.”

NSA alleged that Wilson and O’Brien formed Wapello to purchase the Bank of Oklahoma note “behind the backs of Wilson’s partners” using the bank as their accomplice, and that Wapello’s move to appoint a receiver for the property “was designed by Wilson and O’Brien to try to get rid of Wilson’s partners once and for all. As a backstop, Wilson and O’Brien initiated a duplicative foreclosure proceeding in tandem. … Because Wilson failed to sell NSA out from under his partners in 2022, he and O’Brien have instead resolved to use the authority of this Court to force a ‘liquidation’ through the appointment of an ‘auctioneer’ as receiver. Their plan was working until recently.”

In August, a Larimer District Court judge appointed a receiver for North Shore Manor who would oversee the building until it could be sold at a foreclosure sale this fall. But on Sept. 16, the majority owners filed a motion in Larimer District Court calling for dismissal of the receiver, saying they had given Wapello two cashiers’ checks “for the complete payoff sum of $2,980,205.96 set forth in Plaintiff’s written payoff demand.”

Larimer District Judge Stephen Jouard granted the motion five hours later, writing that because North Shore Associates had satisfied the debt, “the purpose for which the Receiver was appointed has been fulfilled, and Plaintiff has no continuing right to a Receivership over Defendant’s real property or rents.”

Wilson filed a motion to reverse that order on Sept. 17, contending that it had been issued without giving Wapello a chance to review it or file a response. However, three days later, Jouard denied Wapello’s motion.

Representing the nursing home itself, attorney Christopher Carrington of Denver-based Richards Carrington LLC filed a motion seeking a restraining order against the receiver, Scott Shuman of Eaton-based auctioneer Hall and Hall, claiming that he was “working closely with Wapello to intimidate and inflict harm upon North Shore” until NSA paid Wapello’s debt along with a “staggering amount of attorneys’ fees.”

BizWest sought reaction from O’Brien or other representatives of Wapello or Columbine, but an email from the public-relations firm said simply, “no comment.”

In a separate case in which North Shore Manor itself sued Wilson, Wapello, Columbine and several of its entities, Shelley Gilman, a special master appointed by the Larimer District Court to resolve discovery issues, ordered the defendants to either provide a cascading report or show why they couldn’t, and that any further disputes regarding protocols for records searches could be presented to her at a discovery hearing scheduled for Dec. 3.

Gilman also ordered them to provide invoices for “side source payments … even though the claims against  the defendant vendors are not at issue.”

Observing that she had not seen a written document confirming that Paul Benigni had been engaged as a consultant for Columbine before he was named CEO in April 2023, she recommended that North Shore Manor be authorized as an interrogatory to explore his role. Benigni didn’t respond to a subpoena served on him, but that Columbine had “since provided some responsive documents.”

North Shore Manor wanted discovery of non-privileged documents and communications about transactions and work for Columbine performed by Spencer Fane, but Gilman declined to order it because the firm wasn’t a party to North Shore Manor’s complaints.

The cases in Larimer District Court are Wapello Holdings LLC v. North Shore Associates LLP, case No. 2023-cv-30883, with North Shore as a third-party plaintiff v. third-party defendants John O’Brien, BOKF NA dba Bank of Oklahoma, and J. Robert Wilson, case no. 2024-cv-1191S; North Shore Manor Inc. v. J. Robert Wilson, Columbine Management Services Inc. dba Columbine Health Systems, Wapello Holdings LLC, Centre Elderly Transportation Inc., Centre Pharmacy Inc., Columbine Distribution Center LLC, Columbine Medical Equipment Inc., Front Range Geriatric Medicine LLC, Front Range Therapy Systems Inc. dba Columbine Therapy Services, Geriatric Education Center LLC, and Poudre infusion Therapy LLC., case no. 2023-cv-30883.

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