Court orders Chadwick Real Estate’s Friedman to pay more than $44K
Ruling tied to real estate deals; judge decides Friedman doesn’t owe additional $245K
January 27, 2011
Steamboat Springs — A Tuesday court ruling ordered Richard Friedman, of Chadwick Real Estate Group and other entities, to pay more than $44,000 to Florida developer Stephen Bunyard's First Land Development.
The ruling also said Friedman doesn't owe First Land a separate amount of $245,000. The order by Judge Shelley Hill in Routt County District Court marks the latest step in real estate dealings and litigation that stretch back several years and provide a backdrop to the October arrest of part-time Steamboat Springs resident Brooks Kellogg, managing member of Chadwick Estates.
Friedman was out of the state Wednesday and did not return a cell phone message.
First Land has been involved in litigation against Chadwick entities since 2004. Tuesday's court ruling is related to the $2.38 million judgment that First Land won in June 2010 against Chadwick Estates and Kellogg. Friedman is not personally named in that judgment.
But lawyer Reed Morris, of The Law Office of Ralph A. Cantafio, representing First Land, has said because they've received no payment on that judgment — the $44,301 ordered Tuesday could be the first — his firm is pursuing funds from those, such as Friedman, whom they allege owe money to Chadwick Estates.
Morris stated two claims in a Dec. 14 hearing at the Routt County Justice Center: one, that Friedman owes First Land for a $44,301 loan he received from Chadwick Estates; and two, that Friedman assumed personal responsibility for an additional $245,000 owed to Chadwick Estates — from the sale of a Chadwick villa to Julienne Lindberg, Kellogg's sister — and therefore owes that money to First Land, as well.
Hill's Tuesday ruling upheld the former claim and denied the latter.
Friedman denied both claims Dec. 14. He said that the $44,301 initially was classified as a loan — it's reflected as such on Chadwick's 2009 tax returns, Hill stated — but that later, in 2010, the amount was reclassified as personal income for Friedman, and thus was not owed to Chadwick Estates.
"The court was presented no documents of Chadwick reflecting this reclassification," the ruling states.
Later in her ruling, Hill noted the link between Friedman and his business entities.
"The court cannot overlook the fact that Mr. Friedman is the managing director of Chadwick Estates," Hill's ruling states. "He was both the giver and the taker of the loan amounts and the person who decided how the amounts were booked."
Morris said the ruling now is subject to a 15-day automatic stay.
"We'll be seeking that the court add attorney's fees … against Mr. Friedman," he said.
Regarding the $245,000, Friedman has stated in court that obligations for Lindberg's condo were transferred April 29, 2010, to Chadwick Real Estate Group, removing his personal obligation to Chadwick Estates.
According to Friedman, that transfer occurred three days after April 26, 2010, when Kellogg and Friedman each assumed personal, legal liability for obligations related to Lindberg's condo. The condo was sold to her in a "straw transfer" when units apparently were not selling as anticipated, according to court documents.
Morris has disputed the validity of the transfer of obligation to Chadwick Real Estate Group. Morris said Wednesday that throughout the legal proceedings, Friedman has testified "on behalf of four different enterprises and himself."
Both Chadwick Estates and Chadwick Real Estate Group consist of BLK and RAF, two separate LLCs. RAF channels funds to Friedman and his wife. BLK channels funds at least to Kellogg.
Kellogg was arrested Oct. 19 at Denver International Airport on suspicion of trying to pay for the killing of Bunyard. Kellogg's trial is scheduled to begin March 7. Motions are due in writing Feb. 7, and a pretrial motions hearing is scheduled for Feb. 25 in U.S. District Court in Denver.
— To reach Mike Lawrence, call 970-871-4233 or e-mail mlawrence@SteamboatToday.com