Real Estate Water Looting

Background

Last fall, in a suit filed in Adams County District Court, Silver Peaks Holdings claimed that that Robert Lembke, Ted Shipman, and SP Equities, LLC were “looting” water from a joint real estate development.  The plaintiff argues that the defendants, Lembke and Shipman, used United Water and Sanitation District (“United”) to funnel water away from the proposed project to meet the needs of future Front Range real estate developments.

Points of Controversy

Silver Peaks, the plaintiff, contributed 550 acres of land near Lochbuie, CO to develop the real estate project.  It alleges that instead of holding up his end of the bargain, Lembke used the land as collateral to borrow money and build a $14,000,000 water delivery system.  Plaintiff estimates that this is ten times the cost of a water system adequate to meet the project’s needs.  Once Lembke completed the delivery system, he transferred ownership of water certificates and the water delivery system to United, that was allegedly created to provide water to future Front Range developments.  Plaintiff also alleges that Lembke is using United to fulfill its previous existing contracts with several water and sanitation districts.  Ultimately, plaintiff claims that this has left the real estate project with insufficient water to meet its needs.

United’s Defense

United counters these allegations by stating that Kelley Carson, the plaintiff’s only representative, had knowledge of the project details and operational agreements since 2004.  Additionally, United claims that the project has sufficient water to meet its needs.

United also responds to the plaintiff’s allegations on its website.  United states that Carson is attempting to malign the parties responsible for the project’s success in the court of public opinion. United and SP Equities characterize the suit as using litigation to compensate for difficult economic times.  United also emphasizes that Lochbuie and the project have withstood the housing recession.  Finally, United claims that Carson had chosen to take an absentee role in the project by failing to attend many meetings and attempting to withdraw her personal financial support from the project.

Only time, and a court decision, will tell what will happen in this case.


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