Judge seals memo in resort feud
January 10, 2007
In the fight for who may ultimately operate The Canyons ski resort, a Third District Court judge sealed from the public what lawyers say is a document pivotal to resolving the courtroom dispute.
"In fundamental fairness it was intended to be a confidential communication from a lawyer to a client, even though business determinations were discussed," a 9-page ruling and order issued by Third District Court Judge Bruce Lubeck states.
Land to form The Canyons was leased in 1997 to the resort’s parent company, American Skiing Company, by Wolf Mountain Resorts managing partner Kenny Griswold. The Canyons sued Wolf Mountain last year when Griswold attempted to terminate the lease.
Wolf claims the sealed memo would show ASC brass engaged in criminal behavior when they allegedly attempted to defraud Wolf Mountain.
Wolf Mountain officials obtained documents outlining discussions they claim show American Skiing Co. brass, including Les Otten, the company’s past president, intended to defraud Wolf Mountain when the company leased land from Griswold.
"Had Wolf known these things it would not have entered into any agreements with ASC," Lubeck’s Dec. 28 ruling states.
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American Skiing Company execs claim they didn’t provide Wolf Mountain the internal memo nor do they "know how [Wolf] obtained the document," according to Lubeck.
"Instead of advising [American Skiing Co.] of the document or returning it, [Wolf] attached it to a pleading," according to the judge.
Now the memo that some claim shows American Skiing Co.’s "Machiavellian" intentions to fraudulently entice Wolf Mountain to lease land to the company sits sealed in Silver Summit Third District Court.
"There is simply no reason [Wolf Mountain] has the document and it should not have been filed at this juncture," Lubeck states. "It must be returned and retracted from the public file."
The memo was received on a fax machine at Wolf Mountain’s office.
By participating in drafting the document, attorney Christopher Howard acted in a "business and not a legal capacity," Wolf attorneys claim, meaning the material isn’t protected by attorney-client privilege.
"If communication mixes legal and business advice, no privilege exists unless it is predominantly legal," states Lubeck explaining why Wolf Mountain thinks the memo should not be sealed.
According to Lubeck, Wolf officials claim, "the conduct recommended by Howard is in violation of federal and state law and thus fits within the fraud exception to attorney-client privilege."
Before land was leased to American Skiing Co., Griswold was told to generate capital for the resort the company would have a public stock offering, the ruling states.
"Otten and Howard stated they were capable of developing the resort," Lubeck’s order states. "ASC did not reveal that it intended to use funds from the initial public offering to acquire other ski resorts, Steamboat and Heavenly."
But buying those resorts, "caused ASC to be in substantial debt and [reduced] the amount of capital it could use to operate [The Canyons]," Lubeck explains in his ruling.
"The Howard memo of April 1997 was acquired when Otten was at the offices of Wolf conducting due diligence," according to Lubeck. "There was a single fax machine in a public area used by all employees."
A Wolf Mountain attorney discovered the memo last year while reviewing the 1997 files.
"The Howard memo discusses ASC’s subordinated debt indenture, and the memo states ASC’s strategy was to tie up [Wolf] then get the best deal it could," Lubeck states in his ruling. "Wolf claims it was a map of how ASC intended to defraud Wolf."
According to American Skiing Company, "This was a direct communication from a lawyer to a client and need not have been marked ‘privilege’ or ‘confidential.’"
"[ASC] believed [Wolf’s] personnel would not see the transmissions or maintain them," Lubeck’s ruling states. "The public machine was used after the ski season with only a few personnel being present, and [ASC] believed any transmissions would be confidential."
Explaining why ASC claims the memo should be sealed, Lubeck states, "Even if the memo is evidence of a ‘civil wrong’ it is not evidence of fraud."