Former development partners Jeff Pfaeffle and Preston Ziegler are scheduled to face off in a jury trial on Sept. 4. over charges of fraud, breach of contract and unjust enrichment.
The men are at odds over who is entitled to profits from sales of developed lots in the 27-unit Colorado Gulch Preserve subdivision on Broadford Road.
The development was annexed into Hailey in 2017 and representatives have been selling single-family lots as infrastructure was installed.
Pfaeffle, of Hartland Development LLC, filed suit against Ziegler, of GM Ventures, in May, claiming that Ziegler misled him into believing he would be an invested partner and receive 40 percent of sales from developed lots at Colorado Gulch Preserve. Pfaeffle is suing for restitution and damages.
Ziegler claims that no such contract or agreement was struck and that Pfaeffle only ever expected to receive commissions as a listing agent for lots in the development when they sold.
Further details in the dispute came to light on Monday, when Thomas Lloyd, an attorney for Ziegler, presented an argument for a summary judgement to dismiss the case, heard by 5th District Court Judge Ned Williamson.
The initial complaint alleges that Pfaeffle approached Ziegler in December 2015 to enter into a purchase agreement to acquire a portion of the Stevens Family Ranch south of Hailey for $1,750,000.
Pfaeffle alleges that Ziegler agreed to provide for land acquisition, planning costs and fees by obtaining a bank loan and raising $500,000 from investors, while Pfaeffle would pay for $550,000 in infrastructure development costs to develop the property and ready the lots for construction.
The complaint claims that the payout of profits would be 20 percent to outside investors, with Pfaeffle and Ziegler splitting the remaining 80 percent.
In court on Monday, Pfaeffle’s attorney, Scot Ludwig, said due to his client’s close relationship with the Stevens family over many years, the sale price of land parcels at Colorado Gulch were discounted $500,000 in order to convey an untaxable “credit” to Pfaeffle as a partner in the development.
Pfaeffle claims an email from April 24, 2016, confirmed the partnership plan that would ensure that he would be an investor. His attorney stated that Pfaeffle only found out 17 months later, after doing significant work on behalf of the project, that he was excluded from an operating agreement that would have guaranteed his invested participation.
“He [Pfaeffle] would never have transferred the property to CGP [Colorado Gulch Preserve LLC] if he knew he was going to be cut out,” Ludwig said on Monday. “Failure to make a statement [that Pfaeffle was excluded] can be fraud.”
The complaint also states that Pfaeffle facilitated a sale of a portion of the property to the Wood River Land Trust for $1.2 million for conservation purposes.
Ludwig said Pfaeffle’s participation resulted in a “golden opportunity” for the development.
Ziegler’s attorney said on Monday that Pfaeffle never stepped forward with the necessary investment to become a partner in the operating agreement. He said Pfaeffle’s actions on behalf of the development were completed only with the expectation that Pfaeffle would receive commissions as a listing agent for lots in the development when they sold.
“Realtors do a lot of things when they want to get a property sold,” Lloyd said.
Williamson also entertained a motion by Pfaeffle to include Colorado Gulch Preserve LLC as a co-defendant in the lawsuit, a motion that Williamson said he would take under advisement.