Proposed Washington inn faces new legal battle
WASHINGTON — Nothing seems to come easily for Erika Klauer in her efforts to see an inn built on the Wykeham Road property she and her brother purchased in 2006.
Klauer entered into a limited liability agreement in January with the Paligroup, a California hotel firm, becoming members in 101 Wykeham Road LLC. Klauer made a capital contribution in the form of the 27-acre property, valued at $5.2 million, for ownership of 5,200 Class B units in the company. Paligroup’s contribution was agreed to be $6.7 million for majority ownership, to be paid immediately.
However, the $6.7 million has never been paid, according to court documents.
Klauer, who had filed for a preliminary injunction in state Superior Court in Litchfield against Paligroup moving forward to build a high-end inn on the Wykeham Road property, withdrew the civil action on Sept. 15.
Both parties withdrew without prejudice and can renew or refile applications once the arbitration in New York is resolved, Judge John Pickard ruled Sept. 16.
Arbitration has begun between Klauer and the Paligroup to reach an agreement on how to proceed. Klauer claims to be the sole owner in the 101 Wykeham Road LLC — and the Wykeham Road property — since Paligroup has failed to make the $6.7 million payment.
Paligroup owner Avi Brosch offered to end the group’s involvement in the inn project if Klauer would pay $1.4 million to cover “third-party costs incurred in the project.” That offer was good until Aug. 31, according to court records.
“Your change in position on the revised plan for the project, your claims of breach and threats of arbitration ... cross the line,” Brosch wrote in an Aug. 19 email to Klauer. “We do not believe that we will be able to work with you in the future.”
Brosch added that “significant amounts of money have been spent” improving the inn design to make it “financially feasible, marketable to hotel guests, and ultimately cost efficient to run.”