Lake Developer Files Countersuit Arrow Point Builder Also Accuses Canadian Partners Of Fraud

The family that built Arrow Point Resort has sued its estranged business partners, saying they’ve defrauded a golf course development of $1 million.

The lawsuit is a counterclaim filed this week in bankruptcy court, rebutting accusations made against the Stewarts by their Canadian partners, Agincourt.

“It’s a complicated matter,” Roger Stewart said. “We are not happy with the way it’s gone. But we have to defend our integrity in this town.”

The Stewarts built 100 condominiums in 1994 on the peninsula of Lake Coeur d’Alene, which is just south of Squaw Bay on Idaho Highway 97.

But the second phase of the resort, a planned golf course, has fallen prey to a bitter legal stalemate.

The bulk of the legal dispute centers on more than 300 acres that were planned since 1996 as a golf course development.

It was that year the Stewarts’ Arrow Point Development Company formed a partnership with Canadian investor Robert Malcolm, president of West Wood Investments Inc., and his associate Edward Fu.

The Canadian partners formed Agincourt, which became one-half partners in the golf course project.

However, business dealings quickly soured.

A year ago, Agincourt filed for Chapter 11 bankruptcy protection for the golf course project.

In January, Agincourt filed a lawsuit against the Stewarts alleging they committed fraud by misleading Agincourt about how many condominiums had been sold and falsely basing property values on future profits.

In the family’s response this week, the Stewarts now allege fraud by Agincourt and West Wood.

“…the counter-defendants as Agincourt and/or West Wood have initiated several state court actions and the instant bankruptcy matter to drain the financial sources of (Arrow Point Development Company) in litigation while attempting to devalue the subject real properties so that any equity in the properties is diminished by the very actions taken,” the counterclaim says.

“As a direct and proximate result of the above described fraud and deceit, (Arrow Point Development Corporation) has suffered monetary damages estimated to be in excess of $1,000,000 …” Stewart, president of Arrow Point Development, said Agincourt’s legal actions are an effort to damage the Stewarts’ reputation and lower property values for the project.

“We’ve had to wait to find the full depth of their dealings,” Stewart said. “We want to get them in front of an Idaho jury.”

Gene Barton, one of the attorneys for Agincourt, said he received the Stewarts’ counterclaim Thursday.

“I can safely say there is no credence to the Stewarts’ allegations,” Barton said. “Essentially, for the Stewarts to allege they were defrauded by our clients is fanciful at best.”

Spokane attorney Joe Esposito, who has been appointed bankruptcy trustee, said both sides are deadlocked. His job is to make the decisions about the undeveloped land because the two partners can’t agree.

But the project currently carries more debt than the land is worth, which makes selling it tricky, he said.

“It’s for sale, but as of last month there hasn’t been an inquiry,” Esposito said.

While the legal fight is being waged only on undeveloped land, the Stewarts remain behind in taxes on the condominiums.

Stewart paid $183,611 on Thursday for unpaid taxes from 1996 on 43 parcels.

But taxes remain unpaid for 1997, 1998 and 1999 on those same parcels - most of which are unsold condominiums, said Tom Malzahn, chief deputy treasurer for Kootenai County.

Bob Broyles, president of the condominium owners association, said the board of directors is currently taking a poll from landowners on whether to retain the Stewarts’ management company - which is a provision of the homeowners’ contract.

“There were some concerned homeowners who voiced opinions that they weren’t happy with the Stewarts as the management company,” Broyles said. “The board of directors voted to take a poll to retain current management or replace them.”

Results of that poll are not expected until later this month, Broyles said.

Stewart, whose wife manages Independent Management Services, said its contract is renewed annually.

“The board of directors talks to the owners every year,” Stewart said. “This year it asked for a written response.”

Stewart pointed out that Arrow Point Development Company was pulled into the bankruptcy fight because of Agincourt’s Chapter 11 filing. But neither the condominiums nor the family construction company are in bankruptcy.

“We feel that these people have made a pretty significant attempt to try to send us there,” Stewart said, “but we’re not and everything is operating.”