City: LandCo filed suit in wrong court

The city is arguing that a federal lawsuit stemming from the beleaguered $53 million deal to prevent the U.S. Olympic Committee from skipping town is in the wrong venue and therefore should be dismissed.

Colorado Springs City Attorney Patricia Kelly filed a motion late Thursday seeking to dismiss the suit filed by LandCo Equity Partners, the lead developer in the USOC project. LandCo accused the city of failing to live up to its obligations in the deal to keep the USOC from relocating.

Among Kelly's arguments in a 19-page brief in support of the motion to dismiss the case is that the allegations lodged by LandCo in the lawsuit are contractual issues that should be handled in state court rather than federal court.

"Despite the rhetoric LandCo uses to describe the city defendants' actions, this remains a straightforward breach-of-contract case," Kelly said in the brief.

"While LandCo seeks the harbor of federal court by alleging due-process violations, what it really wants is money," she said. "Like thousands of other major business deals around the country that have faltered in the wake of the recession, this deal, too, has fallen apart, and a court may now need to sort out who is to blame. The fact that the government is one of the three parties, however, does not render this a federal case. LandCo can enjoy the process it is due under the Fourteenth Amendment in state court."

There was no immediate response from LandCo to the city's motion.

A year ago, the city, LandCo and the USOC inked a highly touted agreement calling for LandCo to build the USOC a new headquarters downtown, among other things.

But since then, the deal has run into several problems, including the lawsuit that LandCo filed.

All three parties and their teams of attorneys have been meeting behind the scenes for months, trying to hammer out a settlement.

On Wednesday, LandCo, which had also named the USOC as a defendant in its lawsuit, issued a joint statement with the sports organization saying it had "resolved all disputes" with the USOC and dismissed it from the suit.

Vice Mayor Larry Small said the city is still working with LandCo to reach a similar conclusion.

"A settlement is still being negotiated," he said. "All we're saying is that we think the suit should be dismissed."

In a statement, Assistant City Manager Mike Anderson expressed a similar sentiment.

"We continue to work diligently with both LandCo and the USOC to resolve matters and develop a new plan for keeping the USOC headquarters in Colorado Springs to the benefit of the USOC, the Olympic athletes and the community," he said.