Chicago firm mismanaged project before abandoning it, RiNo developer says

The RiNo firm Menalto Development is accusing a Chicago company of burning through more than $10 million “before putting a single shovel in the ground” at their project along Delgany Street, then stopping work and ceasing communication about it.

“Menalto is entitled to recover damages the John Buck Co. has caused Menalto and the family legacy it entrusted to JBC,” Menalto wrote in a countersuit filed Feb. 24.

Menalto founder Bernard Hurley has acquired 7 acres of what is now RiNo over three decades and hopes to turn most of it into Hurley Place, which last week’s lawsuit calls “a premier commercial and residential destination” and a “legacy project for the Hurley family.”

For the first phase, he partnered with John Buck Co. Hurley said that was Buck Co.’s idea.

“The John Buck Company was eager to enter the Denver market, but wanted a local partner,” according to Menalto’s countersuit. “John Buck, the principal of the John Buck Company, personally courted Menalto and Mr. Hurley about developing Menalto’s property.”

The two sides formed Hurley Place Partners I LLC in 2020. That company, which Buck Co. was the managing member of, was supposed to buy Hurley’s real estate for $21 million — $13 million in cash and a stake in the combined company valued at $8 million — although Hurley says the deal was never executed.

The arrangement left Menalto with “no authority over or day-to-day insight into the company’s affairs,” Hurley said.

Both sides worked well together in the venture’s early years, according to Menalto’s countersuit. The partnership paid for site plans as well as expenses Menalto now questions, such as $640,000 in steel even though construction wasn’t imminent.

“JBC’s spending bore no resemblance to the project budget,” Menalto says. “JBC allegedly spent approximately $10.6 million before putting a single shovel in the ground,” or nine times what was budgeted for predevelopment and one-third of the project’s budgeted soft costs.

“Mr. Buck would later acknowledge that JBC had ‘never spent this kind of money in predevelopment work,’” according to Menalto’s countersuit in Denver District Court.

By 2023, the project was buckling under the weight of market conditions, Menalto says. That year, “behind the scenes and unbeknownst to Menalto, JBC stopped work,” the Denver firm recalls. It stopped pursuing a site plan and let the prepurchased steel rust outside.

“Weekly update calls that JBC had been conducting stopped. The required monthly progress reports stopped. The required monthly financial reporting stopped,” Menalto says. “The communication cadence, previously multiple times per week, slowed to almost nothing.”

In October 2023, Buck Co. made the decision that has spawned an $18 million legal fight: It exercised a so-called put right option that, in Buck Co.’s mind, forces Menalto to buy it out for twice what Buck Co. has spent on the project, or at least $18 million.