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Amid a legal battle playing out in Pitkin County District Court, an original investor in the Belly Up Aspen venue is seeking a judge’s order that would dissolve the business entity he and the nightclub’s founder started more than 18 years ago.
Investor David Gitlitz is arguing for the dissolution of 450 South Galena Investors LLC, the legal name for the entity that he and Belly Up Aspen founder Michael Goldberg formed in 2006 to acquire the 5,500-plus-square-foot nightclub space for $1.8 million. Gitlitz’s complaint says he invested $1.4 million in the buildout of the space, which is located at the downtown corner of Galena Street and Durant Avenue.
Belly Up Aspen is one of town’s primary attractions for live music and entertainment. It draws national and global artists and is a venue for private events, nonprofit fundraisers and other gatherings. As the building’s owner, 450 South Galena Investors has been collecting rent from the Belly Up Aspen business, a separate entity, since the venue opened in 2006.
Gitlitz, in a lawsuit first filed Nov. 20, 2023, has argued that the lease terms benefit Belly Up Aspen’s ownership, of which he is not a part. As well, his lawsuit alleges that Gitlitz made requests for a buyout by the Goldbergs that were ignored, prompting him to take legal action.
“This case is about a deadlocked business venture by two longtime Aspenites — in their mid-seventies and well-known to each other — that has devolved into a one-sided deal. The Complaint alleges that one Aspen family, the Goldberg Defendants, holding manager and member positions of trust, have engaged for nearly two decades in rank self-dealing in order to reap untold benefits for their own family’s interests to the detriment of the other Aspen family — Gitlitz,” says a written pleading filed Nov. 14 by Aspen lawyer Matt Ferguson, who represents Gitlitz in the litigation.
Goldberg, his sons who run the nightclub and the family trust are pushing back against Gitlitz’s intentions, with their lawyers arguing he doesn’t have the authority or standing to break up the entity. Dissolution also would require unanimous agreement from the LLC’s members, they argued in an Oct. 9 motion to dismiss Gitlitz's claim for dissolution.
The October filing was the first action taken in the litigation after a judge-ordered pause was issued to allow for out-of-court mediation. The stay, which was in place from Jan. 30 through Sept. 18, did not yield successful mediation.
“At most, (Gitlitz’s lawsuit) asserts a series of disagreements regarding whether the premises could have been rented for more money,” says a filing by lawyers with Denver-based Lewis Roca Rothgerber Christie LLC, which represents the Goldbergs in the dispute. “Those allegations, and Plaintiff’s accusations that Defendants have engaged in misconduct, fall far short of stating a claim for the extreme and disfavored remedy of judicial dissolution.”
Gitlitz and Goldberg have found one area of common ground, and that is to pause the litigation for a second time to allow a “special litigation committee” to examine the dispute out of court.
The Goldberg defense team proposed in October that a special litigation committee be used “to create an independent body to determine whether proceeding with the derivative action is in the entity’s best interests.”
They are seeking a 120-day court-permitted pause in the litigation to bring in a neutral committee — a body of one comprised of an established Denver lawyer — to determine whether dissolution is in the best interest of the corporation 450 South Galena Investors.
Gitlitz’s team said it was open to an out-of-court, independent review of the dispute, but for no more than 60 days, arguing they didn’t “agree that another four months is warranted for a stay.
“Every month, the Goldberg faction denies 450 LLC tens of thousands in monthly market rents while enriching their night club business. The (special litigation committee) needs 60 days to read the pleading documents and investigate the issues facing 450 LLC,” a Nov. 14 filing states.
On Friday, lawyers for the Goldbergs filed a pleading arguing that 120 days is an allowable timeframe and if Gitlitz were to prevail, he could recover an additional two months of damages for the additional two months of the special litigation committee’s time.
Dissolution of the entity into cash on demand for Gitlitz is an “extreme remedy” and not justified, the pleading says.
The Nov. 14 filing by Gitlitz argues that the Goldberg team during litigation continues with “incessant self-dealing, ongoing breaches and abject avarice. All have resulted in intractable deadlock and spiraling injury, requiring a judicial dissolution.”
Gitlitz’s lawsuit makes five claims for relief: judicial dissolution, declaratory judgment, breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and breach of operating agreement.
Besides judicial dissolution — a claim that Goldberg also is attempting to dismiss — the suit seeks court approval for one of three options: terminate the nightclub’s tenancy and order the sale of the 450 S. Galena St. address it occupies; order Belly Up to enter a lease reflecting the current Aspen commercial real estate market and terms; or terminate Belly Up’s lease agreement and lease the space to a tenant approved by Gitlitz and Goldberg.
Michael Goldberg did not return a message seeking comment for this story.