Developer sues “lifelong family friends” over failed Coachella hotel

Stuart Rubin alleges partners engaged in “conspiracy” with lender Calmwater

Developer Sues “Friends” Over Derailed Coachella Hotel
Calmwater Capital's Larry Grantham, GSS Law's Gary Stiffelmanand Stuart Rubin with 84141 Avenue 48 in Coachella (Loopnet, Calmwater Capital, LinkedIn)

For one developer, a lifetime of friendship did not preclude a legal mess. 

Stuart Rubin has filed a countersuit against a group of business partners and lenders, including people he described as “lifelong family friends,” over a failed hotel project near the site of the Coachella Arts and Music Festival. The development, an unfinished 250-key hotel that was set to operate under Intercontinental’s Hotel Indigo brand, went through foreclosure and was put on the market with a $30 million asking price last year.

In a complaint filed in California’s Central District Court earlier this month, Rubin sued lawyers Gary Stiffelman and Richard Pachulski and their firms along with lender Calmwater Capital. In the court filing, Rubin accused Stiffelman and Pachulski, both of whom served as counsel and partnered with him on projects for decades, of entering into “clandestine agreements” with Calmwater to seize control of his assets. 

The lawsuit comes nearly four years after Stiffelman filed a $50 million lawsuit against Rubin and his family, alleging that Stiffelman was saddled with millions of dollars in payments after the project’s finances dissipated through “incompetence and fraud.” According to a previous report from the Palm Springs Desert Sun, Stiffelman claimed that Rubin convinced him to keep pouring in money to guarantee debts for the project, which supposedly burned through $50 million in funding. In the complaint, Stiffelman, who said that he paid $4 million for an equity position in the development, alleged that he could be liable in relation to $25 million in loan guarantees. The case remains open, with a jury trial scheduled to start in September next year. Stiffelman did not respond to a request for comment.  

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Rubin’s lawsuit paints an entirely different picture. In his complaint, he alleges that Stiffelman and Pachulski colluded with Calmwater in a “fraudulent conspiratorial enterprise” to push him into insolvency. 

“Seeing an opportunity when plaintiff Stuart Rubin began facing significant litigation pressures from multiple angles involving the development of a hotel property in Coachella, California, his two lifelong family friends used the litigation as an opportunity to betray him,” the complaint reads. 

“The motives are legion. However, at a minimum, Pachulski hopes to force Stuart Rubin into insolvency so that he can wrest away interests in commonly held investments, shared among their families for decades, and Stiffelman hopes to protect what remains of his assets from liquidation, if not recoup such assets off of Rubin’s back.”

Rubin started construction on the hotel in 2017. A year later, the developer secured a $24.4 million mortgage from Calmwater. The loan went into default shortly after. Glenroy Coachella, the entity that owned the project, filed for bankruptcy in 2021. In 2022, Riverside County officials proposed converting the site, once billed as a “modern luxury oasis,” into a drug rehabilitation facility. 

Rubin seeks unspecified amounts in compensatory and punitive damages.  

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