Castlerock lawsuit may settle before trial

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A multi-million dollar lawsuit against Milwaukee-based Castlerock Commercial Construction Inc. could settle before trial, lawyers for both parties said Thursday.

Milwaukee County Circuit Court Judge Thomas Cooper postponed a scheduling conference until Jan. 5 after both sides acknowledged the possibility of resolving the case before then.

“It would be a type of resolution without having to litigate the entirety of the case,” said attorney Andrew Oettinger of Godfrey & Kahn SC.

Oettinger is representing Rex Runzheimer, owner of Waterford-based commercial management company, Runzheimer International Ltd., who claims Castlerock defaulted on a series of personal loans totaling $2.89 million.

Castlerock closed its doors this year, according to the complaint filed Sept. 13.

“It depends on what the terms of the settlement ultimately end up being,” Oettinger said. “We would have to get some more details.”

He declined to further discuss the potential of a settlement because it would be confidential.

The lawsuit names Castlerock as well as president Richard Jinkins and former executive vice president James Worthington as guarantors of the loans.

Milwaukee attorney Thomas Kurzynski, of Thomas W. Kurzynski JD LLC, is representing Castlerock and Jinkins.

Kurzynski declined to comment on the case Thursday.

Worthington filed for bankruptcy soon after Runzheimer brought his lawsuit and his participation in the case is on hold until he finishes the process, Oettinger said.

According to a lawsuit filed Tuesday, the contractor defaulted in February on loans to keep the business afloat.

According to the complaint, Runzheimer lent Castlerock $1.09 million from November 2008 to May 2009 to help the contractor “obtain bonding and negotiate directly with private clients.”

After the initial loans, a business operated by Runzheimer’s company hired Castlerock to expand the Horny Goat Brewery in Milwaukee, according to the complaint. After completion of the job, Jinkins and Worthington asked for another loan to continue operations, according to the complaint.

Oettinger said the terms of an additional $1.45 million loan required Jinkins and Worthington put up collateral in the event that Castlerock closed.

According to the complaint, Jinkins and Worthington claimed total collateral of about $2.94 million, $1.04 million of which was the listed net assets of Castlerock.

Runzheimer, according to the complaint, gave Castlerock the additional loan in March 2010. But, according to the complaint, Castlerock continued in “dire financial straits,” and Jinkins and Worthington requested more money from Runzheimer.

In November 2010, after obtaining more collateral, Runzheimer consolidated the first two loans and gave Castlerock, Jinkins and Worthington another $350,000 for a total loan of $2.89 million, according to the complaint.

Part of the loan, Oettinger said, included an agreement that gave Runzheimer security interest in all equipment, fixtures, inventory and other property owned by Castlerock.

According to the complaint, on or about Feb. 16, Jinkins and Castlerock acknowledged the agreement was in default and voluntarily agreed to pay $127,331 in partial collateral reimbursement.

Runzheimer is seeking $3,292,900 in addition to attorneys’ fees, collection costs and interest.

Oettinger declined to say whether Runzheimer is seeking a settlement close to the amount sought in the lawsuit.

“Nothing is final at this point,” he said. “So whatever I said would just be speculating. This could still be litigated.”

More on the lawsuit

• Restaurant owner agrees to plead guilty in construction loan scheme
• Castlerock settles lawsuit to pay debt (UPDATE)
• Lawsuit against Castlerock may not head to trial
• Castlerock closes, faces lawsuit (UPDATE)
• Lawsuits pile up against Castlerock
• Castlerock Commercial Construction fights forgery allegation