Jason Winkler, left, owned Makers Line, Q Factor and a list of affiliated construction companies. Tim Foster, right, was president of Makers Line during its rise and fall.
Two developers and another subcontractor have filed lawsuits against the owners and former president of Makers Line, alleging fraud, unjust enrichment and misuse of funds and seeking to recoup millions of dollars from the heads of the collapsed construction enterprise.
The developers’ lawsuits both accuse Makers Line officials of using money and materials on unrelated projects and seek over $17 million in damages, by far the largest among a growing list of legal challenges to come after the collapse of Makers Line.
The lawsuits join a growing list of legal issues stemming from the business practices of Makers Line and its affiliated companies, but they are perhaps the most significant challenge to H. Jason Winkler and his wife and business partner Ellen Winkler. They also put a spotlight on Timothy S. Foster, who was president of Makers Line during its rise and fall.
The lawsuits were filed by Summa Terra Ventures and Roers Companies, who both hired Makers Line to act as the general contractor on new apartment buildings in Ogden and Salt Lake City.
The allegations in the lawsuit track what Building Salt Lake reported last month. But the complaints shed new light on how Makers Line conducted business before it failed alongside several other construction companies the Winklers owned in October.
Both developers allege Jason Winkler and Foster made false statements about how money paid to Makers Line was used.
The lawsuits implicate Foster and Winkler for what they said were intentionally false statements the pair made to obtain contracts and collect money without paying subcontractors. They then say the pair continued making false statements about the status of the projects and payments made to Makers Line that was supposed to pay subcontractors and suppliers.
“Makers Line regularly fraudulently concealed or made material misrepresentations to Roers about payments to subcontractors and suppliers on the project,” Roers alleged in its complaint, filed Dec. 29 in Utah’s Third District Court.
Faulty lien waivers
Roers hired Makers Line to build a 262-unit apartment building, known as the Whitney, in Salt Lake City’s Ballpark neighborhood. Problems started soon after.
“Almost immediately after work commenced on August 29, 2022, Makers Line mismanaged the Project,” attorneys for the Minnesota-based developer wrote.
Part of the disruptions could have been caused by high employee turnover at Makers Line. Roers said the project had seven superintendents and four project managers in the year Makers Line was affiliated with the project.
Titus, a concrete subcontractor owned by the Winklers, was more than two months late on foundation work for the building to start going up, the lawsuit alleges. At least once, Titus filed a lien against the Roers property despite being owned and managed by the Winklers, who as owners of Makers Line had agreed to pay Titus with money Roers paid Makers Line, Roers said.
Makers Line also installed the wrong windows, which Roers said it had to pay $280,000 to replace. The building is now 12-18 months behind schedule and remains unfinished.
In the lawsuit, Roers alleged Winkler and Foster submitted a lien waiver that was “never approved or signed” by a subcontractor in July 2023.
“As a direct and proximate result of Foster and Winkler’s fraudulent inducement, Roers has been harmed and suffered damages in an amount to be determined at trial, but for no less than $5,000,000.00,” Roers wrote.
Neither the Winklers nor Foster responded to a request for comment. The suits name Ellen Winkler as a co-owner of the companies but otherwise make no allegations against her.
They include documents that show Foster signed contracts for work on various Makers Line projects. The complaints allege that Foster and Jason Winkler represented the company in meetings with the development teams, indicating the two were at the helm of the company in the year leading up to its collapse.
Foster and Winkler are also named in a separate lawsuit from a general contractor in Arizona who said the three created a partnership together, but that Winkler and Foster transferred hundreds of thousands of dollars paid by project owners in Arizona to the Makers Line account in Utah.
Trouble in Ogden
Summa Terra hired Makers Line to act as general contractor of two buildings in Ogden known as Hunter’s Landing and Union Walk.
In its lawsuit, Summa Terra reiterates what Building Salt Lake reported last month: Makers Line knowingly bought non-fire treated lumber and framed two buildings with it, according to Summa Terra. One of the buildings was demolished last month.
Like Roers, Summa Terra alleges the problems with Makers Line began soon after the two agreed to work together.
The lawsuit alleges Makers Line’s “errors and defective work” began damaging the historic buildings next door.
A private engineering firm and city inspectors would later find construction defects throughout one of the two Ogden buildings. Those issues, and the developer’s inability to find another general contractor to take on the work, led Summa Terra to demolish the unfinished structure after months of trying to remedy the issues.
Summa Terra said Makers Line made a “unilateral” decision to use non-fire treated lumber to frame the two buildings.
“On information and belief, Makers Line employees internally communicated to Mr. Winkler, Mr. Foster, and others regarding the non-fire rated lumber problem and violation of code, but Mr. Winkler, Mr. Foster, and others instructed the Makers Line employees to proceed ahead with the erroneous lumber,” Summa Terra alleged. “Makers Line ordered and proceeded with the erroneous lumber in a forlorn attempt to save itself time and money on the project.”
The new allegations about construction defects in three more buildings raise more questions about the workmanship of the dozens of other projects Makers Line worked on before it collapsed.
A former prospective tenant of Q Factor, the developer and property manager also owned by the Winklers, alleged in a past court filing that its inspectors found significant construction defects in the Industry SLC building in the Granary District.
Makers Line sought out projects in Detroit, Oklahoma City, Arizona, Sacramento, California, New York, South Carolina and Bozeman, Montana, in addition to its projects in Utah.
Makers Line accounting questions
Both lawsuits shine a light on Makers Line’s accounting practices while it quickly scaled and took on more projects while also adding more affiliated companies under the Winklers’ control.
Sources familiar with the accounting practices of Makers Line and the Winklers’ affiliated companies told Building Salt Lake there was a holding account called Winkler Holding. Employees said they were told there was effectively one account across the companies the Winklers controlled.
In its complaint, Summa Terra also alleged there was a holding account that was used to share money between the Winklers’ companies.
“Makers Line ostensibly had separate accounting for its various shell entities, but there was a primary bank account in the name of Winkler Holdings that transferred money between entities,” Summa Terra alleged.
The developer also alleged that Makers Line received money from Summa Terra for the two projects in Ogden to pay for construction work and services, but that the money was transferred to the Winklers, Foster or their companies.
Those transfers happened after Makers Line had incurred significant debt, and at a time when the transfers could help push Makers Line into insolvency, Summa Terra alleged in the complaint.
“Makers Line did not receive reasonably equivalent value for the Transfers,” the attorneys wrote. “Makers Line was insolvent or became insolvent shortly after the Transfers were made.”
“The Transfers took place after the risk of litigation with [Summa Terra] became apparent,” they wrote. “As a result, [Summa Terra has] been damaged by the Transfers by Makers Line to the Insiders in an amount to be established at trial, which amount is no less than $9,700,000 plus interest and costs.”