The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bimini Bay Resort & Casino’s developers have succeeded in arguing that a US court should send a lawsuit filed by a former condo purchaser, who is alleging he was “defrauded” of $106,000, into arbitration in the Bahamas.

District Judge Rya Zobel found that the “emphatic federal policy in favour” of using arbitration, at first instance, to resolve disputes meant that the case filed by John Lewis in the Massachusetts District Court should be stayed pending the outcome.

In the December 17, 2012, ruling that has been obtained by Tribune Business, Judge Zobel said Lewis was alleging that Bimini Bay and its developers, The Capo Group and RAV Bahamas, had “misrepresented the facilities” at the Bahamian resort complex.

Recording the background to the dispute, the judgment noted that Lewis learned of the Bimini Bay project from a friend in 2003.

“Unbeknownst to Lewis, this friend was being paid by defendants to solicit buyers and investors for that project,” Judge Zobel wrote.

“Lewis was interested in buying a condominium in the new resort. He consulted defendants’ brochures and website, and then flew to the Bahamas to tour the proposed site.

“Defendants advertised that the proposed resort would be uniquely attractive because of the inclusion of a planned golf course and casino.

“On August 27, 2004, Lewis executed a purchase agreement with RAV for an ocean-view ‘Millennium II’ condominium and sent RAV a cheque for $75,200 towards the purchase price. The resort, including Lewis’s condominium, was to be fully constructed by December 31, 2006.”

The judgment noted that in 2006, Lewis allegedly learned that the condominium he had reserved did not have an ocean view, nor a golf course and casino (the latter problem is being rectified as the casino is now under construction).

The Capo Group and RAV Bahamas assured him the latter facilities were under construction, and offered to transfer his deposit to a ‘Topsider’ condominium that would be completed in the same construction phase as the casino.

This ‘exchange’ deal was executed on January 2, 2007, and on March 20, 2008, Lewis received a letter asking him for an extra $30,700 payment towards his Topsider apartment. The payment was made on April 10, 2008.

“In December 2008, RAV sent him a notice that he had to complete the purchase of his condominium in 21 days or forfeit his security deposit,” the judgment noted.

“Lewis raised his concerns with defendants, including the lack of any casino or golf course at the new resort, and the defendants sporadically proposed negotiating extensions of the closing date between January 2009 and December 2011.

“Defendants told Lewis that, in the meantime, his condominium was placed in the resort’s rental programme, but never provided him any information or accounting of the renting of his unit.

“No casino or golf course was ever built, and Lewis never occupied his promised condominium. Eventually, RAV sold the unit reserved for Lewis to a third party for $254,000. Defendants have refused to repay the $105,900 that Lewis had sent them.”

Judge Zobel noted that both sales contracts contained clauses referring disputes to arbitration “in accordance with the provisions of the Arbitration Act of the Bahamas”.

An August 12, 2012, letter to Mr Lewis from Ferron Bethell, RAV Bahamas’ attorney at Harry B. Sands & Lobosky, pointed him in this direction, and nominated Harvey Tynes QC to act as the “sole arbitrator” if both sides agreed.

RAV Bahamas argued that US federal law required Lewis’s US action to be stayed in favour of arbitration, while the latter alleged that there was no valid arbitration agreement because he was “induced to sign the purchase agreements by fraud”.

Judge Zobel found this argument failed, because Lewis never alleged he was fraudulently induced to sign the arbitration agreement.

And, while Lewis claimed his grievance fell outside the scope of the arbitration clause,the judge ruled that this was trumped by US federal policy in favour of arbitration.

And, although Lewis had called for the lawsuit against Bimini Bay and the Capo Group to continue even if the action versus RAV Bahamas was stayed, the judge found the claims “overlap substantially”.

RAV Bahamas’ request for a stay was granted.