The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Lyford Cay resident has suffered a double blow, after his attorneys withdrew over unpaid legal bills just as the fraud case relating to his collapsed Nassau restaurant empire revives.

Jamie Dingman, son of late world-famous entrepreneur, Michael, was on Monday given 30 days by a New York federal judge to hire new attorneys otherwise a default judgment will be entered against him in favour of two former business partners who invested in his failed Out West Hospitality venture.

The court Order came after Mr Dingman's previous attorney, Jeffrey Mitchell, said there had been no contact with his client since August 2017. He told Judge Naomi Buchwald, via a June 21, 2018, letter that the Lyford Cay resident has neither revealed his location or paid past due legal bills.

"We have had limited contact with Dingman (who acts for the corporate defendants), and have not heard from him at all since August 2017," Mr Mitchell told the judge. "He has not responded to phone calls, letters or e-mails sent to the one e-mail address that we have on file for him. He has refused to disclose to us his whereabouts or to pay outstanding bills.

"We notified Dingman in July 2017 that we would no longer represent him but, unfortunately, because he failed to retain new counsel we felt our professional obligations compelled us to file a brief in the appeal on defendants' behalf, as there was insufficient time to withdraw from the appeal without comprising defendants' position."

Mr Mitchell added that attorneys who initially represented Mr Dingman in a related case, this one filed in the New York Supreme Court, had also withdrawn after "encountering the same problems we have encountered".

Mr Dingman's legal woes appear especially ill-timed because a US federal appeals court, on June 19, overturned Judge Buchwald's original verdict and reinstated the lawsuit initiated against him by former business partners, Erik Gordon and Ryan Giunta.

They had alleged that Mr Dingman breached agreements to provide them with an equity interest in Out West Hospitality, the holding company for a planned Nassau restaurant conglomerate that included the iconic Traveller's Restaurant and several other properties, but which fell apart and collapsed in 2014.

Gordon alleged that the $250,000 he paid to Mr Dingman in exchange for a 50 per cent equity stake in Out West Hospitality was a transaction which, under US law, the latter had to complete.

He argued that the Out West Hospitality share deal was governed by US securities laws, given that the negotiations and communications between himself and Mr Dingman occurred in New York.

Yet the southern New York court disagreed, finding that Bahamian law trumped the US version as the Out West Hospitality share transaction needed regulatory approvals in this nation before it could close.

Judge Buchwald ruled that the need to obtain Investment Board and Central Bank approval, given Gordon's status as a non-Bahamian, was "a condition precedent" that had to be completed before the purchase closed.

Given that these approvals were never obtained, Judge Buchwald found that Gordon's claim of "irrevocable liability" on Mr Dingman's part in relation to the deal had not been met. As a result, the whole case was undermined.

Those findings, though, have been rejected by the US Court of Appeals for the second circuit, which found that the agreement between Mr Dingman and Gordon was not "so predominantly foreign" as to mean US securities laws did not apply.

"We are not persuaded that the foreign components present in this dispute render the claims impermissibly extraterritorial," the Appeals Court ruled, given that the discussions over Gordon's Out West Hospitality investment largely occurred in New York.

"The agreement was entered into in New York; Dingman continued to press Gordon for further investments in New York; Dingman and Gordon were both US citizens; the wire transfers originated from New York; and the confirmation letters were sent to New York," the US Appeals Court found.

"The only foreign component present in the formation of the agreement was the eventual registration of the shares 'with the appropriate Bahamian authorities', an act that Dingman agreed to undertake per the agreement."

Mr Dingman had argued that the Bahamas was the most appropriate legal jurisdiction to resolve the dispute, given that he is a permanent resident and all the companies, entities and related accounting records are based here. As a result, he claimed US securities laws were not applicable.

Having rejected this, the US Appeals Court also found that the deal between Mr Dingman and Gordon "was a contract" that committed them to the transaction when they were in the US - even though it was subject to Bahamian regulatory approvals.

"Dingman counters that the agreement was not a binding contract because the agreement specified that he would refund Gordonʹs investment if they could not agree to 'a written document memorializing the terms of Gordonʹs investment'," the verdict recorded.

"He contends that this illustrates that the parties did 'not intend to be bound until their agreement [was] reduced to writing', and thus, the agreement was not binding.

"Gordon and Dingmanʹs subsequent conduct belies this argument. Gordon would not have wired $100,000, and Dingman would not have confirmed it as an investment, unless both understood the agreement to be a binding investment contract."

The Appeals Court verdict recalled how Gordon was unable to obtain Out West Hospitality's accounts despite repeated requests, only for Mr Dingman to inform all investors on September 9, 2014, that the business and all restaurant formats were closed.

"The letter also stated that Dingman was doing a capital call to raise additional funds that would dilute existing shares if the shareholders failed to invest more. The existence of other equity holders came as a surprise to Gordon, given Dingmanʹs previous representations that Dingman and Gordon shared in 50/50 equity of OWH," the court noted.

"In the following weeks, Dingman ignored Gordonʹs phone calls and e-mails requesting operating and financial information and refused to return Gordonʹs investment."

Mr Dingman's efforts to build a Nassau-based restaurant and hospitality business included taking over Traveller's Rest in western New Providence via a lease arrangement.

That venture failed and the property shut again, until members of the Bain family, its owners, re-opened it again.

He also leased two units in the Klonaris brothers' Elizabeth on Bay plaza on Bay Street for two other restaurant formats, both of which have also closed.

Tribune Business also revealed how Mr Dingman leased the Beach Club Cafe from Sandyport's developers, viewing this as his "signature property". The venture never opened, and the lease was pulled.

The initial action against Mr Dingman included numerous Bahamian plaintiffs, such as the well-known Wulff Road-based building materials suppliers, FYP and Tile King, the People First (Bahamas) employment agency, IDNet, and Young Digerati (YNG).

Individual Bahamians also suing Mr Dingman included Jason Rolle, his former general manager, who claimed to be owed $46,113 in unpaid salary and benefits, plus Tyrone Adderley, a contractor seeking more than $2,000 for work on the Beach Club Cafe at Sandyport.

However, all the Bahamian plaintiffs "voluntarily" withdrew their claims for thousands of dollars in damages against Mr Dingman, leaving the action to Messrs Gordon and Giunta. Their action was likely due to Mr Dingman's efforts to dismiss the case on jurisdictional grounds, with the argument that the Bahamas was the proper forum to hear the matter.