The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Lyford Cay resident's former business partners have been given permission by a New York judge to seek a default judgment against him over the collapse of his Nassau restaurant empire.

Judge Naomi Buchwald last Monday allowed Erik Gordon and Ryan Giunta to move against Jamie Dingman, son of late world-famous entrepreneur, Michael, after he missed a 30-day deadline to hire new attorneys or respond to their revived fraud complaint.

Mr Dingman's previous attorneys obtained the southern New York federal court's permission to withdraw from representing him on July 16, 2018, after they could not locate him amid a failure to pay outstanding legal bills.

Clark Freeman, the attorney for Messrs Giunta and Gordon, in a September 14 letter to the judge, said: "We respectfully submit this pre-motion letter to seek leave to move for entry of default judgments against the three remaining defendants in this case - James T. Dingman and his companies, Out West Hospitality and The Traveller's Beach Restaurant.

"By order dated July 16, 2018, the court relieved counsel of record for all defendants and ordered that 'any corporate entities named as defendants in the complaint shall retain new counsel within 30 days of this order, and that failure to do so will result in the entry of a default judgment against them'.

"Neither Out West Hospitality nor Traveller's retained new counsel within 30 days of the Court's July 16 order. In light of this failure to comply with the order, we respectfully request that the Court grant plaintiffs leave to move for entry of a default judgment against Out West Hospitality and Traveller's," the letter continued.

"Similarly, Dingman has not retained counsel and has failed to litigate the case pro se. He has failed to answer the SAC (second amended complaint), and has failed to respond to document requests served on July 19, 2018.

"In light of Dingman's failure to answer the SAC, respond to discovery or participate in any way in this proceeding, plaintiffs respectfully request leave to move for entry of a default judgment against Dingman in addition to Out West Hospitality and Travellers."

Mr Dingman's latest blow came after his 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.

That came after a US federal appeals court reinstated the lawsuit initiated against Mr Dingman by Gordon and 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 had 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, were subsequently 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'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.