The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A US investor’s $2.239m claim against the family owners of a well-known San Salvador resort has been branded as “unenforceable” by a Supreme Court judge and rejected in its entirety.

Justice Andrew Forbes, in a verdict delivered almost 11 years after the case was first tried, found that the $2m promissory note on which Kenneth Schweitzer based his claim against the Williams family, proprietors of the Riding Rock Resort & Marina ever since it was constructed in the 1960s, was “invalid” as it failed to meet “the legal meaning and definition” of such an instrument.

The dispute between the parties erupted over a deal, which was never consummated, that would have seen the American acquire a 50 percent ownership interest in the Family Island resort. Mr Schweitzer alleged that the $2m promissory note was intended to “secure the repayment” of all monies he advanced to purchase materials and furnishings for Riding Rock’s renovation.

The Florida resident, a contractor by profession, argued that the April 1, 2007, promissory note required the Williams family and their company, Carter Enterprises, to repay the principal and interest by January 31, 2008, with a default occurring if the full sum was not paid within 30 days of the latter date.

Mr Schweitzer argued that the Williams’ family defaulted after he had obtained Customs duty and other tax breaks, worth $1.611m, on $2.044m worth of materials imported to renovate Riding Rock. “He further alleges that he agreed to assist the defendant with financing the purchase of the goods which it intended to import into The Bahamas for the purposes of renovating the said Riding Rock Inn and Marina in exchange for executing the promissory note,” Justice Forbes noted.

“The plaintiff further alleges that in pursuance of this agreement the plaintiff spent a total of $1.455m for the Riding Rock project and the said sum was acknowledged by Kevin Williams, one of the defendant’s duly authorised representatives on July 7, 2007.”

The alleged failure to pay saw Mr Schweitzer initiate legal action on September 4, 2012, although the case ultimately only made it to trial in late June and early July 2022 - almost ten years later. The Williams family, though, rejected the American’s $2.239m demand and asserted that he - not themselves - was responsible for a breach of contract by not paying the sum required under the promissory note.

They alleged that Mr Schweitzer was supposed to acquire a 50 percent stake in their resort by paying a $2m purchase price, but the deal was never concluded because this sum was never received. And, while admitting to the promissory note’s execution, the Williams family denied that it was designed “to create a legal obligation” to the American but, rather, was intended to help him secure “Chinese” financing for the $2m purchase.

The Riding Rock owners also alleged that, in 2006, they entered into an “independent collateral oral agreement” with Mr Schweitzer that they would share the cost of resort improvements if he acquired a 50 percent stake. And, while admitting that he did acquire some of the materials, denied that their value exceeded $400,000.

Mr Schweitzer, who denied seeking “Chinese” financing, said Kevin Williams informed him that the family “needed financial help to fix the problems with the marina” when he spent a month’s fishing at Riding Rock in summer 2004 and 2005. He responded that he would be interested in investing $2m in the property in return for a 50 percent equity stake in all the marina properties and businesses on the 25-acre tract.

“By August 2006, he had committed to spending a total of $3m on the resort with a breakdown for $2m in respect of the shares and $1m for the repairs,”Justice Forbes said of the US investor’s evidence. “That he was purchasing the resort ‘as is’ and he agreed that at the end of it the Williams family would have their 50 percent share remaining, a renovated resort and $1m cash in hand.”

By April 17, 2007, Mr Schweitzer said that while the $2m payment for his 50 percent ownership stake remained outstanding, he had funded some $1.5m worth of improvements to Riding Rock and wanted the promissory note as security for his outlay. 

However, Michelle Williams, who together with her four brothers Kevin, Carlos, Jamal and Jayson owns Riding Rock Resort & Marina, alleged that in early 2007 Mr Schweitzer admitted “he was having difficulty raising” the $2m and needed documents to prove to a lender that he had a deal to acquire a 50 percent share.

The promissory note, prepared by the family’s attorney, Bryan Glinton, the Glinton, Sweeting & O’Brien partner, “was prepared solely for the purpose of assisting the plaintiff in his attempt to raise the funds to enable him to purchase the 50 percent interest in the resort”. And Ms Williams alleged that “the cover note from Mr Glinton partially explains” it was not designed to create a legal obligation for the family to pay Mr Schweitzer money.

Kevin Williams, the resort’s managing director, in his evidence said that - at the time - the family had “decided to sell the resort due to the recession and 9/11 and had difficulties with people coming to the island”. However, Justice Forbes said the main issues to be determined were whether the promissory note was legally binding and enforceable, and if the Williams family had defaulted on their obligation to repay.

He found Mr Schweitzer and his witnesses “to be wholly unreliable”, and said the US investor “seems to be somewhat confused as to the nature of his agreement. It would appear that the plaintiff either did not appreciate the nature of the agreement that was being proposed or has simply chosen to appear to be ignorant, and the court finds this unlikely given the multiple businesses the plaintiff indicated he was a part of”.

Noting that the promissory note “is an unconditional promise to repay”, Justice Forbes noted that the document signed by the two sides violated this by containing 11 terms and conditions. “Therefore, the court finds that the promissory note dated April 17, 2007, is invalid as it fails to meet the requirements of a bill of exchange and is therefore unenforceable,” he added.

This meant Mr Schweitzer’s pleaded case “has to fall away”, Justice Forbes added, finding that while there was an “oral agreement” over the repairs and renovations it was unclear as to what the terms were and bother parties were disputing them.