The Tribune

By FAY SIMMONS 

Tribune Business Reporter 

jsimmons@tribunemedia.net

The New York legal clash between Baha Mar’s main contractor, China Construction America (CCA), and Sarkis Izmirlian involving claims of fraud and breach of contract wrapped up with the contractor claiming that debt led to a $1.5bn loss and not construction delays - a claim contended by Mr Izmirlian’s legal team.

China Construction America (CCA) contended that the primary cause of the financial loss was Baha Mar’s excessive debt, not delays in the building process. However, lawyers for Sarkis Izmirlian say it was due to CCA concealing construction delays and intentionally sabotaging the March 27, 2015, completion date and plunging into a liquidity and financial crisis.

CCA’s attorney, Mark Goodman, argued that BML Properties Ltd’s debts and its decision to file for bankruptcy led to the liquidation losses not CCA, asserting “the plaintiff really brought this on itself”.

Attorneys said the losses were due to BML’s financial mismanagement and said the trial did not present evidence that CCA intentionally slowed down construction.

“The evidence has shown that the plaintiff over-leveraged the project with almost $2.5bn in debt [and] spent far in excess of its budget,” said Mr Goodman.

“It faced interest payments that it just didn’t have the resources to cover. The partial opening on March 27 would not have cured any of these fundamental problems.

“The plaintiff really brought this on itself,” Goodman argued.

In contrast, Jacob Buchdahl, counsel for BML, argued that the developer only incurred so much debt because CCA promised to have Baha Mar ready for the opening date.

Mr Buchdahl explained that this assurance led BML to spending millions of dollars on staff, training, room preparations and marketing.

He argued that BML was forced to file for bankruptcy due to CCA missing the opening date then manipulating the liquidation process to advance its own commercial interests, including allegations of bribing a top Bahamian official.

“Everything would have been done differently without these lies,” Mr Buchdahl argued.

“The first thing they would have done was conserve cash.

“What was CCA concerned about? Only about getting paid,” said Mr Buchdahl.

New York Supreme Court Justice Andrew Borrok will issue a written opinion deciding the claims after post-trial briefing from both sides.

Sarkis Izmirlian successfully fought off a bid by CCA to slash his damages claim by $830m just days before their fraud and breach of contract battle went to trial.

The Chinese state-owned contractor asserted that the New York State Supreme Court should bar Mr Izmirlian from bringing “evidence and testimony” involving the loss of his and his family’s $830m initial equity injection at the trial.

However, in a comprehensive victory for Baha Mar’s original developer, Judge Andrew Borrok rejected both this argument and CCA’s other contention that “certain unidentified evidence” involving its alleged breach of the two sides’ investors agreement should also be prohibited from appearing at the two-week trial.

Dismissing the contractor’s position in its entirety, Judge Borrok ruled that the wipe-out of Mr Izmirlian’s $830m investment was a direct result of CCA’s “alleged breach of contract and fraud”.

As a result, evidence relating to the initial equity contribution and its loss was presented at trial, with the judge slamming previous legal examples cited by CCA to justify its position as inappropriate and out of place.

CCA, which had hired new US attorneys after a series of legal reversals in its six-and-a-half year court battle with Mr Izmirlian, also failed to exclude any costs incurred by Baha Mar - as opposed to BML Properties - in the run-up to the $4.2bn mega resort’s failed March 27, 2015, completion from the damages it may have to pay.

It made its last-ditch legal move on June 12, 2024, less than two months before the trial’s start but Mr Izmirlian and BML Properties argued that, rather than seeking to exclude evidence, CCA and its new attorneys were employing “thinly-veiled motions for partial summary judgment” using arguments that should have been raised earlier with the New York State Supreme Court.

Mr Izmirlian and his US legal team successfully argued that CCA was “trying to improperly re-use its lost profits damages arguments”, with which it had succeeded at the appeals court level, to now knock-out and exclude something entirely different - the loss of the original developer’s equity contribution to the project.