The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

BAHA MAR’S original developer has accused the resort’s Chinese contractor of trying to rehash failed legal arguments as he dismissed its assertion that the project went “only $68m” over budget.

Sarkis Izmirlian and his BML Properties vehicle, in late Wednesday responses to China Construction America’s (CCA) last-ditch bid to slash their damages claim by $830m, argued that the state-owned contractor’s claims about the project’s cost were part of a legal filing “rife with unsupported and, in some instances, false assertions”.

CCA, in seeking a court order blocking Baha Mar’s original developer from recovering the $830m in equity capital it contributed to the development, alleged that cost overruns on the Cable Beach mega resort only totalled $68m com- pared to the initial $1.98bn construction budget.

And, while it had received $700m from the China Export-Import Bank, the project’s financier and lender, to complete Baha Mar following Mr Izmirlian’s ouster as the resort’s developer, the Chinese contractor has asserted in other legal filings that some $200m of this sum was used to pay debts and liabilities owed to Bahamian sub-contractors and vendors.

However, Mr Izmirlian and BML Properties countered: “CCA asserts, without any evidentiary support whatsoever in the record, that it finished the project ‘at only $68m’ over budget, failing to acknowledge the unrebutted evidence that CCA overbilled BML Properties and was overfunded throughout the project, or that it was paid an additional $700m to complete the project.”

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

It has made its move less than two months before the trial’s August 1, 2024, start, and is also seeking to exclude the $830m equity contribution that Mr Izmirlian and his family made to Baha Mar from being used as evidence at trial or included in any damages claim.

However, Mr Izmirlian and BML Properties are arguing that, rather than seeking to exclude evidence, CCA and its new attorneys are employing “thinly-veiled motions for partial summary judgment” using arguments that should have been raised earlier with the New York State Supreme Court.

“CCA could have presented these new and misguided legal theories over a year ago. The court should deny the motions as untimely and successive summary judgment motions,” Baha Mar’s original developer alleged. “

“In addition, CCA’s motions lack merit. The first motion is premised on the false notion that, as a matter of law, BML Properties is not entitled to recover the financial contributions it lost as a direct consequence of CCA’s fraud and breach of contract..... BML Properties is seeking the return of the cash value of its ‘“entire investment’ that it ‘lost because of the fraud’ - the standard measure of fraud damages.

“BML Properties’ out-of-pocket damages comprise the return of the value of the assets BML Properties contributed to the Baha Mar project - an appraised value that the parties agreed to in their contract. These are direct, not consequential, damages. BML Properties seeks the return of what it initially contributed and then lost as a direct result of CCA’s breach, not lost profits or collateral business opportunities.”

Mr Izmirlian and his US legal team 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.

“This case is about CCA’s massive fraud and breached promises to its former partner, BML Properties,” Mr Izmirlian and his attorneys argued. “CCA was the general contractor and construction manager, as well as BML Properties’ purported ‘co-investor’ for the multi-billion-dollar Baha Mar resort and casino in The Bahamas.

“BML Properties was the majority shareholder and day-to-day manager of the project. CCA promised BML Properties that its representatives managing the project would ‘at all times act in the best interests’ of the project. Instead, CCA’s representatives withheld material information from and made material misrepresentations to BML Properties, and acted to deliberately harm Baha Mar and BML Properties in order to advantage CCA.

“BML Properties seeks $845m in out-of-pocket damages from CCA, comprising $745m in tangible and intangible assets including land, leased facilities, improvements, personal property, contracts, approvals, hotel assets, intellectual property, personal property and casino operations and a license invested in the project in 2010; $85m in cash invested in the project in 2010; and $15m contributed to the project in 2015.

“Although CCA now - and for the first time - attacks BML Properties’ expert’s calculation of these damages as ‘conclusory’, the parties contemporaneously agreed on the $745m valuation for BML Properties’ non-cash contribution, which was confirmed by an appraisal and memorialised in numerous signed writings.”

Mr Izmirlian further argued that Baha Mar’s “liquidity crisis” and financial woes were caused by the Chinese contractor’s “fraud and misconduct” in failing to complete the project by the March 27, 2015, deadline, “then finagled the [Chapter 11] bankruptcy into a Bahamian liquidation where BML Properties lost everything”.

“This case is about how CCA wrongfully terminated that equity and control with its fraud and egregious contract breaches, causing BML Properties’ total loss,” the original developer added. “BML Properties lost, and did not recoup, its entire $845m investment - which was wasted by CCA’s breach - and has been deprived of the benefits of its investment by CCA.”