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Developer faces $1m lawsuit over alleged contract breach

A developer who set out to build a new hotel in Hamilton has been sued for $1 million in the US after allegedly breaching a contract.

The New York-based Carlton Group claims that Par-la-Ville Hotel and Residences Ltd accepted an $18 million loan earlier this year for the hotel project, but failed to pay the company its $900,000 commission.

The company is now suing Par-la-Ville Hotel and Residences Ltd, Johann Oosthuizen, Wakefield Quin Ltd, Michael MacLean and Theodore Adams III in the Southern District of New York, and are seeking a jury trial.

According to legal documents filed on December 20 by Rosen Law LLC, the Carlton Group allege that they entered an exclusive debt and equity advisory agreement with the Bermuda-based developer in 2012.

Under the agreement, the US company would find $18 million in financing for the hotel development. For their efforts, the Carlton Group would receive a four per cent commission — later amended to five per cent, ($900,000) — payable in full upon the initial drawdown of the funds.

The suit claims that in April of 2014, the plaintiff arranged a binding agreement between Par-la-Ville Hotel and Residences Ltd and the Alsis Funds, also known as Mexico Infrastructure Finance, to fund a loan of $18 million. Repayment of that loan was guaranteed by the Corporation of Hamilton. In July, the Alsis Group issued $18 million in funds, which were placed with an escrow agent as per the contract.

The documents allege that at some point between July 1 and the filing of the suit, the escrow agent was authorised by the defendants to release the funds to a third party or third parties. However, the defendants refused to pay the $900,000 commission.

The suit claims: “Plaintiff Carlton Group has been damaged to an extent to be determined at trial, but anticipated to be no less than the sum of $1 million as a result of the defendant’s breach of contract.”

The Carlton Group further alleges that Par-la-Ville Hotel and Residences Ltd has been “unjustly enriched”, and that the other defendants had used dishonest and/or unfair means to aid Par-la-Ville Hotel and Residences Ltd take the money out of escrow without paying the plaintiff the money owed.

The suit also makes the allegation that Mr MacLean made a “misrepresentation of fact” to the plaintiff by claiming they would be paid the $900,000 owed in full before the money was taken out of escrow.

Efforts to contact the parties for comment regarding this story were unsuccessful as of press time last night.

Discussion about the potential erection of a hotel on the site of the Par-la-Ville parking lot have been ongoing for more than a decade, with a Special Development Order (SDO) issued for the property in 2006.

In November of 2007, the Corporation of Hamilton announced it had signed a deal to bring a five-star Ritz Carlton Hotel to the property.

In 2009, developers announced that the $350 million project would instead operate under the St Regis brand through a partnership with Starwood Hotels and Resorts.

At that time, the project was said to include a 137-room hotel, 95 luxury residences and a three-story underground parking garage.

While Government announced in 2013 that it would bring forward legislation to help secure full financing for the project, separate legislation aimed at reforming the Island’s municipalities forced the project’s lease to be sent to the House of Assembly for approval.

The House approved the lease in March — resetting milestone date’s of the project in the process — and approved a bridge loan to help the project move forward.