NASSAU, BAHAMAS – CCA Construction, Inc., CCA Bahamas Ltd., and CSCEC Bahamas, Ltd. have agreed to conditions for a stay of a $1.6 billion judgment proposed by Baha Mar’s original developer, Sarkis Izmirlian. The agreement includes pledging two Nassau hotels, recently appraised at between $232.7 million and $355.1 million, as security.
A reply affirmation filed today with the appellate division of the New York State Supreme Court outlines the defendants’ request for a stay of enforcement of the trial court’s decision while they seek to overturn it on appeal.
The defendants agreed to secure a stay under conditions proposed by BML Properties, which include CCA Bahamas pledging its shares in subsidiaries owning two Nassau hotels. These hotels represent nearly the entire combined value of the three defendants.
A spokesperson for the defendants stated: “Our decision to provide this security not only underscores our confidence that we will prevail on appeal but also fully meets the conditions BML Properties itself proposed to the appeals court for a stay of enforcement of the trial court’s fatally flawed decision. Given that the security we have offered the Court is consistent with BML Properties’ proposal, BML Properties should inform the Court that it agrees to a stay and allow the judicial process to take its course. As we have said previously, BML Properties brought about its own failures through its gross mismanagement of the Baha Mar project and the trial court piled error on error in finding otherwise. The actions we have now taken are in the best interests of all our stakeholders and, importantly, will have no impact on our operations as we pursue our appeal or on the operation of the British Colonial and Margaritaville Beach Resort hotels and their guests, employees and vendors.”
The filing on Monday noted: “As security to stay enforcement of the judgment against Defendants, CCAB would be willing to pledge its shares comprising 100 percent ownership interest in its subsidiaries that own two hotels in Nassau, Bahamas. Those shares were carried on CCAB’s books in its most recent audited financial statement at $146 million. And the hotels were recently appraised by Cushman & Wakefield Inc. and Jones Lang LaSalle Inc. at between $232.7 million and $355.1 million.”
The defendants brought the motion to maintain the status quo while the appellate court reviewed the trial court’s post-trial decision and judgment. They argued: “The trial court piled error on error in awarding the real estate developer Plaintiff $1.6 billion in damages and prejudgment interest against Defendants, including one (CCA) that had no contractual relationship to or role in the construction project at issue. The trial court ignored swaths of unrebutted testimony and entire defense witnesses, mixed and matched contractual obligations without importing the attendant limitations on liability, and misapplied the same bedrock damages principles that this Court corrected the trial judge on in this same case at summary judgment less than a year ago.”
The defendants claim they have multiple legal arguments likely to reduce damages significantly or release some parties from liability. They contend there was no fraudulent misrepresentation:
“The trial court held that CCAB defrauded Plaintiff by promising ‘BML and its representatives that substantial completion would occur by March 27, 2015.’ As an initial matter, that mischaracterizes the evidence: The March 27 opening explicitly depended on factors outside CCAB’s exclusive control, and CCAB promised only to use its ‘best efforts’ to achieve that date. But even accepting the trial court’s erroneous factual findings, the fraud claims fail as a matter of law.”
The defendants argue that BML’s liquidity crisis was self-inflicted noting: “Before March 27, 2015, BML had drawn down over $2.3 billion on its loan, the lending bank notified BML it could draw down no more unless it put in $70 million additional equity, and the lending bank calculated a $200 million cost overrun. CCAB, meanwhile, was undisputably under its construction budget.”
BML Properties Ltd. was awarded $1.6 billion against China Construction America in its long-running New York lawsuit concerning the Baha Mar project, prevailing on all claims. The bench trial, overseen by New York Supreme Court Justice Andrew Borrok, examined whether BML’s $1.5 billion losses resulted from overleveraged debt or construction delays.
BML claimed that CCA, the Chinese state-owned construction firm responsible for Baha Mar, concealed delays and sabotaged the March 2015 opening, driving BML into liquidation and leading to the loss of its $745 million investment, now totaling $1.55 billion with interest.
Sarkis Izmirlian, Baha Mar’s original developer, filed a lawsuit six years ago alleging “massive fraud” by CCA. He claimed the firm intentionally slowed or stopped work to prevent the resort from opening, contributing to BML’s liquidity crisis. The resort was ultimately placed into receivership and sold to Hong Kong-based Chow Tai Fook Enterprises.
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