NY court dismisses CCA’s appeals

BML’s claim for fraud against CCA “adequate”, says court

NASSAU, BAHAMAS – The Appellate Division of the New York Supreme Court yesterday ruled that BML Properties Ltd. has adequately stated a claim of fraud against China Construction America (CCA) and said New York Supreme Court Judge Saliann Scarpulla correctly denied CCA’s appeals for the case to go to arbitration.

The court previously vacated CCA’s request for the court to stay trial proceeding until the hearing of an appeal could be completed.

The court ruling, dated July 2, reads: “Order, Supreme Court, New York County (Saliann Scarpulla, J.) entered on or about January 24, 2019, which, to the extent appealed from as limited by the briefs, denied defendants’ motion to compel arbitration or alternatively to dismiss the causes of action for fraud, unanimously affirmed, without costs.

“The court correctly denied the branch of defendants’ motion seeking to compel arbitration because plaintiff was not a party to the agreement containing the arbitration clause and the claims at issue were, by separate agreement, required to be litigated in New York.

“…Plaintiff adequately stated a claim for fraud by asserting justifiable reliance upon assurances alleged to have been false when made, regarding the project’s status, and the workforce and resources available to meet the deadline for completion of the project, which were collateral to and not duplicative of [the] plaintiff’s claims for breach of contract…”

In a statement, BML said, “The Appellate Decision of the Supreme Court of New York today rejected the appeal of defendants China Construction America, Inc. and its affiliates.

“The court ruled unanimously and entirely in favor of BML Properties Ltd. and determined that all of its claims for fraud and breach of contract must go forward in the Supreme Court, and not in arbitration.”

BML, the company formerly responsible for the Baha Mar development, sued CCA, now known as CCA Construction Inc.; CSCEC Bahamas Ltd; and CCA Bahamas Ltd, the contractor responsible for the resort’s construction for nearly $3.5 billion.

BML, which is owned by Sarkis Izmirlian, claimed that CCA defrauded BML by seeking to deliberately cause the project to fail through a ride range of fraudulent dealings, including allegedly rerouting millions of dollars for purposes other than what the developer’s money intended.

The Cable Beach development suffered a three-year delay in opening after Izmirlian filed for Chapter 11 bankruptcy.

In court documents, BML claimed CCA sought to gain leverage over BML and Baha Mar Limited.

The resort is now owned by Hong Kong conglomerate Chow Tai Fook Enterprises.

Baha Mar completed its final phase — Rosewood — in May 2018, and has reported 100 percent occupancy in recent months.

April marked its second anniversary since opening its doors on April 21, 2017.

The resort, which has been heralded by politicians and economists alike for its impact on the Bahamian economy, employs more than 5,000 associates, the majority of whom are Bahamian.