Fontainebleau Las Vegas, LLC amended its USD3 billion lawsuit against a group of lenders by demanding additional damages from Deutsche Bank Trust Company Americas for seeking to destroy the Fontainebleau in order to minimize competition with the nearby Cosmopolitan Resort and Casino, which is now wholly owned by a Deutsche Bank subsidiary.
Fontainebleau Las Vegas is suing Deutsche Bank, a unit of Deutsche Bank A.G., and other lenders, referred to as the Revolver Banks, after the lenders reneged on their contractual commitments to provide the Company with almost USD800 million in prearranged construction funding.
Fontainebleau amended its lawsuit by adding two additional claims against Deutsche Bank, including a claim for tortious interference with contractual relations, for allegedly encouraging the other Revolver Banks to renege on their lending obligations and interfering with attempts by those banks to resolve their differences with the Company.
The defendants in the case are Bank of America, N.A.; Merrill Lynch Capital Corporation; JPMorgan Chase Bank, N.A.; Barclays Bank PLC; Deutsche Bank Trust Company Americas; The Royal Bank of Scotland PLC; Sumitomo Mitsui Banking Corporation New York; Bank of Scotland; HSH Nordbank AG, New York Branch; and MB Financial Bank, N.A.
The lawsuit notes that Deutsche Bank and its affiliates were lenders to the Cosmopolitan, which, like Fontainebleau Las Vegas, is under construction on the Las Vegas Strip. According to the lawsuit, Deutsche Bank subsequently foreclosed on the Cosmopolitan and, through an affiliate, purchased the USD3.9 billion project for USD1 billion in a foreclosure sale in mid-2008.
Fontainebleau Las Vegas will be a strong competitor to the Cosmopolitan, according to the lawsuit. The lawsuit states that: Deutsche Banks more than USD1 billion ownership stake in Cosmopolitan far exceeds its commitment to Fontainebleau, providing Deutsche Bank with a strong incentive to undermine Fontainebleaus development and future prospects.
The lawsuit seeks an injunction against Deutsche Bank to prevent it from continuing its violations of the duty of good faith and fair dealings. The lawsuit also asks for damages against Deutsche Bank to be determined at trial.
At the time the original lawsuit was filed, on 23 April 2009, the project was more than 70% complete, employing 3,300 construction workers, with an additional 1,700 jobs needed to finish the final stages. The original and amended lawsuits say the banks brazen breach of contract jeopardized Fontainebleau Las Vegas ability to complete its signature casino-resort on the Las Vegas Strip.
To further its own interests as the Cosmopolitans owner and developer, Deutsche Bank is now seeking to destroy the Fontainebleau in order to minimize competition with the Cosmopolitan project, according to the amended lawsuit, which was filed in the District Court of Clark County, Nevada. Deutsche Banks misconduct is more than just a breach of its own contractual obligations. To serve its own conflicting interest in ensuring the success of the Cosmopolitan, Deutsche Bank has induced other Revolver Banks to breach their own commitments.
The banks refusal to honor their lending commitments is creating enormous hardship for thousands of union construction workers and their families, says Jeff Soffer, executive chairman, Fontainebleau Resorts LLC. It is imperative that the banks honor their contractual obligations so that we can restore these jobs and thousands of other positions that will be created when Fontainebleau Las Vegas opens.
L.D.