Aug. 19, 2006 - In a rush to start making money from the Chatham Bars Inn's new spa complex, the owner of the resort attempted to rent out guest rooms in the addition before it passed building inspection, according to court documents and local officials.

Manhattan real estate developer Richard Cohen filed a lawsuit Thursday against the town of Chatham and its building director, demanding immediate permission to rent out the rooms -- even though a building inspector had not yet signed off on them.

"The Spa Project is substantially complete and ready for occupancy," states the complaint filed in Barnstable Superior Court on behalf of a management corporation established by Cohen. According to the complaint, a town building inspector agreed to conduct a "final inspection" on Wednesday of the recently completed addition, but instead the town official was "on vacation" on the scheduled date.

Meanwhile, the 12 guest rooms in the spa building were reserved starting Wednesday, according to the document. Cohen sought unspecified damages for lost revenue in the suit. During the summer, rooms at the luxury resort cost between $360 and $1,650 per night, according to the facility's Web site.

Chatham development director Kevin McDonald denied Cohen's claims and said an inspector visited the spa building Wednesday and it failed the review.

After a follow-up inspection yesterday, the building still had "life-safety" problems, McDonald said, including emergency lights that didn't work and improperly positioned gas heater exhaust fixtures, which could be an explosion hazard.

McDonald said the rooms were not safe to occupy and he wasn't sure when they would be approved.

"It really depends on whether they get this stuff fixed," he said.

Cohen spokeswoman Emily Easter declined to comment on the suit yesterday. A lawyer representing Cohen, Matthew LeBretton, called the Cape Cod Times yesterday evening and said the suit had been dropped.

"There were some misunderstandings that have since been resolved," LeBretton said. "We are going through the permitting process with the town and we hope to have (the spa building) open as soon as possible."

McDonald said he had heard nothing from Cohen about the lawsuit or about it being withdrawn. He said he has never spoken to Cohen or his associates.

Cohen took over the property in June.

"This was the first occasion," McDonald said, referring to the suit.

"Obviously, it's not working out too well."

LeBretton declined to say whether the rooms in the building had already been rented by guests. McDonald said the rooms were empty yesterday. But an employee who recently left the resort, and wished to remain anonymous, said the rooms were rented starting Wednesday and the guests were moved before inspectors visited the property yesterday.

Cohen, who is married to CNN news anchor Paula Zahn, purchased the property for $166 million from Cincinnati insurance holding company Great American Financial Resources earlier this summer. The hefty purchase price prompted speculation that the developer planned to convert the inn's 25 ocean-view acres into a condominium complex.

But in a news release issued when he took control of the property, Cohen said he planned to turn the inn into "a fine five-star resort" and planned extensive renovations. However, no renovation plans have been submitted to the town, according to local officials.

The spa complex, a multimillion addition to the inn's historic main building, was nearly finished when Cohen purchased the inn.

Earlier this month, the former general manager of the inn, Christopher Diego, resigned citing an incompatibility with Cohen's management style. His replacement, Paul Zuest, former manager of several premier hotels, starts work on Monday, according to Cohen's spokeswoman.

The resort has about 80 year-round employees and roughly 500 in the summer.

Staff Writer Jason Kolnos contributed to this report.

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