|By Leslie Berestein, The San Diego
Union-TribuneMcClatchy-Tribune Regional News
March 14, 2009 - Nearly 70 plaintiffs who invested millions of dollars in the Trump Ocean Resort, a planned luxury oceanfront development in Baja California that was never built, are now suing Donald Trump, his son and daughter, and the project's developers on a fraud claim.
The lawsuit was filed yesterday in Los Angeles Superior Court. It alleges, among other things, that buyers who put down deposits on the planned development's 526 condo-hotel units were deceived into believing they were buying into a Trump development when the Trump name was merely licensed by the developers.
Included among the defendants are Trump, Donald Trump Jr. and Ivanka Trump, as well as principals of the project's Los Angeles-based developers, Irongate Development, its partner company Punta Bandera Investors USA, and its real estate brokers S&P Destination Properties.
Among the 41 causes of action listed are allegations of fraudulent inducement, negligent misrepresentation, deceit and breach of fiduciary duty.
The developers of the Trump Ocean Resort lost their financing after a construction loan of about $150 million from a German bank fell through last summer. Late last year, buyers learned their deposit money had been spent; last month, they received a letter saying the project had been scrapped because of the poor condition of the financial markets.
Aside from some ground preparation and foundation work, there is nothing on the site, 10 miles from the border.
The Trump Organization terminated its license agreement with the developers in January, after the project had gone belly-up.
However, beginning in 2006, the project was marketed as a Trump development, said Bart Ring, an attorney representing 69 plaintiffs.
"The Trump name appears ubiquitously in marketing for the project, including on advertisements, on billboards advertising the project, on letterheads, stationery, and cover letter," the 197-page complaint says.
A DVD was taken from the project's Web site of Donald and Ivanka Trump plugging the development, Ring said. The Trump brand name provided a sense of security for buyers who would not have otherwise considered investing in Mexican real estate, he said.
"None of these people would have done a thing without Trump being substantially involved," Ring said.
In a phone interview yesterday, Donald Trump maintained his distance from the developers, saying he was "not happy" with what occurred.
"I have never been there," he said of the site. "They licensed my name."
Trump, who had not seen the complaint, said buyers were informed in writing, on a project fact sheet, that he was a licensor and not the developer. Trump had already partnered with Irongate for a project in Hawaii; he said he decided to work with them in Baja California because he considered the Hawaii project a success.
He said he terminated his licensing agreement with the developers because they were in default.
"They did not live up to the terms of the agreement," Trump said.
An attorney for Irongate and a former company principal did not return phone messages seeking comment.
Nearly 200 buyers are believed to have deposited more than $32 million for ocean-view units priced at $300,000 to $2.5 million.
Tammy Willis, 38, a city employee in Oakland, put down three installments totaling $150,000 for a one-bedroom unit costing $525,000. She said she paid her last installment in early 2008.
By that time, the developers were already in financial trouble, Ring said.
Willis, who has not yet taken legal action, traveled to San Diego for a sales reception in December 2006, where prospective buyers were served appetizers and drinks as they chose color schemes. She paid her first $50,000 then.
"I was never told the (Trump) name was only licensed," she said. "It could have been in the legal documents, but I didn't know that. I thought it was what it said, Trump."
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