August 6, 2009 - LOWELL -- With the Hawthorn Suites Hotel scheduled to go on the auction block tomorrow, Princeton Chelmsford LLC, owner of the North Chelmsford hotel, has filed an $8 million lawsuit against the UMass Lowell Building Authority, UMass Lowell and UMass Chancellor Marty Meehan for allegedly reneging on a deal to lease the hotel for student housing with the option to buy.

In a lawsuit filed last week in Lowell Superior Court, Princeton Chelmsford, through its attorney Arthur E. Levine, claimed breach of contract, unfair trade practices and deceit after there were numerous discussions and even a handshake deal over leasing the Hawthorn Suites Hotel at 25 Research Place for student housing with the option to buy.

But The Sun has learned that the property is up for auction with an asking price of about $5.3 million.

While not commenting on the pending auction, UMass spokesperson Patricia McCafferty described the lawsuit as "frivolous."

Overseeing the 10 a.m. auction will be attorney Norman C. Sabbey of the Boston law firm of Lyne, Woodworth & Evarts LLP. According to town of Chelmsford documents, the building has an assessed value of $6.4 million.

McCafferty noted that Princeton Chelmsford wanted $8.7 million for the Hawthorn, but UMass officials determined the hotel was "not worth the price and would not withstand the long-term use for student housing."

When reached for comment, Levine, who represents Princeton Chelmsford, declined to comment saying, "The complaint speaks for itself."

According to court documents, Andrew Chaban, president of Princeton Chelmsford and Meehan, "shook hands" on the deal on Feb. 12.

Both sides hired attorneys and the final draft lease was completed on Feb. 17.

As a result, Chaban made the hotel staff "available for inspections of the property, scaled back marketing operations for hotel occupancy and accepted a short-term extension of their financing on this property above the long-term market rates," Levine wrote in the lawsuit.

Two months later, on March 10, UMass officials stopped taking Chaban's calls, according to the lawsuit.

In April, UMass officials announced that there was a deal for the UMass Building Authority to purchase for $15 million the DoubleTree Hotel in downtown Lowell for student housing and a conference center.

McCafferty said university officials had discussions with the owners of Hawthorn Suites, at their request, about potentially purchasing their property for student housing, as they have had with several property owners over the past year.

"After conducting due diligence, as is done with any potential real-estate transaction, the UMass Building Authority advised the university that it was not in its best interests to purchase the property," she said.

She added, "There was never a signed agreement between the university or the Building Authority and the Hawthorn Suites owners to purchase or lease that property."

On July 31, Meehan confirmed that the UMass Lowell Building Authority had completed the $15 million sale of the 252-room Warren Street property to be renamed the UMass Lowell Inn & Conference Center.

"The inn and conference center will transform this key facility in the heart of the downtown into the social, cultural and intellectual hub that was imagined in 1986 when the hotel opened," Meehan said at the time of the announcement.

After the $4 million renovation project is completed, the new facility will house 350 upper-class, honors and foreign students in 175 rooms this fall. The university is expected to keep 30 to 50 rooms available for the public.

According to the lawsuit, throughout 2008 and into 2009, UMass officials and Chaban, from Princeton Chelmsford, discussed the lease of the hotel at least twice a week.

During that time, Executive Vice Chancellor Jacqueline Moloney and Vice Chancellor Joanne Yestramski allegedly represented to Chaban that they had the authority to enter into leases and purchases of buildings to address the shortage of student housing at UMass Lowell.

In a memo dated Jan. 25, Yestramski allegedly confirmed in writing the "fundamental terms" of the lease of the Hawthorn with an option to buy. Meehan confirmed an agreement with Chaban to lease the hotel as dorm rooms based upon terms proposed by Yestramski.

On multiple occasions Meehan, Yestramski, Moloney and their associates "guaranteed Chaban an agreement had been reached to lease Hawthorn Suites Hotel and a written lease agreement with an option to purchase would be executed."

But McCafferty countered that "nothing was ever signed. There is no agreement until there is a purchase and sale agreement."

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