|By Suzette Parmley, The Philadelphia
InquirerMcClatchy-Tribune Regional News
Jul. 30, 2009--A New York City developer that once wanted to buy the Trump Marina Casino Hotel filed a lawsuit Tuesday seeking the return of its $17 million deposit.
The legal action by Coastal Marina L.L.C./Coastal Development L.L.C. comes days before the board of directors of Trump Entertainment Resorts Inc. is supposed to decide who will own the three-property Atlantic City casino empire that carries Trump's name.
There are two contenders for ownership: Donald J. Trump himself and the bondholders, who already own the majority stake in Trump Entertainment.
This seems to matter little to Coastal, which had agreed to buy the casino May 28, 2008, for $316 million -- later reduced to $270 million -- and convert it into a Margaritaville-theme casino.
The deal was scheduled to close exactly one year later on May 28 after Coastal was granted an extension. But talks broke down between the two parties just before the extended deadline, and each accused the other of breach of contract.
The $17 million Coastal seeks was the deposit it put down on Trump Marina and, which the firm says, it should get back. Coastal also accuses the casino company of failing to adequately maintain the property and of diverting customers from Trump Marina to the other two Trump casinos -- Trump Taj Mahal and Trump Plaza.
"Unbeknownst to the Coastal parties, the defendants intended to strip the casino of its valuable customers and key personnel, destroy the image with its potential and current patrons, and let the casino fall into a complete state of disrepair such that no lender would ever finance its purchase," Coastal claims in the lawsuit, filed in U.S. Bankruptcy Court in Camden.
Trump Entertainment chief executive officer Mark Juliano called Coastal's allegations "baseless."
"It's a classic case of buyer's remorse," he said yesterday. "Everything we were required to do according to the purchase agreement we did."
Juliano said the agreement specifically outlined capital improvements and maintenance that were required of the company during the sale process with Coastal.
Juliano said Trump Entertainment was entitled to keep the $17 million deposit because Coastal failed to close the deal.
"It is automatically forfeited," Juliano said. "It was very specific in the language of our purchase agreement -- $17 million becomes ours if they didn't close."
Juliano also denied Coastal's claim of diverting business from Trump Marina.
The lawsuit comes as the battle for control of Trump Entertainment is nearing resolution.
Trump and his daughter Ivanka abruptly resigned from the board in early February, just days before the company filed for Chapter 11 protection Feb. 17. It was the company's third trip to Bankruptcy Court.
Trump, who remains Trump Entertainment's largest individual stakeholder with 31 percent equity, blamed the bondholders and what he said was their poor decision-making for his departure.
Trump's plan to repurchase the company is in competition with one submitted by the company's bondholders, the majority owners. The board is expected to make a decision on the two offers by Monday, Juliano said.
Trump had been chairman of the board before he quit, but he did not manage the casinos' daily operations.
"I had a lot of fun in Atlantic City," the real estate magnate and reality-TV star said yesterday. "I did a great job. People really want me back."
He said the economic and competitive challenges that Atlantic City was facing had not fazed his desire to remain a fixture there.
"It's got a lot of challenges," Trump said, "but Atlantic City will overcome those challenges."
Contact staff writer Suzette Parmley at 215-854-2594 or email@example.com.
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