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Garfield Traub, the Would-be-Developer of Aborted Downtown Tucson Convention
Hotel Project Files Lawsuit Against Two Rio Nuevo Board Members for Defamation
and Board as a Whole for Wrongful Termination

By Rhonda Bodfield, The Arizona Daily Star, TucsonMcClatchy-Tribune Regional News

Oct. 20, 2011--The would-be developer of an aborted downtown hotel project filed a defamation claim against two Rio Nuevo board members Tuesday, saying they should be held personally responsible for hurting the company's reputation with false and reckless statements.

Garfield Traub, which also filed against the Rio Nuevo district board as a whole for breach of contract and wrongful termination, said it either wants the board to give it money it believes it is owed and help it get its good name back, or pay $1.8 million in damages.

The claim names board members Jodi Bain and Jonathan Paton personally for comments made to the Tucson media questioning the amount of the Texas developer's billings.

The company said the two made defamatory comments that led to the unexpected loss of a multimillion-dollar contract with a public entity in Texas. The company's attorney would not disclose the name, saying his clients did not want to drag the jurisdiction into the dispute, since there's an opportunity for future work.

The dispute is rooted in Rio Nuevo officials' contention the district has paid too much for the hotel project. After the developer requested mediation to get the final payments for about $14 million in design work for the hotel and convention center improvements and $4.3 million in construction costs for the new east entrance to the Tucson Convention Center, the board in July canceled the contract altogether, all but assuring the fight would play out in court.

Garfield Traub takes issue with Bain indicating it might have been overpaid by as much as $1.8 million. It says Paton "recklessly" stated the overpayment "is unmitigated greed. It's the only thing I can say; it's either greed or incompetence."

The claim, a precursor to a lawsuit, sets out two remedies.

The first option would have the board pay the balance of what the company says it's owed, with interest, which is roughly $572,000.

It also wants the board to undo the cancellation of the contract.

And it wants a press release retracting the board members' comments.

If the board declines, the firm offered a second option: It can pay $1.8 million, including the balance, combined with defamation damages of $1 million and $250,000 in damages for canceling the contract.

Garfield Traub's attorney, Robert Dyer, said his clients are national developers. Any time they bid on public projects, the question at the top of the list is whether they've had a contract terminated. Even though they will explain it was canceled inappropriately, he said, there is still some damage done to the firm by having to report the termination.

Dyer said his clients were pressed into the threat of litigation.

"This company did everything humanly possible to avoid this claim and avoid having to take these various steps to get paid," he said. "It's negative energy, to be sure, and they didn't want to have to spend money on attorney fees or court costs. And it's unpleasant, because this is not what they do for a living."

He said the company has not withheld documents from the board but has given over "voluminous" amounts of invoices and supporting documentation.

The hotel contract required documents to be kept on-site in Tucson, but Rio Nuevo's auditors said Garfield Traub told them they could pick up or review documents in an office outside Las Vegas.

Board member Paton said he sees no retraction in his future.

"The taxpayers of this state have invested money into this and they expect us to stand up for them and I'm not going to let anybody silence me," he said. Quite aside from the fact he doesn't have $1 million, he said the claim is without merit. "To some extent, it's a badge of honor because it means we're getting to the truth."

Bain agreed that she sees no cause to retract anything. She said auditors are still indicating there was an overpayment. She also noted the claim took her comments out of context, since she indicated the overpayment, based on information from the board's forensic auditors, could be as little as a few hundred thousand dollars up to $1.8 million. "I think it's an attempt to say they'd like to get paid more money, but it's just not going to happen."

Dyer said his client isn't trying to freeze criticism.

"When members of the board say disparaging things to the media and those things get reported, that finds a national audience and it causes Garfield Traub to lose credibility and lose work."

Paton said it's not going to make the company look good to be suing their clients, either.

Contact reporter Rhonda Bodfield at or 573-4243.


(c)2011 The Arizona Daily Star (Tucson, Ariz.)

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