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Lawsuit filed to prevent rentals at Vegas complex20 July 2010
The lawsuit was filed Wednesday in Clark County District Court on behalf of 220 individuals with nearly $20 million in deposits on units. The lawsuit is also seeking an injunction to keep the resort's owners from accessing deposit funds from the plaintiffs held in escrow.
"Many of the 220 unit purchasers of the condominiums claim to have been held hostage for five years while hundreds of thousands of dollars in deposits have been held by Deutsche Bank," Shahram Shayesteh, a Los Angeles-based attorney representing the plaintiffs, said in a statement.
Cosmopolitan spokeswoman Amy Rossetti said in a statement that the resort believes the lawsuit to be without merit.
Deutsche Bank owns the Strip project located between CityCenter and the Bellagio.
Shayesteh said the plaintiffs have received letters from the bank "demanding that they commit to close escrow on their units in an attempt to bully plaintiffs into accepting partial refunds of their deposits, even though Deutsche Bank has failed to disclose even the most basic information about the nature of its condominium program."
Deutsche Bank announced in late June that the property was taking reservations for its Dec. 15 opening. In April, Cosmopolitan Chief Executive Officer John Unwin told the Review-Journal that about one-third of the rooms will not be available until July 2011.
The $3.9 billion project will include 2,995 rooms, a 100,000-square-foot casino, 150,000 square feet of meeting and convention space, a spa, nightclub and retail space.
The original Cosmopolitan called for the project to have condominiums, but several potential buyers who put down deposits on units as long ago as 2005 sued over the delay in completing the project.
Deutsche Bank reached agreements with a group of Cosmopolitan condo buyers in both of the resort's towers to refund between 60 percent and 64 percent of their deposits.
The plaintiffs in Wednesday's lawsuit, which paid 20 percent deposits on units, have not agreed to the terms of the settlements.
Shayesteh said a division of the Department of Housing and Urban Development is investigating the Cosmopolitan to see if any federal laws have been broken regarding the condominium units and the settlements.
The plaintiffs' attorneys sent a letter in March asking HUD's Office of Real Estate Settlement and Procedures Act and Interstate Land Sales to determine if the resort's owners failed to update the buyers with progress reports and a closing date as required under federal law. The plaintiffs also want HUD to determine if the buyers have been given an appropriate opportunity to rescind their purchase agreements.
HUD's offices in Las Vegas and San Francisco did not return calls seeking comment.
Deutsche Bank acquired the project for $1 billion when it was half-finished after its original developer and owner, New York-based Bruce Eichner and his company, 3700 Associates LLC, entered foreclosure proceedings.
The plaintiffs are represented by Los Angeles-based law firms Girardi & Keese and Lurie & Park.
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