Cosmopolitan Class Action Lawsuit
LAS VEGAS - In February 2009, a lawsuit was filed in Clark County District Court by buyers who want their deposits, some of which were paid as long as 4 years ago, refunded. On December 14, 2009 the court approved a settlement for West Tower buyers with the current Cosmopolitan owner, Deutsche Bank AG. East Tower (also sold as 'Beach Tower' or 'Tower 8') buyers have litigation that is already underway. For more information call (702) 382-0711.
Court Approves Cosmopolitan Deal
Monday, 02 November 2009 00:00
Condominium buyers have until December to opt out of settlement
BY TONY ILLIA
Las Vegas Business Press
Homebuyers at the Cosmopolitan are getting some of their money back. On Oct. 20, Clark County District Court Judge Elizabeth Gonzalez approved a deal between plaintiffs and defendant Deutsche Bank AG to return a portion of deposits on 1,322 condominium residences inside Cosmopolitan's 600-foot-tall West Tower. The $3.9 billion development at 3700 Las Vegas Blvd. South consists of two hotel-condominium towers perched atop a multilevel retail, casino and entertainment podium. Deutsche Bank bought the 3,000-unit development complex, on 8.5 acres, during a foreclosure sale last summer. It's expected to tentatively finish construction next year.
The court settlement will return 74.4 percent of homebuyer deposits, which average about $140,000 a piece. Deutsche Bank spokesman John Gallagher declined to comment on the case. Homebuyers have until Dec. 4 to opt out of the settlement. Checks could be mailed out in time for Christmas.
"We are pleased with the decision and feel that it represents a fair settlement, which makes economic sense for everyone," Marquis & Aurbach Managing Principal Terry Coffing said. "We believe the checks will be distributed by the end of December."
Las Vegas-based law firm Marquis & Aurbach represents owners of 430 units inside Cosmopolitan's West Tower or 32.5 percent of the total building. Homebuyers had claimed numerous breaches of contract, including unmet completion deadlines. Several lawsuits filed earlier this year sought return deposits; they were eventually combined into a single case with more than $200 million in down payments at stake. The settlement will return roughly $140 million of that amount. But not everyone is happy with the deal.
"The offer by Deutsche Bank is insulting," said Daniel Park, a partner with Los Angeles-based Lurie & Park, which represents more than 20 homebuyers inside the West Tower. "This would be a windfall profit for Cosmopolitan, resulting from their failure to honor the promises made to buyers."
Lurie & Park intends to represent homebuyers unwilling to settle for partial payment; the firm plans to pursue further litigation in order to recover full restitution.
"Buyers of units are being told that they must agree, or opt out of the settlement by early December," added Lurie & Park Associate Attorney Sonia Taylor. "This is a pressure tactic that is unseemly."
Cosmopolitan's East Tower, meanwhile, remains mired in litigation. Purchase pacts for the 800-unit high-rise are structured differently than its counterpart, which makes a settlement agreement unlikely, say legal experts. The fight for return deposits is expected to head to court. A sold-out East Tower represents about $112 million in deposits.
A worsening economic outlook has many Cosmopolitan homebuyers scrambling to get out from underneath their purchases, as many face challenges finding funds and securing mortgages amid a frozen credit market. Luxury condominiums are being valued differently today than a few years ago during the real estate boom. Rising unemployment and a deepening recession are fueling more widespread financial conservatism, as once bullish investors delay, defer and cancel large capital expenditures. It could make remaining condominium sales difficult, say industry observers.
"We have so many condo hotel units in the market that it is driving price points downward," said Bruce Hiatt, owner of Luxury Realty Group Inc., a Las Vegas-based high-rise condominium brokerage company. "Today's buyer is much more aware of the current resale marketplace and those price points, which are very different from what they were a few years ago."
Cosmopolitan Compromise
Monday, 19 October 2009 00:00
Sources say bank will return portion of deposits to group of homebuyers
BY TONY ILLIA
Las Vegas Business Press
Deutsche Bank AG, the German financial giant, has reached a tentative lawsuit settlement with a group of Cosmopolitan homebuyers, sources familiar with the deal say.
Clark County District Court Judge Elizabeth Gonzalez is expected to rule on the proposed pact on Oct. 20. The agreement only applies to plaintiffs for Cosmopolitan's 600-foot-tall, 1,322-unit West Tower. The $3.9 billion development at 3700 Las Vegas Blvd. is tentatively scheduled to open in late 2010. Perini Building Co. is the general contractor.
Homebuyers had claimed numerous breaches of contract, suing the owner earlier this year for return of deposits. More than $200 million in cash hung in the balance. Lawsuits were eventually consolidated into a single case. Deutsche Bank has since agreed to return 75 percent of principal West Tower deposits with a combined value of $140 million, sources say. Deutsche Bank did not return calls seeking comment for this story.
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BILL HUGHES | BUSINESS PRESS |
"We are very optimistic. We have had some very fruitful discussions," said Terry Coffing, managing principal with the Las Vegas law firm Marquis & Aurbach, which represents 430 plaintiffs. "We have reached a tentative settlement. Our hope is that it will be finalized shortly."
Homebuyer purchase agreements never specified a completion date, giving plaintiffs a legal advantage that helped broker a settlement. The 7 million-square-foot complex will open a year late due to cash problems. Developer Bruce Eichner defaulted on construction loans last January and lost the project. Deutsche Bank bought the twin tower, 2,998-unit complex during a foreclosure sale last summer for $1 billion. It then hired The Related Cos. to oversee construction on its behalf. Three years ago, the company opened a Las Vegas office that it later closed after failing to build two high-rise developments of its own -- Icon and Las Ramblas.
Cosmopolitan's delayed opening has cost homebuyers money, the lawsuit claims; the project's condo-hotel concept allows homebuyers to generate revenue by renting their residences as hotel rooms when not in use. It also accuses the developer of onerous "one-sided terms" and violating "good faith and fair dealing" with homebuyers.
Cosmopolitan's East Tower, meanwhile, remains mired in litigation. Contracts for the 600-foot tall, 800-unit high-rise are structured differently than those of its neighbor, which makes a settlement less likely, sources say. Cosmopolitan's average homebuyer deposit is about $140,000; a sell-out of the entire East Tower could generate up to $112 million or more in down payments. Litigation seeking deposit reimbursements is expected to follow, sources say.
Many homebuyers are having a hard time getting mortgages in a skittish lending environment. A deepening recession and rising unemployment is fueling more financial conservatism. Many investors and homebuyers are delaying and deferring large capital expenditures during uncertain economic times.
"We have so many condo hotel units in the market that is driving price points downward," said Bruce Hiatt, owner of Luxury Realty Group Inc., a Las Vegas-based high-rise condominium brokerage company. "Today's buyer is much more aware of the current resale marketplace and those price points, which are very different from what they were a few years ago."