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politics

Trump International Accused of Bullying Panama Hotel Owners

Updated on
  • Investors voted to remove Trump as hotel operator last year
  • Owners’ lawyers say Trump can’t force them into arbitration

Most of the unit owners in the Trump International Hotel & Tower Panama want to get rid of the president’s hotel-management company. It refuses to go without a fight and, according to the owners, is trying to bully them into backing down.

The owners’ association in October accused Trump Hotels of mismanagement in an arbitration claim and sought $15 million in damages. Trump’s company countered with a claim for more than $150 million against the hotel and the owners for attending an October meeting where they voted to oust the company. On Tuesday, unit holders sued to block Trump’s arbitration claims.

Trump is trying to "intimidate and harass" the Panama hotel owners into joining an International Chamber of Commerce arbitration over the alleged mismanagement of the hotel, according to the lawsuit filed in Manhattan federal court.

In a separate lawsuit filed in Delaware on Tuesday, the hotel owners’ lawyers said the Trump firm is wrongly accusing them of criminal conduct in the fight over the Panamanian property and is improperly seeking to drag them into the arbitration.

"The hotel has steadily been losing market share and stands in last place among its peer luxury hotels in all the relevant metrics for success in the hotel industry," the owners said in the New York case. "The decline in occupancy has had and continues to have a direct impact on the hotel’s bottom line."

Trump Properties Fare Worse in New York’s Luxury-Condo Slowdown

Trump’s divisive rhetoric during the presidential campaign and since has hurt patronage of his hotels in politically liberal areas including New York. Since June, owners have moved to strip Trump’s name from hotels in Toronto and New York’s SoHo neighborhood as well as Panama.

The New York suit was filed by two entities of Miami-based Ithaca Capital Partners that own more than 200 of the Panama hotel’s 396 units and its amenities, including the pool and restaurant spaces, and Ithaca’s managing partner, Orestes Fintiklis. Trump Panama Hotel Management LLC and Trump International Hotels Management LLC are the defendants.

Seventy-eight percent of the beneficiaries of the foundation that controls the hotel met in October and voted to terminate Trump’s management, according to the lawsuit. The complaint was filed just weeks after residents of Trump Place, a condominium complex on Manhattan’s Upper West Side, sued seeking a court order declaring that they had permission to remove Trump’s name from those buildings.

Trump Says Panama Hotel Is Legally Bound to Use Name ‘Long Term’

“We’re not going anywhere,” Trump Organization general counsel Alan Garten said in response to the New York lawsuit. “This fight is only the start.”

In the Delaware Chancery Court case, Morgan & Morgan, a Panama’s biggest law firm, said Trump officials have accused it of racketeering and conspiracy over its representation of the hotel’s ownership.

Even though the law firm never agreed to arbitrate claims over its work on the hotel case, Trump officials maintain the lawyers fall under an arbitration clause covering the Panamanian property. Trump Panama Hotel Management LLC is registered in Delaware.

“These claims are legally and factually absurd,” the law firm said in the complaint. “In effect, Trump is alleging that providing legal advice to its adversaries in business disputes is a crime.”

The New York case is Ithaca Capital Investments I SA v Trump Panama Hotel Management LLC, 18-cv-00390, U.S. District Court, Southern District of New York (Manhattan). The Delaware case is Morgan & Morgan PA v. Trump Panama Hotel Management LLC, No. 2018-0031, Delaware Chancery Court (Wilmington).

— With assistance by Patrick Clark

(Updates with law firm’s suit in fourth paragraph.)
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