Judge Halts Trump Arbitration Claims in Panama Hotel Case

MANHATTAN (CN) – After two hours of oral arguments Thursday afternoon, a federal judge ruled from the bench to temporarily block Trump International Hotels from pursuing claims in international arbitration court against the owners of a former Trump hotel.

FILE – This July 4, 2011, file photo, shows the former Trump International Hotel Panama , third building from left, in Panama City. (AP Photo/Arnulfo Franco, File)

U.S. District Judge Edgardo Ramos’ injunction temporarily stops Trump International Hotels from pursuing new claims in the International Court of Arbitration and directs any such claims to New York courts, where they would be subject to dismissal motions.

Ithaca Capital – an investment firm that is the majority shareholder of units in the 70-story luxury building formerly called Trump Panama Hotel, which overlooks Panama Bay in the Punta Pacifica area of Panama City – acquired 202 of the hotel’s 369 units in early 2017.

In October 2017, Ithaca claims 78 percent of the hotel’s beneficiaries discussed Trump’s alleged “gross mismanagement” of the property in a meeting where they decided unanimously to commence a $15 million arbitration against Trump International.

Ithaca and other owners evicted the Trump management team and removed the president’s name from the hotel, rebranding it Bahia Grand Panama.

The owners took control of the property in March with the help of Panamanian officials, ending a 12-day standoff between President Donald Trump’s family hotel business and investors.

In a lawsuit filed in Manhattan federal court in January, Ithaca claimed Trump International retaliated for the ouster by filing a 73-page arbitration complaint alleging “an outlandish conspiracy theory that threatens…third-parties with damages of up to $150 million for conduct that amounts to a supermajority of the beneficiaries attending a meeting and voting (unanimously) to remove Trump as operator of the Trump Panama Hotel.” (Parentheses in original.)

Ithaca’s lawyers confirmed at Thursday’s hearing that the $150 million damages – based on $50 million trebled – sought by Trump’s counter-arbitration have now dropped to $9 million, or $3 million treble. Ithaca’s arbitration claim still seeks $15 million in damages.

After Judge Ramos’ injunction temporarily blocking new Trump claims in the International Court of Arbitration, attorneys for Ithaca asserted that Trump’s counterclaims in arbitration distracted from what they say was always the core issue, Trump International’s alleged mismanagement of the Panama hotel.

During Thursday’s two-hour long arguments, Ithaca’s attorney, Joshua Bernstein from Akerman LLP, called Trump’s counterclaims “a circus,” loaded with nonparties and designed to delay Ithaca’s original arbitration for as long as possible.

Bernstein said after the hearing, “It is our belief and it is set forth in our papers that…Trump attempted to bring in the additional parties, none which had an arbitration agreement with Trump, and they did so with the purpose of delaying the resolution.”

Looking ahead, Bernstein added, “We hope that by this decision, the process of moving the arbitration forward will be expedited.”

Representing defendants Trump International Hotels Management and Trump Panama Hotels Management, attorney Perry Ansellem of Pryor Cashman LLP said that in October, Ithaca “voted us out without notice” and threw them off the property.

Ansellem said they could not yet comment on whether the Trump defendants would appeal Judge Ramos’ decision granting the preliminary injunction.

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