Partners Say Trump Was Desperate|to Derail $1.8 Billion Real Estate Deal

MANHATTAN (CN) - After losing two lawsuits and multiple appeals in New York "in a 5-year litigation campaign," Donald Trump has threatened to file another "extreme and Draconian" action out of state to derail a $1.76 billion real estate deal, his former partners say in New York County Court.

"In 1994, when Trump was in serious financial straits and his bank, Chase Manhattan, was threatening to foreclose on a $200 million mortgage, Trump freely entered into limited partnership agreements that vested the General Partners with full control over the Partnerships' business and ownership," the complaint states.

The partner-plaintiffs are four corporations and four limited partnerships operating under the name Hudson Waterfront.

That mortgage involved development of the Riverside South Properties, which the partners sold in spring 2005 to the Carlyle Group and Extell Development Co. for $1.76 billion, according to the complaint.

Under terms of the partnership, Trump ceded control over the properties in return for "a passive 30 percent interest with limited rights, and the new investors contributed all of the money and the risk of losing that investment," the complaint states.

"Since 2005, Trump has sought to use litigation to escape from those agreements," Hudson Waterfront says.

"Two Commercial Division Justices dismissed all of Trumps claims ... a unanimous panel of the Appellate Division, First Department, affirmed dismissal of the claims in Trump I, and the Court of Appeals declined to review that decision," the complaint states.

After Trump's most recent legal failure, the court warned him that he "narrowly avoided the imposition of costs or sanctions ... Continued prosecution of claims without basis ... will place [Trump] beyond this point," according to the complaint.

"Apparently recognizing that this New York Court would not tolerate Trump's filing of further meritless claims, the draft complaint is styled as an action in the Delaware Court of Chancery," the companies say.

Hudson Waterfront says Trump's "latest theory" is that the partnerships "were dissolved in May 2007 by virtue of an acquisition by a subsidiary of Vornado Realty Trust, a multibillion-dollar publicly traded corporation, of the shares of foreign companies that indirectly own the General Partners."

But the partners say Trump "abandoned" efforts to prevent that transaction, and the New York courts have dismissed his efforts to dissolve the partnership.

The Hudson Waterfront companies seek a judgment declaring that the partnerships were not dissolved and that the partnerships are not subject to judicial dissolution.

The plaintiffs are represented by Robert J. Guiffra Jr. with Sullivan & Cromwell.

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