CCA Construction, in Bankruptcy Proceedings, Loses Appeal of $1.6B Baha Mar Verdict
Developer BML Properties "looks forward to collecting on their debt."
BML Properties was the original developer of the Baha Mar resort, located in Nassau, Bahamas, which opened in 2017.
Image courtesy of BML Properties
The New York State Supreme Court's Appellate division on April 8 rejected CCA Construction's appeal of a verdict issued last December, finding that the contractor owed Baha Mar resort developer BML Properties Inc. $1.6 billion in damages.
CCA—formerly known as China Construction America—had termed the court's previous ruling as "wrongful" and "erroneous," arguing that "the only alleged basis for recovery against CCA was BMLP’s convoluted theory of veil-piercing liability." The term "veil-piercing" is used when judges find that corporate structures are being used to shield wrongful conduct.
Instead, the appeals court ruled that the "trial court properly found that under New York law, defendants’ corporate veils should be pierced. The evidence in the record, which was largely unrebutted, shows that CCA Construction exercised complete domination of CCA Bahamas and CSCEC Bahamas, and that the domination was used to breach the investor agreement, defraud plaintiff and cause the collapse of Baha Mar, resulting in plaintiff’s injury."
As ENR previously reported, the court's decision last December stated that BML Properties' bankruptcy was partly brought about via a $54-million payment from the developer to contractor CCA Bahamas as the project was nearing completion. In his ruling, the New York judge sided with BML's contention that instead of using the $54 million to fund construction, CCA Bahamas "wanted it and used it to buy a competing hotel development down the road," the British Colonial Hilton in Nassau, Bahamas.
In a press release regarding the latest court action, Sarkis Izmirlian, chair of BML Properties Ltd., stated, “We are grateful that the Appellate Court upheld Justice Borrok’s judgment, once again confirming that CCA’s multiple acts of fraud and breaches caused the Baha Mar project to miss its opening, resulting in the subsequent loss of our entire investment.
“We are continuing in our efforts to aggressively enforce our rights against CCA, its parent CSCEC, their affiliates and all those who orchestrated the fraud, and look forward to collecting on their debt," Izmirlian continued. "We hope that they will come to their senses and enter into a rapid settlement to minimize the disruptions to their operations that have been caused by their actions.”
In a statement, China Construction America commented: “We are disappointed in the appellate court’s decision, which is incorrect on multiple points of New York law and ignores BML Properties’ mismanagement of the Baha Mar project, which led to the losses suffered by CCA Bahamas, CSCEC Bahamas, the Bahamian government, subcontractors and workers.
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"The decision also sets a dangerous precedent for the construction industry by allowing BML Properties, the developer, to circumvent the standard provisions of the AIA Standard Form of Agreement, which governed the construction of Baha Mar and included a liquidated damages cap of $50 million," CCA's statement continued. "The decision effectively awarded BML Properties delay damages of over 2000% of the applicable contractual cap. This is not the last word on this matter.”
BML Properties now estimates the judgment against CCA at more than $1.7 billion.
