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Donald Trump Sued By Buyers Of Failed Luxury Condo Project

ELLIOT SPAGAT   03/14/09 12:40 AM ET   AP

Donald Trump

SAN DIEGO — Donald Trump was sued Friday by buyers who lost millions of dollars in deposits on a failed hotel-condo in the Mexican border city of Tijuana.

The 69 buyers purchased 71 units in Trump Ocean Resort Baja and paid deposits totaling between $18 million and $20 million, said Bart Ring, their attorney.

Buyers were told last month that the luxury oceanfront project was being scrapped and that there was no money left to refund deposits. In December, they were told the project had only $556,000 left after collecting $32.2 million in buyer deposits.

The 197-page complaint filed in Los Angeles Superior Court seeks unspecified damages against Trump, his children Ivanka and Donald Jr. and others including Los Angeles developer Irongate Capital Partners LLC.

The lawsuit accuses the New York real estate developer and reality television star of fraud, negligence, unjust enrichment and violating federal disclosure laws.

Representatives of the Trump Organization Inc. and Irongate did not immediately respond to requests for comment late Friday. In December, a Mexican developer, PB Impulsores, told buyers that Trump licensed his name and was not an investor.

The lawsuit says PB Impulsores is a "mere shell entity" for Irongate, created to avoid legal liabilities. The project was marketed as a partnership between Trump and Irongate _ the same team behind Trump International Hotel & Tower Waikiki in Honolulu.

In a statement last week, the Trump Organization said that Trump ended a licensing agreement because the developer violated terms, missing deadlines to obtain financing and begin construction.

The lawsuit disputes that Trump had a peripheral role. It quotes one brochure that read, "Mr. TRUMP is personally involved in everything his name represents." The lawsuit alleges buyers didn't learn Trump had only licensed his name until late December.

Trump Baja demanded about 30 percent down for units that sold from less than $300,000 to $3 million. The lawsuit lists plaintiffs who paid deposits between $53,835 and $470,725. Many put up more than $150,000.

Trump Baja went on sale when Southern California home prices were near their peak. All that remains of the project is a closed sales center and showroom, a paved parking lot and a big hole that cuts a wide swath across the property.

(This version CORRECTS that Trump was not accused of breach of fiduciary duty).)

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Filed by Nicholas Sabloff  |