March 16, 2009 - The Cosmopolitan, Las Vegas NV

Cosmopolitan slapped with second lawsuit

Case brought by 200 homeowners accuses owner of unreasonable delays

Cosmopolitan slapped with second lawsuit

Cosmopolitan is now scheduled to open June 2010

Disgruntled homebuyers recently filed a class action lawsuit in District Court against the developers of the still-under-construction Cosmopolitan condominium-hotel project on the Strip.

The 12-page complaint accuses former project owner, 3700 Associates LLC, of breaking purchase agreements due to "unreasonable delay of completion." Homebuyers now want their money back.

"The high-rise is now scheduled to open by June 2010, or a year later than originally intended, but we don't realistically believe that they'll meet that time line," said Terry Coffing, president of Marquis & Aurbach, Las Vegas, which filed the lawsuit on behalf of 200 homebuyers. "The work stoppage and interior redesign makes that schedule unrealistic."

Dining Deutsche Bank AG bought the twin 600-foot tower, 2,998 condo-hotel unit Cosmopolitan during a foreclosure sale in August for $1 billion. Deutsche Bank affiliate Nevada Property 1 LLC is also named as a defendant in the lawsuit.

Construction progress slowed last year during the ownership change. Portions of the west tower recently halted work while interior redesign occurs. Adopting a new look would undo months of construction. The newest makeover marks the project's third interior redesign.

The luxury high-rise residential market has imploded since the $3.9 billion, 7-million-square-foot Cosmopolitan broke ground in October 2005. Home values have plummeted and lending standards have tightened. As of Feb. 25, there were only four active high-rise projects in the Las Vegas Valley, Deutsche Bank's Bill Lerner reports.

Coffing said: "Values have dropped by 35 percent since sales at Cosmopolitan began. We have yet to hear from Deutsche Bank, but they have two weeks to respond."

Deutsche Bank won't comment on pending litigation. Homebuyers, meanwhile, have 20 percent deposits valued at about $200,000 each. There is a pool of money valued at more than $200 million. The lawsuit claims the project's delayed opening has cost homebuyers money. The condo-hotel setup enables homebuyers to rent residences as hotel rooms when they're not in use.

The lawsuit also accuses the developer of onerous "one-sided terms" and violating "good faith and fair dealing" with homebuyers.

Marquis & Aurbach represents about 200 homebuyers at Cosmopolitan. Yet, their class action follows another homebuyer class action lawsuit filed last month by entertainment columnist Robin Leach and Las Vegas show producers Norbert Aleman and Jeff Gitlin. The trio, which filed their lawsuit in District Count in February, alleges that the Cosmopolitan fraudulently induced them into buying condominium units.

Leach and his co-plaintiffs claim they were misled into buying their units because of the resort's expected opening in December 2008. The three in a 19-page complaint also say that they meet the requirements to sue on behalf of 500 people from across the nation who made similar down payments on condominium units.

Marquis & Aurbach amended their complaint on March 5 to include violation of the Interstate Land Sales Full Disclosure Act (opens PDF). The act requires the developer to register with the U.S. Department of Housing and Urban Development. Each buyer is supposed to receive a "property report," detailing the project specifics.

Original Story - Las Vegas Business Press