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Another victory for Izmirlian in BML lawsuit against CCA

Court documents reveal that BML Properties Ltd. has won another small victory in U.S. courts, with an appeals court judge ruling yesterday that BML’s case against China Construction America (CCA), now known as CCA Construction Inc., will move forward in the New York Supreme Court and not be taken to arbitration as had been requested of the courts by CCA.

The court ruled that BML, which is owned by Baha Mar’s former developer Sarkis Izmirlian, has proven that it has a legitimate claim to a case of fraud and breach of contract.

“The court correctly denied the branch of defendants’ motion seeking to compel arbitration because the plaintiff was not party to the agreement containing the arbitration clause and the claims at issue were, by separate agreement, required to be litigated in New York,” the court ruling stated.

“The plaintiff adequately stated a claim for fraud, by asserting justifiable reliance upon assurances, alleged to have been false when made, regarding the project’s status, and the workforce and resources available to meet the deadline for completion of the project, which were collateral to, and not duplicative of plaintiff’s claims for breach of contract. This constitutes the decision and order of the Supreme Court, Appellate Division, First Department.”

BML in its response to the ruling released a short statement: “The appellate decision of the Supreme Court of New York today rejected the appeal of defendants China Construction America, Inc. and its affiliates. The court ruled unanimously and entirely in favor of BML Properties Ltd. and determined that all of its claims for fraud and breach of contract must go forward in the Supreme Court, and not in arbitration.”

BML filed a lawsuit against China Construction America (CCA) at the end of 2017, alleging fraudulent activity during the construction of Baha Mar. Its claim alleges that CCA deliberately reduced the number of workers on the Baha Mar project and that workers were employed without their work permits being renewed.

When the project was approved, Baha Mar was cleared to have approvals for about 5,000 Chinese workers. However, court filings by Izmirlian claim that CCA – which was allegedly responsible for bringing in the workers and securing their work permits – may have reduced the number of workers purposefully, as suggested in the court documents.

“CCA did not provide sufficient staff necessary to, among other things, process all the work permits for incoming Chinese workers, and Baha Mar Ltd. was forced to assist CCA to a large extent in obtaining those work permits at its own extra expense,” the court documents state.

“In this vein in late 2014 it came to light that CCA had over 1,800 workers it claimed were on site, but for whom CCA did not renew permits and thus could not legally be working on the project at that time.

“Regarding work permits, CCA was required to familiarize itself and comply with all local laws, organize the work permit process, prepare all documents needed for that process, and recognize that delays can occur in that process and therefore structure the process to allow for issuance of permits in a timely manner.”

According to the court documents, CCA also allowed active work permits to expire and did not replace labor on the project after it was found that there were insufficient workers to keep the project on schedule.

“Ning (Yuan, president of China State Construction Engineering Corporation, of which CCA is a subsidiary) did discuss work permits sought and issued for additional labor, while admitting, however, that CCA was not coming close to the additional ‘400 per month’ new workers (not replacements) he had committed to add to the project,” the court filings point out.

“By November of 2014, CCA had over one thousand expired work permits for allegedly experienced workers who were at that time not legally allowed to be working on the project and thus not properly part of the legally cognizable ‘workforce’ under the MCC (master construction contract), a fact that CCA never itself disclosed to BML Properties and that BML Properties had to direct others to determine,” the court documents note.

The lawsuit alleges that CCA “did not come close to having 3,400 workers on site by the end of 2013”, which BML suggests led to the project missing its opening date and experiencing structural problems as a result of the unskilled labor received.

Chester Robards

Senior Business Reporter at The Nassau Guardian
Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian.
Education: Florida International University, BS in Journalism
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