Cosmo condo buyers gain ground in trying to trim financial losses

Buyers of eight condominiums at The Cosmopolitan of Las Vegas gained ground in trying to reduce the financial losses they suffered in arbitration when trying to recover their deposits.

In a Tuesday hearing where the buyers challenged the outcome, Clark County District Court Judge Elizabeth Gonzalez ordered the arbitrator to redo part of his work, as well as recalculate legal fees. The latter order alone could save the buyers hundreds of thousands of dollars.

The buyers, including entertainment producer Jeffrey Gitlin and celebrity chronicler Robin Leach, had separately signed sales contracts six years ago. However, they decided not to join a settlement that gave partial deposit refunds to buyers of about 1,800 other units last year.

Instead, they banded together to get back their collective
$1.35 million in deposits though the compulsory arbitration clause written into sales contracts. In September, the arbitrator ruled they could keep nearly $350,000, but hit them with Cosmopolitan's legal bills of $718,000.

Los Angeles attorney Andre Sherman, representing the buyers, claimed they were also being billed for attorney fees for cases brought by others, including those who joined the settlement.

Gonzalez pointed to $674,000 quoted in documents as pertaining to other Cosmopolitan cases and ordered the arbitrator to limit buyer's fees to their case only.

Further, the buyers had complained about late-night noise emanating from one of the resort's clubs. On an inspection, the arbitrator said he went to the units personally to judge the level of the nuisance.

Sherman, however, claimed the arbitrator never visited all the units.

"What we have are what we believe are very serious acts of misconduct by the arbitrator," he said.

However, Cosmopolitan attorney Mark Lalli said the arbitrator was at most "confused by the evidence." He had gone to nearby units to listen because one in question was being rented out as a hotel room that night.

Overall, Lalli wrote in papers filed in the case, "(I)t is obvious that (the buyers) will say or do virtually anything to get a refund of their earnest money deposits."

While thousands of high-rise condo buyers on or near the Strip were forced into arbitration in the wake of the housing bust, results are normally sealed. This one was unusual because all the terms were made public.

Attorneys for buyers generally do not like arbitration, in part because of the high cost . At one point in the hearing, Gonzalez noted, "The American Arbitration Association submitted a bill of $38,000. Business court doesn't cost anything."

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.