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Sycuan Wins Suit Over Management of Hotel

Attorneys for San Diego-based American Property Management Corp. contend that they will appeal a jury’s verdict that awarded Sycuan Development Corp. nearly $1.4 million after Sycuan fired the firm as manager of the U.S. Grant Hotel.

The case, which went to trial Jan. 6 in San Diego Superior Court, was based on which entity had violated the terms of a 10-year management contract for the historic 271-room hotel when the management company was fired in February 2004.

Sycuan, which acquired the storied hotel and hired American Property in December 2003, said American Property Management was fired for cause and sued it for $2.8 million in damages. The alleged causes included late payment of property insurance and employees’ dental insurance premiums and transferring money from one bank account to another without authorization.

American Property Management countersued Sycuan, alleging that the tribe violated its contract by not giving prior notice or a set period of time to rectify those problems before being fired and sought $10.8 million , the balance of what it said it was owed for the remainder of the contract term.

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The decision, which was rendered Jan. 26, awarded Sycuan $1.386 million, including $1.35 million that the jury said American Property Management wrongly took after it was fired. The sum also included about $30,000 for meals and hotel stays for some employees who were family members of American Property Management President Michael Gallegos and an additional $5,500 for meals and a hotel stay for a nephew of Gallegos.

Attorney Joel R. Wohlfeil of the San Diego-based law firm Boudreau Albert & Wohlfeil LLP, which represented American Property Management, said it plans to file an appeal based on the court’s pretrial decision that Sycuan did not owe the management company prior notice or a chance to rectify problems before it was fired.

Anthony Dain of Procopio Cory Hargreaves & Savitch LLP represented Sycuan.

Under Renovation

The U.S. Grant Hotel was built in 1910 by Ulysses S. Grant Jr. to honor his Civil War hero-turned-president father. Once considered the grande dame of Downtown, the Grant has become quite expensive for Sycuan Tribal Development.

Originally estimated to cost $20 million to renovate, the tab now stands at $52 million. Part of the reason for the cost increase is the need to update infrastructure, including plumbing, heating and cooling and safety equipment, hotel executives have said.

According to court testimony by tribal Chairman Danny Tucker, the development corporation had expected to spend no more than $100 million to acquire and renovate the hotel. The purchase price was $52 million and the renovation tab now stands at $52 million, as well.

Tucker said that the Grant is scheduled to reopen as one of the Luxury Collection of Starwood Hotels & Resorts Worldwide Inc. in October.

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