Resort Properties of America, owned by David Atwell, is suing El-Ad for the 1% brokerage fee he believes he is owed for helping to initiate El-Ad's $1.2-billion acquisition of the former New Frontier casino property on the Las Vegas Strip from Wichita billionaire Phil Ruffin, who owned the property with Margaret Elardi.

Atwell alleges he brought Tshuva and Ruffin together in New York in June 2006 to discuss a deal. Ruffin ultimately rejected the first offer but Tshuva then personally contacted Ruffin and ultimately flew to Wichita with his wife to meet with Ruffin and resurrect the deal, which he successfully did, according to depositions of key players.

In denying the motion for summary judgment and overruling its objection to Tshuva being deposed, Hicks states that there are facts that only Tshuva can provide regarding certain meetings between he and Ruffin, facts that are relevant to opposing El-Ad's motion for summary judgment.

"The present case concerns in part whether Resort Properties was the procuring cause for an El-Ad real estate purchase," Judge Hicks stated in his decision. "One factor relevant to this inquiry…is whether the purchase constitutes a continuation of an earlier transaction or an entirely different transaction. The testimony of [Tshuva] is relevant to establishing what type of transaction was discussed in those meetings."

El-Ad had requested that if its objection to Tshuva being deposed was rejected that Tshuva only have to respond to written interrogatories but the judge denied that as well. "There has been no showing that oral deposition would unduly burden Tshuva, especially in light of Resort Properties' offer to conduct the deposition via video conference," Hicks stated.

Atwell says he sued El-Ad Properties in June 2007, shortly prior to the official closing of the transaction, once he believed that El-Ad did not intend to pay him a commission on the transaction. El-Ad has maintained that Atwell "did not earn, and is not entitled to, a commission."

Just prior to the official closing of the acquisition in mid-August, Atwell told GlobeSt.com that El-Ad Properties had made an 11th hour settlement offer. "El-Ad made us a last minute offer to settle before close, but we felt we must decline," Atwell said in a prepared statement at that time. "Our initiation of this transaction, which we can prove, is very valuable in anyone's analysis."

The sale of the New Frontier hotel-casino property was first announced in May 2007. El-Ad Properties agreed to buy the property for approximately $35 million per acre, the highest price ever agreed to for a large piece of land on the Las Vegas Strip. El-Ad subsequently brought on a partner, Property and Building Corp. Ltd., a subsidiary of Tel Aviv-based IDB Development Corp., and made plans for a multi-billion-dollar redevelopment of the site.

In March 2008, the joint venture formed for the $6-billion project, El-Ad IDB Las Vegas LLC, received approvals for its site development plan and special use permit from the Clark County Commission. At the time, the JV said design completion and the start of the excavation is scheduled to occur before the end of the year.

Plans called for seven high-rise towers atop a mid-rise podium. The structures would house 4,100 hotel rooms; 2,600 condominium units; 175,900 sf of gaming; 480,000 sf of retail and restaurant space; 539,607 sf of convention space; a 50,000 sf health club; a 1,500-seat theater; and 227,038-sf of recreation space for pools and other amenities.

In April, both sides attended a mediation session to try and resolve the lawsuit. Reportedly in attendance for the defendants were Plaza Las Vegas COO Dan Wade, El-Ad Properties' head counsel, and Ruffin. Not in attendance was El-Ad president Miki Naftali, whom Atwell says eventually nixed the deal.

Since the development approvals were obtained there have been stories suggesting the project may be on hold due to the dislocated credit markets, and there is certainly no activity on the site, according to locals. Most of the reports seem to have stemmed from an article in the Israeli publication Yediot Ahronot. Naftali has in the past refuted the report, saying the project will move ahead as planned. An El-Ad spokesperson did not immediately respond to a request for an update on the project's timeline and comment on the most recent court decisions.

The El-Ad Group, founded in 1992, develops, owns and operates real estate primarily in the United States, Canada and Asia. In addition to Plaza Las Vegas, El-Ad Group and El-Ad Properties are known in the US for their $675-million acquisition and condominium conversion of the historic Plaza Hotel property in New York City in 2004. Its partner, IDB Development, is Israel's largest business group, recording total revenues of $12 billion in 2007 on total assets of $26 billion and $34 billion of assets under management.

Instant Insights /

El-Ad Suffers Setback in Brokerage Fee Lawsuit

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