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Judge gives Portland hotelier option of lease or damages against Port of Astoria

Param Hotel Corp.’s lawyer said the company plans to take over the hotel lease in 2018
By Edward Stratton

The Daily Astorian

Published on October 20, 2017 6:37PM

Last changed on October 23, 2017 9:45AM

A Portland hotelier plans to take over the Astoria Riverwalk Inn after prevailing in a lawsuit against the Port of Astoria, which owns the hotel.

Joshua Bessex/The Daily Astorian

A Portland hotelier plans to take over the Astoria Riverwalk Inn after prevailing in a lawsuit against the Port of Astoria, which owns the hotel.

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Clatsop County Circuit Court Judge Dawn McIntosh has given Param Hotel Corp. a choice between either a seven-year lease on the Astoria Riverwalk Inn or up to $4 million in damages against the Port of Astoria.

Param’s attorney, Colin Hunter, said the company plans to take over the lease of the hotel in November 2018, after the term of Astoria Hospitality Ventures ends.

“The judge and jury have now spoken with one voice to confirm that Param is entitled to the benefit of the bargain it reached with the Port back in 2015,” Hunter said. “At its core, this case has always been about the opportunity to run the Riverwalk Inn, a truly unique hotel property with enormous potential.”

A jury last week awarded the $4 million to Param, finding the Port had breached a contract and that Port Executive Director Jim Knight had knowingly made fraudulent misrepresentations to Param’s owner, Ganesh Sonpatki.

McIntosh held a hearing Friday on Param’s pending claim for specific performance, a legal remedy used when monetary damages are not adequate. McIntosh said she would accept a suggestion that the Port enforce Param’s seven-year lease at the end of Hospitality Ventures’ remaining year. Param would also have to pay what was promised in the breached contract to satisfy former operator Brad Smithart’s debts to the Port, Astoria and Clatsop County. Any remainder would go to Smithart, who recently closed his other business, the Arc Arcade, and moved to New York.

In the hearing Friday, McIntosh concurred with the jury that there was clear and convincing evidence of a contract breach.

Knight had argued that terminating Smithart’s lease before the deal with Sonpatki had closed was necessary because of the run-down state of the hotel, bad operations, Smithart’s growing debts and his pursuit of other suitors behind Sonpatki’s back. Sonpatki testified about his efforts to close the deal, including his offering of a cashier’s check to satisfy Smithart’s debts.

“I did not find the testimony of Mr. Knight to be particularly credible,” McIntosh said Friday. “I did find the testimony of the plaintiff to be credible.”

One of the most telling points, she said, was how Knight had led Sonpatki to believe the Port would fix some incorrect documents related to the contract, while also communicating with Chester Trabucco, a local developer competing for the hotel’s lease, and directing the Port’s attorneys to stop working on the documents. Trabucco eventually partnered with Astoria native William Orr, a brother-in-law of then-Port Commissioner Stephen Fulton, to form Hospitality Ventures.

After terminating Smithart’s lease, the Port kept him in place as a short-term operator and opened the hotel to other suitors. The Port Commission eventually awarded Hospitality Ventures a short-term lease in September 2015 over several competitors, including Param.

Orr, Trabucco and Hospitality Ventures had originally been included as co-defendants by Param for intentionally interfering with Sonpatki’s deal. They were later removed from the case after their lobbying of the Port Commission was found by Judge Philip Nelson to be protected activity.

In its opposition to the specific performance claim, the Port had argued that Hospitality Ventures was an innocent bystander that would be harmed by giving Param the lease. McIntosh disagreed, saying Hospitality Ventures knew the risk. Param would also be taking a risk by assuming its seven-year lease of the Riverwalk Inn and then having to negotiate with the Port for a longer extension, she said.


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