The Port of Astoria’s potential legal bill over the Astoria Riverwalk Inn has been reduced from $4 million to less than $1 million.
Clatsop County Circuit Court Judge Dawn McIntosh granted a motion Monday by the Port to limit Param Hotel Corp.’s damages on claims of fraud against the agency to $682,800.
That is in addition to more than $200,000 for awarded to Param over the Port’s breach of contract.
Param and its owner, Ganesh Sonpatki, had been trying since 2014 to take over operation of the Riverwalk Inn from heavily indebted former operator Brad Smithart in exchange for paying his debts to the city, Port, county and other government entities. The Port Commission voted in 2015 to have staff transfer the lease, but the deal fell apart.
After the Port installed locally connected company Astoria Hospitality Ventures as the short-term operator, Param sued the Port for breach of contract and fraud, arguing the agency had unfairly misled the company and broken the previous agreement to transfer the lease. Executive Director Jim Knight was named a co-defendant in the lawsuit, but later had a separate fraud claim against him dismissed.
A jury last month awarded Param $202,430 in economic damages for a breach of contract claim and nearly $3.8 million on the claims of fraud. The Port’s attorney, Luke Reese, argued that the claims of fraud are subject to caps under the Oregon Tort Claims Act. The act is meant to protect public bodies from massive payouts after a wrongful act, other than a breach of contract, that results in damages or injunctions.
A week after the verdict, McIntosh gave Param the choice between taking either the monetary damages or the lease it had sought on the hotel.
Param’s attorney, Colin Hunter, said the company plans to take over the hotel lease in November 2018, after the term of current operator Astoria Hospitality Ventures ends. The takeover would also involve Sonpatki fulfilling his promise to pay off Smithart’s debts.
The Port has also sued Smithart for back-due rent and revenue sharing. The case was put on hold until after Param’s lawsuit was resolved. A trial between the Port and Smithart is scheduled for January.