Lawsuit: Hualapai tribe snatched away ranch unfairly
Tribe counters that the property was not being maintained
1/30/2014 6:00:00 AM
By Doug McMurdo
KINGMAN - A lawsuit filed in Hualapai Tribal Court earlier this month alleges, among other things, that directors of the Grand Canyon Resort Corporation and its officers conspired to break a contract with Western Destinations owner Jim Brown, the builder and manager of Hualapai Ranch.
This is the second instance in which the resort corporation has been formally accused of failing to honor its contracts with non-tribal business partners in Grand Canyon West, but the lawyer who filed the lawsuit on Brown's behalf could not say for certain if a pattern has developed.
Tucson-based attorney Ali Farhang did suggest, however, that a growing history of breaking contracts with business partners would come back to haunt the Hualapai Tribe.
Farhang also said he would like to see figures detailing the "current profitability" of Hualapai Ranch. He said he is "disgusted" with how the tribe allegedly treated his client.
"Why would anyone want to do business with this tribe?" said the attorney. "I don't know if they do it purely for greed. I don't know if there's a level of discrimination going along with that."
As far as the tribe and the tribal-owned resort corporation is concerned, Brown neglected the property, despite earning millions of dollars over the seven years be managed the attraction, according to tribe spokesman Dave Cieslak.
There are several issues at play, said Farhang.
The most egregious, if ultimately proved true, is an allegation that Jennifer Turner, the resort board's CEO, and others found Brown in default after they ordered him to do something wholly unreasonable, and that was to essentially tear down and rebuild every building on the site within 30 days.
The lawsuit alleges Brown reached out to several board members, Turner and others, in an effort to resolve the dispute. He offered to perform the extensive and expensive work the board required, but nobody ever responded to any of his emails, letters or phone calls requesting a meeting.
Ironically, Brown couldn't have begun repairs until given pre-approval from the board, which allegedly ignored his many efforts to meet.
The lawsuit also alleges the board pressured Brown to sign an op/ed piece that was highly critical of another business partner of the tribe.
Brown refused to sign the letter due to its tone, but he did offer to write his own letter to the editor praising the tribe and the resort board for the way they treated his contract.
The late David Jin funded and built the Skywalk tourist attraction at Grand Canyon West. The tribe ultimately took away Jin's right to manage the attraction - a glass walkway that juts out from a canyon rim - and the matter wound up in court. Jin ultimately won a settlement of nearly $30 million, which was his reported total investment.
Brown built Hualapai Ranch, first known as Western Town, on Hualapai land near where the Skywalk is today, in 2005. He spent roughly $485,000 on the project, which offered horseback rides and other western-centric fun.
The tribe rewarded Brown's investment by giving him management and profit-sharing rights in a contract that was supposed to remain in effect until 2017.
Brown would ultimately enter into a separate contract with the tribe to build 40 cabins that visitors could rent while visiting the two attractions.
Brown invested another $545,000 to build 26 of the cabins, a kitchen, a barn and other amenities.
In 2010, the tribe approached Brown regarding its desire to merge the two contracts into one, but with a key provision missing: Any disputes would not go to mandatory arbitration and the tribe could avoid litigation by claiming sovereign immunity, according to the lawsuit.
Brown, said Farhang, initially rejected removing the safeguards from the amended contract. He signed it for two reasons, according to the lawsuit: One, that the resort corporation said the change was needed due to the ongoing Jin litigation and two, he signed because certain board members assured him the tribe would never claim sovereign immunity against him.
The lawsuit claims the conspiracy was part of an effort for the tribe to break its contract with the business - and strongly suggest that the Grand Canyon Resort Corporation, a tribal governing board with oversight over non-tribal members who do business with the tribe, conspired for years to end its relationship with Brown.
The lawsuit claims Turner did not respond to any of Brown's attempts to discuss the issue until the 30-day timeline to repair the buildings had passed, and that communication was only to inform Brown that the resort corporation found him in default and it was "forced to terminate the agreement on Feb. 1."
While the lawsuit notes the tribe has not made any of the repairs it demanded of Brown since taking over management of Hualapai Ranch about a year ago, Cieslak said the tribe "took immediate action" to repair certain structures and even to limit guest access at other buildings that were reportedly in need of significant work.
The resort corporation, said Cieslak, believed Brown was a negligent manager of the property he spent more than $1 million to build.
"As we've come to expect, Western Destinations and Jim Brown are using inaccurate information and inflammatory language to distract the public from their own misconduct," said Dave Cieslak of the public relations firm Scutari & Cieslak. The Hualapai Tribe is a client.
Cieslak, who allegedly penned the letter critical of Jin that Brown reportedly refused to sign, in an emailed statement said "issues came to light regarding various conditions of the property, including concerns over infrastructure, repair and maintenance of improvements at the property."
Cieslak said the resort corporation was forced to terminate the contract because Brown, despite given ample time, failed to make the improvements.
But Brown in his lawsuit said the notice of default was written in vague terms and the work would have required him to destroy every building on site and rebuild, all within the one-month deadline.
Farhang in his lawsuit requests the Tribal Court to compel the Grand Canyon Resort Corporation to enter into mandatory arbitration to settle the matter and seeks a full accounting and audit of the books since the resort corporation took over management of Hualapai Ranch last February.
The lawsuit accuses the resort corporation of breach of contract, breach of good faith and fair dealing, inducement of amended agreement, fraud, civil conspiracy, and unjust enrichment.
And while Cieslak said the tribe denies, "each and every one of the allegations," Farhang said his lawsuit was "very detailed," in order to provide little legal wiggle room for the defendants.
Not surprisingly, each blames the other for breaking the contract.
"Jim Brown failed to abide by the terms of the contract he signed with Grand Canyon Resort Corporation, plain and simple," said Cieslak. "Businesses can only be successful when both parties honor contracts and keep their word. Western Destinations did the exact opposite."
"The tribe saw how much money the project was gaining, and for whatever reason they decided to manufacture this default so they could take all of the money," countered Farhang. "This is not how solid business relationships are built, but it is how reputations can be destroyed."