Developer Glenn Straub sued Stockton University on Wednesday over the unfulfilled deal to convert Atlantic City's former Showboat casino into a college campus.
Straub, who also owns the former Revel casino next door, has a $26 million contract to buy the Showboat from Stockton, but the deal must close by Thursday.
In a lawsuit filed Wednesday afternoon, Straub asks a judge to declare the contract void but also to prevent Stockton from unilaterally cancelling it. He also wants to extend the closing date while conflicting legal restrictions on the property's future use are hammered out in bankruptcy court.
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"Why doesn't he just walk away? Because he wants this deal," said Straub's attorney, Stuart Moskovitz. "We want the deadline extended, and let's get this straightened out and let it play out."
"They had a responsibility to get certain things done before the closing, and they haven't," Straub added. "They had 90 days to deal with this, and they still haven't."
Caesars Entertainment shut the still-profitable Showboat on Aug. 31, 2014 in the name of reducing competition in the struggling Atlantic City casino market. In December, it sold the property for $18 million to Stockton, a suburban college that planned to use it as a long-sought satellite city campus.
But Caesars Entertainment placed a deed restriction on the Showboat before selling it to Stockton, preventing it from ever being used as a casino again. That clashed with a 1988 covenant signed by Showboat, the Trump Taj Mahal and Resorts, mandating that the Showboat never be used as anything other than a casino.
Stockton did not get the 1988 covenant resolved before buying the Showboat, and Taj Mahal owner Trump Entertainment Resorts refused to waive it, fearing that underage college students next door would sneak into the Taj Mahal to drink and gamble, exposing the casino to costly fines.
The university then asked the Illinois bankruptcy court hearing a case involving a unit of Caesars Entertainment to resolve the competing claims — a request that still has not been addressed.
Stockton's acting president, Harvey Kesselman, said his top priority was undoing the Showboat mess and extricating the university from what he described as a costly mistake. In a statement issued before Straub filed the lawsuit, Kesselman said, "From our perspective, the contract speaks for itself. It will be quite disappointing if Mr. Straub does not complete the purchase of the Showboat by the July 2, 2015 closing date."
A Stockton spokesman said the school will "respond appropriately" after reading the lawsuit but would not elaborate.
Straub envisioned the Showboat as part of a $500 million multifaceted Atlantic City redevelopment plan he named The Phoenix Project and put up $26 million on April 3 to acquire it. That deal is due to close by 1 p.m. Thursday — a deadline Moskovitz said he expects will pass without any action.
Moskovitz said he asked Stockton to extend the closing date numerous times, including as recently as a few days ago, but that the university refused. Moskovitz said he thinks Stockton has another offer for the property.
Straub bought the former Revel casino on April 7 from bankruptcy court for $82 million. But like the Showboat, Revel has been bogged down in litigation that has prevented it from reopening this summer.