About two and a half years ago, Irongate Developers had a lot to brag about. The 464 units of the Trump International Hotel and Tower Waikiki Beach, the flagship project of Irongate, sold out in one day for prices ranging from $500,000 to $4,500,000 for the most expensive penthouse. This extraordinary development set a record for the Hawaii real estate sales as the total topped $700,000,000. At the time, Irongate released a statement claiming that the sale was a world record for a one-day sale. Fast-forward thirty months from the economically very different times of November 2006, and the promised 38-story skyscraper is nearing completion, starting to make its own impression on the legendary Honolulu skyline. All is not well however – driven partially by the devastating economic depression that began in the year 2008, two groups have filed suit in District Court and Circuit Court, claiming that Irongate misrepresented the involvement of the internationally recognized real estate tycoon. The lawsuit is especially important because of the possibility of a plaintiff-friendly verdict setting a precedent for future, similar lawsuits. According to Robert Hastings, president of a local real estate appraisal firm, “These suits are a function of the times, and there will be other litigation like this.”
The plaintiffs consist of two separate groups, one of which chose to air their grievances in the state circuit court, and the other of which chose to file suit in Honolulu federal court. Combined, the trial groups include about twenty dissatisfied buyers, representing investors from the mainland, Japan, and Hawaii itself. The claims of both lawsuits are essentially the same – that Irongate incorrectly listed Donald Trump as a “co-developer” in its 2006 promotional brochure, when in reality Trump simply licensed his name to be used with the project. The lawsuit alleges that Trump had the option to terminate the contract at any point in time, since the real estate mogul did not have any material investment in the tower. The plaintiffs claim that their decision to invest in the development was based heavily on the brand name of Trump, which grants an inherent value to the complex. They are concerned that if Trump exercises the option to withdraw his name, the Trump Waikiki will plummet in value.
The suit was filed by former Hawaii Attorney General Warren Price, and seeks to recover the initial deposits of the plaintiffs. Price stated that “Our clients intended to invest in an exclusive, one-of-a-kind Trump project in Waikiki. They were making an investment in a Rolls-Royce. They weren't told there's a license and it can be terminated, at which time the Rolls-Royce turns into a GM type of car.” Irongate was quick to respond to the lawsuit, saying that “A small group of individuals filed suit today. We believe that all of the claims are without merit and we intend to vigorously defend ourselves. Furthermore, we intend to pursue all of our own claims against these individuals. The vast majority of buyers are moving towards closing and are looking forward to their first visit to Trump Tower Waikiki Beach Walk later this year.”