The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Supreme Court is the best place for Bahamian creditors to seek redress over the “medley of allegations” against Jamie Dingman’s failed Nassau restaurant empire, his US attorneys are arguing.

Mr Dingman, son of world-famous entrepreneur and Lyford Cay resident, Michael, and his advisers made clear their intention to seek dismissal of the $1.113 million claim brought against him in the southern New York federal court.

Rather than file a defence to this action, Mr Dingman’s attorneys laid out the two grounds upon which they will move to strike out the lawsuit in a May 5, 2016, letter to US judge, Naomi Reice Buchwald.

Given that 13 of the 20 parties are from the Bahamas, they plan to argue that this nation is the appropriate legal forum to resolve the dispute - especially since only one plaintiff is domiciled in New York.

Some seven Bahamian companies and individuals are among those seeking compensation from Mr Dingman over outstanding payments for services and products provided to his collapsed venture.

And three Americans, Kirk Bouffard, Ryan Giunta and Erik Gordon, are alleging that they were “fraudulently induced” by Mr Dingman to invest in his failed Nassau restaurant empire.

In particular, they are alleging that Mr Dingman violated the US Securities Exchange Act by failing to issue them with shares in the venture’s parent company, Out West Hospitality, despite promising to do so in return for their investments.

Mr Dingman’s attorneys, though, are arguing that this claim should also be dismissed because the Exchange Act does not apply in these circumstances. That is because Out West’s shares were not listed on a US-based exchange, and the whole transaction was Bahamian - not US -domiciled.

Jeffrey Mitchell, of the Browne, George, Ross law firm, told Judge Buchwald that he planned to file a motion on Mr Dingman’s behalf seeking dismissal of the action, and wanted to hold a conference with her and the plaintiff’s attorneys before doing so.

With their answer to the lawsuit due by June 1, Mr Mitchell wrote in his letter: “This action concerns a failed restaurant venture in the Bahamas.

“Of the 20 parties, 13 are from the Bahamas and only one is from New York: A chef with a $5,200 claim for relief under Bahamas law for services allegedly rendered in the Bahamas to create a menu and manage the staff at restaurants there.”

Again arguing that Mr Dingman was not a New York resident, Mr Mitchell argued that the alleged US Securities Exchange Act violation was the only issue providing jurisdiction.

He wrote: “The remaining causes of action are a medley of allegations that include, in addition to the chef’s claim, a claim for $2,252 for tile and building supplies by a Bahamian company contracted to renovate the restaurant space; claims by for unpaid IT bills by a different Bahamian company; and a claim by a Bahamian youth group for $2,100, based on allegations that it was unable to host its one-night event at one of the restaurants because the restaurant was in disarray.”

Arguing that the action against Mr Dingman would be fatally undermined if the securities-related allegations were dismissed, Mr Mitchell said: “This claim is based upon allegations that several of the defendants fraudulently induced plaintiffs Bouffard, Giunta, and Gordon to invest in Out West Hospitality, a Bahamian corporation, and failed to issue shares in Out West.

“The plaintiffs allegedly earned the shares in connection with their providing funds and services in the Bahamas for the Bahamian restaurants, and Erik Gordon’s decision to invest was explicitly based upon his effort to obtain permanent residency in the Bahamas, which would require substantial investments in Bahamian enterprises.

“Moreover, the plaintiffs did not incur any ‘irrevocable liability’ in connection with these transactions, and any liability incurred by the defendants would have been incurred in the Bahamas,” the attorney continued.

“Similarly, no title passed anywhere, but any shares in Out West would have been issued in the Bahamas.”

Mr Mitchell said the US Exchange Act had no extra-territorial application, meaning it did not apply to share-based transactions in the Bahamas, or involving Bahamian companies.

Laying out the second thrust of Mr Dingman’s attack, Mr Mitchell argued that the Bahamas - not New York - was the most appropriate jurisdiction in which to bring the claim.

“Almost all of the parties, witnesses and evidence are in the Bahamas, the case concerns businesses in the Bahamas, and virtually every event complained of occurred in the Bahamas,” he alleged.

“Accordingly, the three factors to be considered in assessing a request to dismiss all weigh in favour of dismissal. Moreover, for those plaintiffs who are US citizens, their reliance on citizenship to avoid dismissal is diminished in view of their choice to invest in a foreign country, and their complaints about fraudulent acts occurring primarily in that country.

“Instead, these claims should be adjudicated in a Bahamian court, where defendants all are amenable to suit, and which is the appropriate avenue for plaintiffs to seek redress for their claims.”

Mr Mitchell also warned that Mr Dingman might seek to dismiss the lawsuit because it “lacked jurisdiction” over both himself and the five restaurant companies, all of whom are domiciled in the Bahamas.

The five companies are the failed Nassau restaurant ventures: The Traveller’s Beach Restaurant, 25 North Ltd, Island Smoke House Ltd, Out West Hospitality and Bahamex Ltd.

The original lawsuit, filed early in the New Year, claimed that Mr Dingman has effectively abandoned his creditors and investors and “fled the Bahamas altogether”, refusing to pay what he owes.

It alleges that he had stopped communicating with them, and is “hiding out in his girlfriend’s apartment in downtown New York City” in a bid to escape both his Bahamian creditors and ex-employees, plus foreign associates he either hired to assist him or induced to invest in the Nassau-based restaurants.

Mr Dingman’s efforts to build a Nassau-based restaurant and hospitality business included taking over the iconic Traveller’s Restaurant in western New Providence via a lease arrangement.

That venture failed and the property shut again, until members of the Bain family, its owners, re-opened it again last summer.

He also leased two units in the Klonaris brothers’ Elizabeth on Bay plaza on Bay Street for two other restaurant formats, both of which have also closed.

Tribune Business also revealed how Mr Dingman leased the Beach Club Cafe from Sandyport’s developers, viewing this as his “signature property”. The venture never opened, and the lease was pulled.

The Bahamian companies involved as plaintiffs are FYP and Tile King, the People First (Bahamas) employment agency, IDNet, and Young Digerati (YNG).

The individual Bahamians suing Mr Dingman include Jason Rolle, his former general manager, who claims to be owed $46,113 in unpaid salary and benefits, plus Tyrone Adderley, a contractor due more than $2,000 for work on the Beach Club Cafe at Sandyport.