New York court affirms $1.6 billion judgment over Baha Mar resort collapse

New York court affirms $1.6 billion judgment over Baha Mar resort collapse
The Appellate Division of New York’s Supreme Court has upheld a $1.64 billion ruling against China Construction entities in a high-stakes case over the failed Baha Mar resort development in the Bahamas.
APR 15, 2025

A New York appellate court has unanimously affirmed a $1.64 billion judgment in favor of BML Properties Ltd., holding several China Construction entities liable for breach of contract and fraud arising from the failed development of the Baha Mar resort in the Bahamas.

In a decision issued April 8, 2025, the Appellate Division, First Department, upheld a ruling by Justice Andrew Borrok of the Supreme Court of New York County, following a nonjury trial that spanned 11 days and included 20 witnesses and over 1,000 documentary exhibits. The case centered on a series of actions that delayed construction and ultimately prevented the resort from opening, resulting in the financial collapse of BML Properties, the direct parent of the developer, Baha Mar Ltd.

BML Properties Ltd., a Bahamian entity, was responsible for Baha Mar’s day-to-day management and owned 100% of its voting shares. Defendant CCA Bahamas Ltd. served as construction manager on the project. Defendant CSCEC Bahamas Ltd., another Bahamian entity, was a minority shareholder in Baha Mar under an investor agreement. Defendant CCA Construction Inc. (formerly China Construction America, Inc.) was not a party to the underlying contracts but was involved in the project through overlapping executives and offices. The court identified Taizhong Wu—an executive of both CCA Construction and CCA Bahamas—who was also appointed to Baha Mar’s board on behalf of CSCEC Bahamas.

The trial court found that Wu’s actions, including stripping manpower and resources from the project, diverting subcontractor funds, and contributing to delays, violated the investor agreement’s requirement that board representatives act in the project’s best interests. These breaches, according to the court, directly prevented the resort from opening and caused BML Properties’ complete investment loss.

The court also found that the defendants misrepresented their ability to meet a March 27, 2015 opening date, despite internal communications showing they believed it was unachievable. This constituted fraud, the court held, and supported BML’s claims.

Defendants argued on appeal that the trial court had misapplied the legal standard for scienter and that damages awarded were consequential, not direct. The appellate court rejected both arguments. It affirmed that defendants’ misrepresentations, made while knowing the project could not open on schedule, satisfied the fraud standard. It further held that the plaintiff’s losses were direct, because the project’s failure to open rendered the investment worthless and led to the plaintiff’s bankruptcy.

The judgment totaled $1,642,598,493.15, including $845 million in damages and prejudgment interest on $830 million from May 1, 2014, through March 31, 2015, and on the full $845 million from April 1, 2015, to the date of judgment.

The appellate court also upheld the trial court’s decision to pierce the corporate veils of the affiliated defendants. It found that CCA Construction exercised complete domination over CCA Bahamas and CSCEC Bahamas and used that control to breach the investor agreement, commit fraud, and cause financial harm to the plaintiff. The court noted that the veil-piercing evidence was largely unrebutted.

Additionally, the court rejected the defendants’ attempt to invoke Bahamian law. Although they gave notice of intent to apply foreign law shortly before trial, they failed to provide the trial court with the necessary information under CPLR 4511 until their post-trial brief—too late for consideration. As such, the court applied New York law throughout.

With the trial court’s findings fully affirmed, the case highlights the risks of intercompany control in cross-border development projects, particularly when corporate structures are used to insulate misconduct. It underscores the willingness of New York courts to enforce fiduciary obligations and hold affiliated entities accountable when their actions contribute to project failure and investor loss.

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