A California court has ruled that Kenwood Investments can proceed with its fraud and breach of fiduciary duties lawsuit against its partners Stockbridge Capital Group and developer Wilson Meany over the redevelopment of Treasure Island in San Francisco Bay, US.
Kenwood alleges that Stockbridge and Wilson Meany, its co-investors in the project, conspired to divert profits that belong to Kenwood to an investment fund allegedly controlled by the Chinese government.
Kenwood brought Stockbridge and Wilson Meany into the Treasure Island Community Development project in 2005.
The plan, which is currently underway, calls for up to 350 hotel rooms, as well as 8,000 new residential units, 250,000 square feet of retail space, 2,000 permanent jobs, public parks, and more than 300 acres of open space.
San Francisco, one of the most visited cities in the world, provides valuable real estate for the hotel industry. Major hospitality groups such as Oxford Capital have invested millions in hotels in the city.
San Francisco Superior Court Judge Richard B Ulmer Jr issued orders on 18 October 2023 allowing California-based Kenwood to proceed with the case and seek punitive damages, denying Stockbridge and Wilson Meany’s attempt to have the case dismissed on technical grounds.
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Kenwood’s suit alleges that Stockbridge and Wilson Meany have repeatedly and knowingly misled Kenwood regarding the nature of their outside transactions and dealings, notably by partnering with CITIC, an investor owned by China’s largest sovereign wealth fund and alleged to be a functioning arm of the Chinese government.
PJ Johnston, spokesman for Treasure Island Community Development, told Hotel Management Network: “Kenwood’s lawsuit is against the entities developing Treasure Island, not against Stockbridge Capital Group. The latest legal development — a demurral — is fairly routine; the court also recently denied Kenwood’s attempt to dismiss Stockbridge and Wilson Meany’s complaint against Kenwood.”
The other companies named in the lawsuit did not respond to Hotel Management Network’s request for comment at the time of going to press.
Kenwood is currently conducting discovery of defendants Stockbridge and Wilson Meany and third parties, with an anticipated trial date in 2024.