According to the suit, filed against the SRLC and Robert C. Cahaly, who signed the contract on the group's behalf, in an initial contract from March 2011, "under the terms of this contract, the [Charleston Place Hotel] agreed to reserve virtually the entirely of the [hotel]" for the conference, and the hotel would provide the rooms, food and drink, and other amenities." The terms of the contract stipulated that after an initial deposit, any outstanding fees would be calculated at the end of the conference. There was a second contract signed December 20 that amended some of the terms of the first.
The suit claims that the SRLC breached this contract "by failing to pay the plaintiff as required by the contract."
The conference was rather mysteriously under-attended -- so much so that Newt Gingrich canceled his scheduled appearance at the last minute, though his campaign said it was a scheduling conflict. ABC News reported that "attendance at the 6,000 seat TD Arena was around 25 people" for one event, and around the same number showed up for Rick Santorum's speech, despite the 1,700 who signed up.
The suit blames this on the disorganization of the SRLC: "The defendant corporation was grossly undercapitalized; failed to observe corporate formalities; was insolvent; and was merely used as a facade for the operations of the defendant Cahaly." The suit also accuses Cahaly of using the SRLC to "hide from the normal consequences of carefree entrepreneuring by doing so through a corporate shell."
On January 22, the suit claims, the SRLC canceled a meeting that was scheduled to settle the account, and emailed to cancel with "false, fraudulent and unsubstantiated claims in an effort to evade their responsibility for payment of the outstanding balance due the plaintiff." These claims, the suit says, included billing discrepancies, "inappropriate sharing of privileged SRLC/Charleston Place information," "various difficulties with refunds or adjustments," and poor treatment by hotel staff, including "[the hotel manager's] instructing of an SRLC staffer to engage in illegal activity."
The SRLC said these claims needed to be resolved before they would make the final payments, and its attorney would schedule a meeting shortly thereafter. This never occurred, according to the suit.
In response to the suit, the SRLC put out a statement Monday claiming that they pre-paid the hotel to the tune of $235,000 but had "an unprofessional experience that directly and indirectly breached our contract causing great harm and distraction to our attendees, sponsors, and staff."
"The Charleston Place's attempt to mischaracterize this legitimate dispute as the SRLC's walking away from a bill is in keeping with the pattern of deception and misrepresentation that is a significant part of our ongoing disagreement," the statement said, adding that the hotel "seeks to sensationalize" the dispute. "We sincerely hope that cooler heads at the Charleston Place will prevail and they will acknowledge serious errors and actions resulting in a fair agreement."
The SRLC's lawyer, Charleston Attorney John Harrell, told TPM that he will soon be filing a responsive pleading on the case once he has a chance to review the facts, but hasn't decided yet whether or not to file a countersuit. "[The SRLC] certainly would seem to have [a counterclaim], but in terms of what I'm going to file, that I'll know better in a few days," he said.
Harrell wouldn't comment on the supposed "illegal activity" that was referenced by the hotel in the suit, but said that the SRLC noticed discrepancies in the bill (though he didn't have a ballpark figure of how much they amounted too). After the conference ended on January 22, Harrell said, the SRLC asked for a meeting with the hotel, and a copy of the bill mailed to them to review. They were told they would receive an invoice, but eight days after the end of the conference they got a summons and complaint "without any resolution on, from what I understand are serious discrepancies and certainly legitimate questions about the bill," Harrell said.
He reiterated that the SRLC had already paid the hotel $235,000 before the conference began. "The allegations that were just fired off could just be described as spurious, and not very well thought out," he said, "and sort of goes to the statement the SRLC made today of the unprofessional conduct that they encountered when dealing with Charleston Place."
"The SRLC has a legitimate concern about their invoice and absolutely nothing to hide," Harrell said.