Court sides with Hilton in dispute over unbuilt Las Vegas Strip project

By Cy Ryan

Tuesday, March 2, 2010 | 10:15 a.m.

CARSON CITY – The Nevada Supreme Court has upheld a $1.1 million decision in favor of Hilton hotels and its affiliates in a dispute with a resort company.

The court ruled against Majestic Resorts, which argued Hilton had broken its 2004 management agreement to join in the design, development and construction of an upscale hotel and condominium project on the Las Vegas Strip.

Nothing came of the proposed project, and Majestic filed a request for arbitration in 2007. The arbitration panel rejected the claim of Majestic and ordered it to pay Hilton $834,734 in attorney fees and $319,817 in costs.

Majestic appealed to District Court Judge Elizabeth Goff Gonzales, who sided with Hilton, Conrad Hotels USA and Conrad Hospitality.

Majestic argued that one member of the arbitration panel was biased because of his prior association with the attorney for Hilton. Richard Chernick, one of three members on the arbitration panel, was partners with Robert Fairbank in a national law firm. Chernick left the firm in 1994, 13 years before the arbitration. Fairbank represented Hilton.

Attorneys for Majestic raised the issue before the panel and Chernick refused to excuse himself. The Supreme Court said lawyers for Majestic failed to pursue procedures to remove Chernick and instead withdrew their objection before the arbitration panel reached its decision.

The panel of arbitrators didn't award damages to Majestic, and instead, ordered the resort company to pay attorney and costs to Hilton. Majestic then raised its objection to Chernick sitting on the panel.

The court said that because Majestic “withdrew its objection and consented to the arbitrator’s continued participation, the district court properly denied its motion to vacate the arbitration award.”