MGM Mirage, bar owners tangle over Mandalay lease dispute

By Cara McCoy

Friday, Jan. 15, 2010 | 8:22 p.m.

MGM Mirage and a group tied to the troubled Privé nightclub are again set to wrangle in a landlord-tenant dispute, this time centering on the shuttered Bambu Bar at the pool at Mandalay Bay.

On Thursday, Vegas South Partners, which is backed by veteran nightclub operators Roman Jones and Mitchell Rubinson, filed a suit against Mandalay over the 2,400-square-foot outdoor pool bar’s lease, which Mandalay terminated in December.

Vegas South claims wrongful eviction from the property and says Mandalay breached its contract by violating a good faith agreement over changes to the lease, which was signed May 5, 2009. The club operators are seeking more than $400,000 in damages, saying they spent more than that amount in renovating the bar so it could open in time for the 2009 summer pool season.

Bambu Bar, adjacent to Mandalay Bay Beach, opened July 2, 2009, to much pomp and circumstance.

But shortly after it opened, the scandal at Privé erupted. And after a laundry list of citations, including prostitution, drug use and underage drinking at Privé and sister property Living Room Lounge, Planet Hollywood, which houses the clubs, was fined an unprecedented $500,000 for not reigning in the problems.

Bambu Bar closed July 29, 2009. At the time, Gordon Absher, vice president of public affairs for MGM Mirage, said Bambu Bar’s operators, Greg Jarmolowich and Frank Tucker, agreed to voluntarily suspend operations “in light of recent developments.”

Absher declined to comment Friday on the case, citing MGM Mirage’s policy against commenting on pending litigation.

Tucker and Jarmolowich were key employees at Privé until the Clark County Department of Business License on July 28 moved for their removal. Rubinson and Jones were instilled at Privé in their place.

According to court filings, Mandalay asked Vegas South to make changes to the bar’s ownership and management. Vegas South claims it did and Mandalay approved the changes; Mandalay, however, never formalized the agreed-upon changes, the suit says.

The lawsuit is similar to a suit Vegas South filed in December , also stemming from a lease dispute. That suit pertains to a burlesque cocktail lounge called the Rose that was in the works at Mandalay Place, which is the retail arm connected to the Mandalay Bay resort. The Rose was slated to occupy the space previously used by Ivan Kane’s Forty Deuce.

That dispute, which is ongoing, hinged on amendments Mandalay Place wanted to make to the lease agreement for the Rose.

Court proceedings offered a snapshot into MGM Mirage’s worries: In arguments before Judge Kathleen Delaney on Dec. 16, attorney Todd Bice cited the problems at Planet Hollywood as reasons MGM Mirage had been hesitant to have the Rose as a tenant at its Mandalay Bay property.

Bice said the company wanted to protect itself and its gaming license, and that MGM had serious concerns after the “shenanigans” at Privé.

Talks were ongoing about opening the Rose, but if MGM Mirage was to allow Vegas South on its property, the nightclub operators would have been subject to restrictions.

“Much like Clark County, we were going to put them on a very short leash,” Bice told the judge at the hearing.

In the wake of the rash of problems at Planet Hollywood, regulators put the gaming industry on notice that too much lawbreaking in nightclubs could cost casinos their gaming licenses.

The complaint filed by Vegas South regarding Bambu Bar indicates that at the time it closed, Bambu Bar was operating under an agreement with Mandalay Bay to use its liquor license. Vegas South had submitted its application for an independent license but didn’t receive it in time for the 2009 summer pool season, court filings indicate.

According to the lawsuit, Mandalay moved to end its liquor license-sharing agreement in August and formally terminated Bambu Bar’s lease on Dec. 15, 2009, for nonpayment of rent – within about a one-week span of Vegas South’s initial court filings regarding the Rose.

Vegas South claims Mandalay agreed to suspend rent payments while Vegas South worked to obtain its own liquor license for Bambu Bar, noting all the while that “that transition (to an independent license) has yet to occur.”

As it pointed out in taking its gripes over the Rose to court, Vegas South can’t get a liquor license without a valid lease.

“Mandalay now refuses to cooperate with Vegas South in obtaining a liquor license allowing the reopening of the Bambu Bar and instead claims to have terminated the existing lease without paying Vegas South its investment as required by the recoupment term of the lease,” the suit charges.

Vegas South also claims Mandalay didn’t go about terminating the lease properly, so Vegas South argues the lease is still in effect.

It had similar claims in its suit filed in the Rose case, but Delaney ruled against Vegas South and said the lease had indeed been terminated. Court records indicate Vegas South filed an amended complaint after the ruling and earlier this month requested a jury trial in the matter regarding the Rose.

In filings, Mandalay responded to the new complaint, again denying Vegas South’s allegations.

As for Bambu Bar, Vegas South further claims Mandalay “has no legal basis to interfere with Vegas South’s reopening and rightful possession of the premises at issue.”

Attorney Vince Consul, who is representing Vegas South locally in both suits, deferred comment to law firm partners in Miami who couldn’t be reached for comment Friday.