On May 26th 2015, it was reported that the Stockton University is looking to claim damages to the value of as high as $22 million from Caesars Entertainment. This is due to the unfortunate purchase that the school made for the former Showboat Hotel and Casino in Atlantic City.
The property was purchased from Caesars by the university for $18 million in December under the understanding that the entertainment company would find a solution to the issues in regards to the deed restriction that inhibits the property from being used as anything other than a casino.
These issues though were not addressed and Caesars declared bankruptcy the month after, which then left the university to carry the cost of half a million per month for a 26 acre property that can’t be used as a satellite campus as the university originally planned.
The claim against Caesars from the university includes a breach of contract and fraud. The university wants Caesars to honor the insurance clause that appears in the sales contract, which should have protected the college from any liabilities that come from the Trump Taj Mahal’s attempt to enforce the 1988 restriction.
Trump Entertainment Resorts says that they enforced the agreement, as they feared that students who are under 21 will attempt to access the Taj Mahal so that they can gamble and drink. This will then make the company vulnerable to expensive fines.
Herman Saatkamp, the school’s president has resigned since the deal and Stockton have made a new agreement to sell the property to a Florida developer; however this deal has not been concluded.
The claim from Stockton that was filed in bankruptcy court in Illinois is a way for the university to keep its rights according to a spokesperson for Stockton.
The university was aware of the restriction, but was told that this would be resolved. They have also authorized an outside investigation of the Showboat purchase even though they are trying to get out of the deal.
Caesars has not commented on this case.