The minority ownership group of the Skirvin Hilton, led by John Weeman, is suing an affiliate of majority owner and operator Marcus Hotels & Resorts for breach of contract and fiduciary duties.
Neither Weeman nor representatives of Marcus Skirvin Inc. would comment Monday on the litigation, which court records indicate caps years of disputes between the ownership groups.
The March 15 filing in Oklahoma County District Court by Weeman's Skirvin Partners in Development claims his investment group was deprived of contractually agreed to distributions due to disputed charges by Marcus and other accounting disagreements.
The filing seeks unspecified damages, a neutral accounting of operations or a receiver to be appointed for the ownership partnership.
Weeman was the initial developer of the effort to renovate and reopen the Skirvin, which was built in 1911 and closed in 1988.
The hotel, 1 Park Ave., was dilapidated when the city bought it and entered into a redevelopment agreement with Weeman and Marcus Hotels and Resorts. When a third equity partner in the deal fell through, Milwaukee-based Marcus expanded its role from operator to become an equity partner.
Court filings show Marcus owns 60 percent of the operation, while Weeman's group owns 40 percent. The hotel has been widely considered a successful example of public/private redevelopment of a troubled property since it reopened in 2007, with the city steadily recouping its investment and retaining ownership of the land under the hotel.
“The Skirvin Hotel has been exceedingly successful, running an average occupancy since its reopening through Jan. 31, 2013, of 78.43 percent, or 381,381 occupied room nights,” wrote Mark Stonecipher, attorney for Weeman's Skirvin Partners in Development.
“To date, during the nine years since the formation of Skirvin Partners (the ownership partnership between Marcus and Weeman's group), only diminutive distributions have been made to Skirvin Partners in Development,” Stonecipher wrote. “In contrast, Marcus has received approximately $6 million in distributions, $3.9 million in management fees and $1.2 million in payments for group services from Skirvin Partners in exchange for Marcus's approximately $2.5 million investment and other services.”
Stonecipher also claimed that when, in 2009, Skirvin Partners in Development challenged accounting and documentation provided on “group charges” by Marcus, that a company executive responded, “We have no intentions of discussing this topic at this or future owner's meetings as we would much rather focus on more productive operational and asset management topics.”
Other disputes include a 2007 refinancing approval sought from the Oklahoma City Redevelopment Authority without, as alleged by Stonecipher, coordination with Skirvin Partners in Development. The plaintiffs also question why Marcus has yet to proceed with a capital improvement plan approved by the partners in 2011 to improve the hotel.
Marcus has seen a change in management both at the corporate and hotel level since the Skirvin opened, including the 2011 departure of Bill Otto as president of Marcus Hotels and Resorts. Skirvin Partners in Development, meanwhile, saw the addition of local real estate investor Roddy Bates.