Hotel legal dispute
near a decision

Aston Hotels and its former
owner battle during arbitration

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By Tim Ruel
truel@starbulletin.com

Attorneys in a legal wrangle between hotelier Andre S. Tatibouet and the mainland firm that bought Aston Hotels & Resorts submitted final written arguments yesterday, and an arbitration panel is expected to make a decision in the matter within the next couple months.

Tatibouet, whose family founded Aston in Hawaii in 1967, sold the firm to Memphis, Tenn.-based ResortQuest International Inc. in 1998 for 1.7 million shares of ResortQuest stock and $20.9 million in cash. ResortQuest sued in May 2000, alleging Tatibouet illegally gave intellectual property bearing the Aston name -- including the rights to the Web site name aston-hotels.com -- to ResortQuest rival Cendant Corp. ResortQuest also sued Cendant.

Tatibouet has denied the allegations, saying he never gave ResortQuest the rights to the name Aston. He countersued ResortQuest, saying the firm should have dealt with the matter privately in arbitration, not in the public courts. The state Circuit Court and Supreme Court agreed, and in September the case entered private proceedings before a panel of three Honolulu arbiters, attorneys Michael Freed, Gerald Clay and Michael F. Nauyokas.

The panel could either decide the entire case, or refer parts of it back to court. The decision is expected in one to two months, said William Saunders Jr., attorney for Tatibouet.

Arbitration decisions can be appealed, but it is much harder to do so than in a regular lawsuit.

Tatibouet used to be ResortQuest's largest shareholder with a 10.7 percent stake, but in ResortQuest's April proxy statement, he was no longer listed as a principal stockholder. Tatibouet has also stepped down from ResortQuest's board of directors.

After filing the lawsuit, ResortQuest said it had placed Tatibouet on leave from his position as president of Aston. But Tatibouet's attorney Jim Bickerton disagreed, saying Tatibouet had voluntarily taken leave until he could resolve the dispute. According to his contract of employment, Tatibouet earns an annual base salary of $120,000, plus bonus and expenses.

Aston manages some 30 hotels and condominium resorts in the islands, two of which are owned by Tatibouet, the 80-room Aston Waikiki Beachside on Kalakaua Avenue and the 247-room Aston Coral Reef Hotel on Kuhio Avenue.

Tatibouet put the Aston Waikiki Beachside up for sale in February, saying it could potentially go for as much as $19 million.

In the third quarter, ResortQuest's income from Hawaii operations fell 31 percent to $2 million from $2.9 million in the year earlier, according to the firm's filing with the Securities and Exchange Commission. Revenue declined 13 percent to $6.2 million from $7.1 million, primarily because hotel occupancy fell.

ResortQuest's stock, traded on the New York Stock Exchange, closed down 8 cents to $4.99 today. The firm first offered its stock publicly at $11 a share in May 1998 when it bought Aston.