Stockton free to sell Showboat, judge rules

Stockton University is free to sell the troubled Showboat casino hotel property in Atlantic City to whomever it wants, a judge ruled Monday, freeing the school from a sales agreement with Florida developer Glenn Straub.

Stockton president Harvey Kesselman said Monday that the university had "interested buyers."

"The bottom line is that Stockton University is now free to market and sell the Showboat property, with no further restrictions or involvement" from Straub's company, KK Ventures, Kesselman said in a statement. "We are confident that this ruling will lead to an excellent outcome for the university's students, faculty, and staff, and for the residents of Atlantic City."

Straub plans to appeal the decision, his attorney said.

Stockton agreed in April to sell the property to Straub for $26 million, with a 90-day period in which the university could try to resolve complicated legal questions that had derailed its plans to establish a campus there.

If the sale did not go through by July 2, the deal was supposed to be off.

Straub sued the university on July 1, saying Stockton had entered into the contract in bad faith and had not done its part to try to clear the legal impediments. KK Ventures sought an indefinite extension of the sales agreement while other legal problems were worked out.

Superior Court Judge Julio L. Mendez said in Monday's ruling that there were no specific actions that Stockton failed to do.

"If a specific course of conduct was contemplated and intended by both parties, it should have been expressly included in the contract, and it was not," Mendez wrote.

Straub's lawyer, Stuart J. Moskovitz, agreed Monday that there were no specifics in the contract - "He's absolutely right" - but said that acting in good faith, as implied in every contract, would have included pursuing a resolution of the legal issues.

"We expected them to take the steps anybody would have expected them to take - the steps they told us they would take," Moskovitz said.

Moskovitz said Straub, who this year bought the Revel casino hotel after a legal battle, still wants to buy the Showboat property. But, he added, his client is wary of spending $26 million on a property that cannot be used while it remains in legal limbo.

The judge had previously issued a temporary restraining order preventing Straub from interfering with Stockton's attempts to find new buyers for the casino property. He made that permanent Monday.

He also ruled that the 90-day contract had properly ended, dismissing Straub's complaint and freeing Stockton to sell the property.

Straub will get back the $26 million he had placed in escrow. Stockton will submit a list of attorney's fees to the court, and Mendez will determine compensation.

Monday's ruling does not resolve the legal issues that surround the property, including conflicting restrictions on the site's use.

After Stockton bought the Showboat property for $18 million in December, the parent company of the Trump Taj Mahal casino next door said it would enforce a 1988 covenant that says the Showboat site must be a casino.

That brought to a halt Stockton's plans to create a residential campus there.

Caesars Entertainment also had placed a deed restriction on the Showboat property when the company sold it to Stockton saying the Showboat could be used for anything except a casino.

A number of other complications have added to the mess, including Caesars' subsequent bankruptcy. Stockton has filed claims in the bankruptcy litigation.