Kiwi vineyard owner Glenn Schaeffer losses appeal, ordered to pay Las Vegas execs

Schaeffer was the majority shareholder of Mahana Estates, which was put up for sale in late 2018. Photo / File

The owner of a Nelson vineyard ordered to pay US$2.3 million ($3.3m) to two Las Vegas executives has lost his recent appeal.

In 2018 the High Court ruled that Glenn Schaeffer, an American-born hotelier, had made negligent misstatements to James Murren and Daniel Lee and was liable for them.

Murren is chief executive of MGM Resorts International, a multi-billion dollar Las Vegas hospitality business, while Lee is the boss of a casino company in the same city.

The pair brought a lawsuit against Schaeffer - who has donated substantial sums to the arts in New Zealand - in 2015.

Murren and Lee said they and others discussed forming a partnership with Schaeffer that would own a vineyard and winery.

After a 2008 approach from Schaeffer, Murren said he and his trust had personally paid Schaeffer US$1.6 million (NZ$2.3m) and Lee said he paid US$700,406.

The two alleged that false representations were made to them that they would be part owners of the vineyard.

The High Court ordered Schaeffer to pay up for damages sought plus interest - US$1.6 million to Murren and US$700,406 to Lee.

In a just-released judgement, Schaeffer's appeal to the judgment was dismissed.

Schaeffer challenged the fact that the Judge applied New Zealand law in his decision, rather than applying Nevada law.

But the Court of Appeal agreed with the earlier High Court judgement.

"The Judge Mr Schaeffer liable in the tort of negligent misstatement and under the causes
of action brought under the Fair Trading Act and the Nevada Deceptive Trade Practices
Act," the decision said.

"He dismissed the claims in deceit and for fraudulent misrepresentation. In doing
so, the Judge applied New Zealand law, save as regarded the claim under Nevada
legislation.

"As regards aspects of that claim, the Judge applied Nevada law as put
before him by Messrs Murren and Lee's expert witness, Judge Pro, a retired Federal
Court Judge from Nevada.

"For the balance, for example, as regards duties owed by partners to each other, he applied New Zealand law."

Schaeffer's appeal was dismissed and he was ordered to make payments toward the outstanding sums to Murren and Lee.

Formerly the head of the Mandalay Resort group in the US, Schaeffer was the majority shareholder of Mahana Estates - one of New Zealand's biggest winery-based tourism and hospitality operations.

Mahana was tipped into receivership in September 2018.

In their first report, receivers said the business owed about $20 million to a related company that developed the vineyard and winery. Rabobank was also owed $3.2m, the receivers from KordaMentha said.