A Delaware judge ruled yesterday that co-op owners at the Watergate East were within their rights when they voted this summer to reject the offer of a D.C. developer to purchase property as part of a plan to convert the Watergate Hotel into more luxury co-ops.
The decision by William B. Chandler III of the Delaware Court of Chancery does not block the co-op conversion, but it could complicate it for the developer, Monument Realty LLC.
Michael J. Darby, a principal at Monument, did not return repeated calls to his office and cell phone. He has said that even if he didn't get the small piece of property in dispute, he would go forward with his plans to renovate and convert the hotel to co-ops.
Still, the 17-page decision was a victory for those who oppose the conversion. "It's delightful. It's delicious. It's de-victory," said William Diedrich, who lives in Watergate East and is against the sale.
Jack H. Olender, a malpractice lawyer who also lives in Watergate East, said, "We feel vindicated, especially because the people on the other side were so gung-ho to sell the property against the wishes of the membership."
The residents of Watergate East, as a group, have long owned a small space in the 251-room hotel, now used as parking, meeting rooms and administrative offices. Monument offered $4.25 million to buy the space and use it for parking spaces to be offered to the purchasers of the new co-ops it plans to develop.
Watergate East residents are bitterly divided over whether to sell that space and have been battling about it since January.
The residents have held several contentious votes on the matter -- including one overseen by the League of Women Voters. The opponents won a vote on June 9, but a majority of the co-op board voted to override that vote of residents and approved the sale. Yesterday's court decision ruled that the residents' vote was the "definitive act . . . and that the membership has declined to accept the Monument offer."
The Watergate East co-op board said it will speak with its attorneys today to study the implications of the decision. "It appears that the contract we signed is probably null and void," said Daniel F. Sheehan, board president.
Monument has put down a deposit on the property owned by the Watergate East residents, and that money is in escrow, Sheehan said. If Darby decides not to fight the judge's ruling and pulls out of the deal, he will get his money back.
Some Watergate East residents are also working on another front to block the hotel conversion. They have filed an appeal to the city's zoning commission to try to stop Monument. Their case has not yet been heard.