Published September 2003

Money woes for
Howard Johnson operator

By Eric Fetters
Herald Business Writer

The company that operates the Howard Johnson Plaza Hotel in Everett has filed for Chapter 11 bankruptcy protection in the midst of a legal battle with the hotel’s owner.

Everett Pacific Hotel Associates LLC, which has leased and run Everett’s largest hotel since 1994, says in its bankruptcy filing that it has less than $50,000 in assets and up to $1 million in debts.

Meanwhile, Pacific West Hotels Inc., which owns the Howard Johnson Plaza, is moving ahead with a 3-year-old lawsuit against Everett Pacific.

Despite all the behind-the-scenes activity, neither the Chapter 11 filing nor the lawsuit is affecting the Howard Johnson’s day-to-day operation, said Jim Costa, the hotel’s general manager.

“I can say it’s 100 percent business as normal. Nothing will change from that in the foreseeable future,” Costa said. In fact, he’s expecting 2003 to be the hotel’s best year since 2000, and he’s optimistic about what 2004 will bring.

Lawrence Horwitz, a principal with Seattle-based Everett Pacific, could not be reached for comment about the bankruptcy reorganization. Horwitz also is chairman of Canadian-based AFM Hospitality Corp., a large hotel franchiser and management firm.

Todd Boysen, vice president of Pacific West, also could not be reached for comment.

In February 2000, Pacific West sued Everett Pacific on charges of breaching its original lease and a number of other accusations, according to King County Superior Court documents. In August of that year, the two parties signed a complex settlement agreement.

Among other things, Everett Pacific agreed to purchase the hotel from Pacific West as part of the settlement, the court documents state.

Not only did that not happen, but Everett Pacific failed to make its lease payments for December 2002 and January and February of this year, Pacific West’s attorneys allege in court filings. They also charge Everett Pacific failed to pay back taxes on the property.

For that reason, they are again suing for breach of contract and asking for up to $10.2 million in payments from Everett Pacific.

On June 23, King County Superior Court Judge Helen Halpert ruled that Everett Pacific had no good reason to terminate its agreement to purchase the hotel. Everett Pacific had argued that the local hotel market was adversely affected by the Sept. 11, 2001, terrorist attacks and the struggling economy.

Even though “there is no question that the Everett hotel industry was drastically impacted by recent events,” that was not a reason to allow Everett Pacific out of its agreements, Halpert ruled.

Halpert said the company had breached its lease and purchase agreements and thus officially ended them. The judge left the damages to be paid to Pacific West to be determined at trial.

Built in 1981, the eight-story Howard Johnson Plaza at 3105 Pine St. is Everett’s largest hotel, with approximately 250 rooms, and the area’s largest convention space. According to Snohomish County records, the hotel has an assessed value of $6.7 million.

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