Legal Battle over Trump Hotel Lease Ropes in D.C. Restaurateurs

Neither the private Trump Organization nor the General Services Administration are talking publicly about still-unresolved issues surrounding President Trump’s unusual lease arrangement at the federally-owned building housing the Trump International Hotel.

So late Wednesday, a team of attorneys concerned about the president’s “unprecedented” deal in which, they say, he is both landlord and a tenant reaping benefits, took a new tack. They filed a tort complaint in the District of Columbia Superior Court on behalf of two D.C. restaurateurs alleging unfair competition.

Diane Gross and Khalid Pitts, who since 2008 have run the award-winning Cork Wine Bar and Cork Market & Tasting Room on 14th Street Northwest, appeared on Thursday at the National Press Club with attorneys with specialties in business law, the Freedom of Information Act and government procurement.

“It’s a business claim, that they’re being competed against unfairly by another local business, which just happens to be owned beneficially by the president,” said Scott Rome of the Veritas Law Firm. The Trump entity Trump Old Post Office LLC, he said, owns all the restaurants inside the building “and is directly competing with Diane and Khalid and all the rest of D.C. restaurants.” He cited the section in Trump’s lease signed in 2013 with GSA which states that “No ... elected official of the Government of the United States ... shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom.”

The “damage from competition occurs daily because of the lease with GSA,” Rome added, saying the lease is in breach and was not corrected after Trump’s surprising election victory, even though the lease “was set up with this possibility in mind.”

The complainants and the attorneys point to the many foreign dignitaries and political organizations that have “flocked” to book events at the Trump hotel as a way to “curry favor.” Even Trump himself has been there to greet some of them.

Washington “is a company town, and the president is the principal, so why wouldn’t one go to an event at a place the president is known to frequent?” asked Pitts. He and his wife, who employ 45 staffers, have watched their patronage flag since Trump’s election, they said, judging by normal expectations for such occasions as the inauguration.

When the couple started their restaurant and wine bar in 2008, “there were few restaurants in the neighborhood” within two blocks of the White House,” said Gross, who days she is a Democrat while her husband is an independent. “It has now exploded. We’re not strangers to competition -- we’re driven to succeed by a competitive environment.” But the current situation, she added, “is not a level playing field.”

The small-business owners and the attorneys declined to put a dollar figure on the damage, and are not seeking financial redress, only an injunction, attorneys said. They are not addressing the alleged breach of the lease, nor are they citing, as other legal challengers have, the emoluments clause of the Constitution, which prohibits office holders from receiving gifts from foreign governments, noted longtime Washington attorney and organizer Alan Morrison.

Possible remedies, said attorney Mark Zaid, could include Trump divesting himself of the hotel, resigning from office, or halting the functioning of the restaurants. He said it will be easy to serve papers on the Trump representatives inside the hotel, but tougher to serve Trump himself, who is named as a defendant. “Serving the president may be more difficult because I don’t want to be tackled by the Secret Service,” Zaid said.

Highly critical of Trump at the press conference was Steven Schooner, the Nash & Cibinic Professor of Government Procurement Law at The George Washington University Law School who has written widely on the issue. “This case draws from arguably the most dramatic conflict in the history of the presidency of the United States,” he said on Thursday. “The boss of the GSA is to be appointed by him. You couldn’t draft a better example for a law school examination.”

Schooner said the arrangements Trump has offered to remove conflicts of interest from his business holdings—setting up a trust run by his adult children and vowing to forward all the hotel profits to the Treasury -- are “in the same category as him not releasing his taxes -- nonsensical. The president and his family have shown themselves willing and eager to exploit public office for private gain. And there’s no doubt that Trump is the central beneficiary of the trust.”

GSA for its part, Schooner said, “knows it is wrong to continue it. We are witnessing a total abdication of responsibility, I assume because of fear or political pressure. It’s an issue of good governance.”

Other legal groups that have entered the fray on the Trump hotel, such as the ACLU and Citizens For Responsibility and Ethics in Washington, have not been seen to have legal standing, the Cork restaurant attorneys noted. This is one reason they filed in D.C. Superior Court.

Democratic lawmakers have repeatedly pressed GSA for a ruling on the Trump lease and continue plans for an investigation of the circumstances.

A GSA spokeswoman did not respond to inquiries by publication time. One of the agency’s key players in the issue, Public Buildings Commissioner Norman Dong, left the agency on Wednesday, The Washington Post reported.

The White House referred inquiries to the Trump Organization, which did not reply.