Lawsuit Could Delay Reopening of Queen Mary : Business: An investment group that sought to buy the ship says the city illegally awarded a 5-year lease. But officials say minor technical errors are not cause to invalidate the pact.

Officials fear that a lawsuit filed this week could torpedo efforts to quickly reopen the Queen Mary.

The Queen Mary Preservation Trust, an investment group that wanted to buy the ship, accuses the City Council of illegally awarding the five-year lease to run the tourist attraction.

Preservation Trust, which includes Long Beach and Orange County business people, filed the lawsuit Monday in Los Angeles Superior Court seeking to invalidate the lease. A hearing date had not been set, officials said.

“I always worry when a lawsuit is filed,” City Manager James C. Hankla said. “Anything can happen in a court of law.”

Queen Mary Partners Ltd. plans to reopen the ship later this month or in early February, managing partner Joseph F. Prevratil said.

“My hope is that (the lawsuit) doesn’t delay anything, and I don’t anticipate it will,” Prevratil said. “I don’t know what their game plan is.”

Preservation Trust sued because it contends that its proposal was not given fair consideration, a spokesman said. The group offered $1 million for the ship and planned to run it in Long Beach.

“The process needs to be reopened and held in a complete open forum pursuant to law,” said John Thompson, an Orange County developer and spokesman for the group.

The lawsuit alleges that the council violated state law by not properly announcing a Dec. 8 meeting at which city officials met privately with prospective operators and buyers of the ship. Preservation Trust was represented at the meeting.

After the meeting, city officials announced that they would negotiate exclusively with Prevratil and eliminated from consideration Preservation Trust and two other groups that wanted to buy the ship.

The City Council formally awarded the lease to Prevratil’s group on Dec. 22.

The lawsuit also alleges that the council violated the City Charter by not seeking formal bids.

City Atty. John R. Calhoun said city officials may have made minor, technical errors in the way it announced the Dec. 8 meeting, but that they were not cause for invalidating the lease.

And Calhoun said the City Charter does not require formal bids on the Queen Mary lease.

The Queen Mary has been closed since Dec. 29, when Walt Disney Co. ceased operations after deciding not to renew its lease. Disney, which began operating the Queen Mary in 1988, reported losing up to $10.8 million a year on the ship.

Prevratil has spent the past two weeks contacting investors. To finalize the lease with the city, his group must deposit $2 million in an operating fund. It also must secure a $3-million loan guarantee as a reserve. Queen Mary Partners will pay the city $165,000 the first year and $240,000 a year thereafter, along with a percentage of food and beverage revenues.

Prevratil, who ran the Queen Mary in the mid-1980s, said his group should be ready to sign the lease with the city at the end of next week. He said he plans to inspect the ship on Jan. 23 and to reopen its restaurants, bars and tours shortly thereafter.

The Queen Mary Hotel would resume operation within 60 days after the ship reopens, he said. In addition, Prevratil plans to install children’s rides near the Queen Mary and to stage concerts and other events in the Spruce Goose dome.

Prevratil said Queen Mary boosters were overly optimistic in thinking that the City Council could award a lease on Dec. 22 and that a new operator could step in the next week.

“When you buy a simple house it takes at least 30 days to close it,” Prevratil said. “This is a very large transaction.”