SEASIDE — Masudur Khan, a hotelier and investor involved with several projects on the North Coast, is suing his former business partners for $2.5 million.

In court documents, Khan and his Portland-based attorney, Edward Choi, claim his former partners violated operating agreements and failed to provide fair market value for several companies.

Masudur Khan

Masudur Khan welcomed visitors to the ribbon-cutting of the SaltLine Hotel in 2020.

Until December 2021, Khan and the defendants were partners in projects in Seaside, including the SaltLine Hotel, the former City Center Hotel, the Inn at Seaside and the River Inn.

Khan, who received a salary as managing director of the SaltLine Hotel, was let go from the partnership in December 2021.

Acquisitions in Seaside

Khan moved to Oregon in 2009 when his wife, Taslema Sultana, received a job at Intel. At that time, he entered the hotel business in Seaside.

To fund his initial investments, Khan brought in former classmates and family members as partners.

Only one among the six people named in the lawsuit had any experience in the hospitality or hotel industry, according to the complaint filed in May and amended in December.

Doel LLC, one of the defendants named in the suit, was formed in June 2009 and acquired the Inn at Seaside Hotel.

The Inn at Seaside Hotel was successful, and Khan looked to expand. In 2012, he and his partners formed a separate company, Seaside Lodging LLC, to acquire the Royale Motel, which was razed and opened in 2015 as the River Inn at Seaside.

Khan and his partners formed City Center LLC in 2013 to acquire the City Center Motel, Seaside’s oldest motel, which had opened in 1938. City Center Motel continued to run as a budget motel for several years until Khan decided to construct a new building on the site.

Construction of the new SaltLine Hotel began in September 2019 and continued through the coronavirus pandemic. Khan oversaw all of the construction, according to the complaint.

In July 2020, the SaltLine Hotel opened, with Khan as its managing director and a membership interest in City Center LLC.

Khan had a rising profile in hospitality. He served as the chairman of the Oregon Restaurant & Lodging Association and was named the association’s lodging operator of the year in 2015.

In his complaint, Khan said he was abruptly informed in December 2021 that he would be terminated without cause from his position as managing director of the limited liability companies.

While he disputed the termination decision, Khan stated in the complaint it would be best if they “went their separate ways and ceased the business relationship, given the apparent disagreements and irreconcilable differences of opinion and interests between the members.”

In January 2022, he voluntarily withdrew from the partnerships and requested a buyout of his membership interests for Doel LLC, City Center LLC and Seaside Lodging LLC.

Operating agreements were not revalued or adjusted, Khan’s complaint said, although partners received a purchase offer of $32 million.

Members of the limited liability companies rejected an offer to revise the buyout offer in March.

Counterclaim

Carter Mann, a Portland-based attorney for the defendants, wrote in a motion for summary judgment filed in early September that Khan’s “ ... theory that the defendants are required to buy him out is fatally flawed as a matter of law.”

In their counterclaim, the defendants said that while he was managing the SaltLine and other properties, Khan managed and maintained competing hotels, including the Inn at the Prom, the Gilbert Inn and the Inn at Haystack Rock. The counterclaim also alleges that Khan used LLC assets and funds to pay for work on his own hotels, directed LLC employees to conduct work at his hotels and spent time that should have been spent managing the LLC’s properties. Khan’s actions constituted a breach of fiduciary responsibility, according to the filing.

The motion for summary judgment on behalf of the defendants has been scheduled for Circuit Court in April.

Defendants seek dismissal of all of Khan’s claims, Mann said in an email.

Khan and his lawyer did not return requests for comment.

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