Flawed Casino Tower at Center of Vegas Trial

[mark handler]

Flawed Casino Tower at Center of Vegas Trial

LAS VEGAS — Oct 28, 2014, 7:37 PM ET

By KEN RITTER Associated Press

http://abcnews.go.com/US/wireStory/jury-selection-begins-vegas-strip-hotel-case-26523395

The Harmon Hotel tower was designed to soar 48 stories over MGM Resorts International's massive CityCenter complex, offering hotel guests and condominium owners unparalleled views at the heart of the Las Vegas Strip.

Instead, work stopped halfway in 2008, after inspectors found that steel used on the first 26 stories wouldn't support the remaining 22 floors.

While general contractor Tutor Perini Corp., its subcontractors and the casino company fought over who was to blame, the rest of the glitzy and glassy $8.5 billion development opened in 2009 on the CityCenter site.

On Tuesday, six years after problems were found, jury selection began in Nevada state court for a massive breach-of-contract trial with as much as $500 million at stake for the casino company that never opened the flawed hotel and condominium tower and the contractor.

"Perini and CityCenter have accused each other of breaching their contract," prospective jurors were told in a one-page case synopsis made part of a 35-page questionnaire. "Before coming to court today, had you read or heard anything about a lawsuit involving the construction of the Harmon Hotel at CityCenter?"

Attorneys for MGM Resorts and its subsidiaries and Tutor Perini and other plaintiffs, including steel companies and condo owners, have already fought pitched battles ahead of arguments before the jury that will be seated for what could be a yearlong trial.

Clark County District Court Judge Elizabeth Gonzalez started with surveys asking 6,000 prospective jurors whether they could spend a year hearing a trial. She whittled the list to 407 people based on those surveys and the questionnaires before lawyers for seven parties began final queries. They'll seat eight civil trial jurors and 12 alternates to hear the case. The process is expected to take about a week.

More than 3 million evidence exhibits were logged for the trial, and most will be presented in electronic form, court spokeswoman Mary Ann Price said. A courtroom in Las Vegas has been reconfigured and rewired to accommodate more than 35 lawyers and paralegal aides, leaving about nine seats for the media and public.

The case folds 12 lawsuits into one, with lawyers for Tutor Perini arguing that MGM Mirage failed to pay construction bills and the casino company arguing the contractor was responsible for the building flaws.

The sleek blue, glass cylindrical Harmon sat unused — a $500 million mistake wrapped with advertising for Cirque du Soleil shows — while inspectors called it an earthquake hazard and lawyers fought over whether it could be safely imploded.

Tutor Perini had contended the building that was built was structurally sound and could be fixed, and that MGM Resorts wanted the building demolished to bolster its position before trial.

Ultimately, Gonzalez decided that the Harmon could be dismantled piece by piece.

The 66-acre CityCenter development at Harmon Avenue and Las Vegas Boulevard includes three other hotels, a casino, a pair of condominium towers called Veer that tilt toward each other, and a convention center. It also features the upscale Crystals shopping center, with high-end shops such as Emilio Pucci, Hermes, Harry Winston, Tiffany, Cartier, Valentino and Versace.

 

[ICE]

Three million evidence exhibits, thirty-five lawyers and they figure to be done in a year?

 

[Wayne]

Re: Flawed Casino Tower at Center of Vegas Trial

Three million evidence exhibits, thirty-five lawyers and they figure to be done in a year?

They had to modify the courtroom to hold all of them too.

Since this is local to me I've been following it from the beginning. It all started when the local AHJ noticed the third party inspector approved rebar installations that didn't conform to the plans (not enough coverage). This kicked off further investigations of the concrete coverage of other concrete columns/beams. Imagine if this continued without intervention.

 

[chris kennedy]

Who where the architects and engineers? Why are they not named in the suit???

 

[conarb]

Since this is local to me I've been following it from the beginning. It all started when the local AHJ noticed the third party inspector approved rebar installations that didn't conform to the plans (not enough coverage). This kicked off further investigations of the concrete coverage of other concrete columns/beams. Imagine if this continued without intervention.

Good for the AHJ, I never see the AHJ challenge Special Inspections, in this case was it Special Inspections or were all inspections farmed out to third party inspection?

 

[Wayne]

Re: Flawed Casino Tower at Center of Vegas Trial

Who where the architects and engineers? Why are they not named in the suit???

It's not a design issue so they aren't named is my assumption.

Good for the AHJ, I never see the AHJ challenge Special Inspections, in this case was it Special Inspections or were all inspections farmed out to third party inspection?

In this jurisdiction third party does rebar, concrete, soil, steel, welding, fireproofing and duct detectors. I think I got them all. The local inspector was checking in on the third party and stumbled onto the issue.

 

[Mark K]

Chris

Why do you believe the architect and engineer should be responsible for the problem? It is a rare architect or engineer contract that has the design professional performing inspections.

The building official is supposed to approve the special inspectors. Did the special inspectors suffer any consequences for systematically missing the problem?

 

[conarb]

In this jurisdiction third party does rebar, concrete, soil, steel, welding, fireproofing and duct detectors. I think I got them all. The local inspector was checking in on the third party and stumbled onto the issue.

This is the system working, I recently had a customer (mechanical engineer) ask: "Why all these multiple layers of inspection, you paid for the building permit and now I am paying a fortune in Special Inspection fees?" Special Inspection firms have become very profitable companies, I've had them fight to get special inspections, I had a Geotech doing pier inspections constantly ask for epoxy and welding special inspections, in fact he refused to issue his report until the owner gave him the welding inspections, my owner fired him and hired another geotech because of the blackmail. Special welding inspections are very profitable.

 

[mark handler]

ChrisWhy do you believe the architect and engineer should be responsible for the problem? It is a rare architect or engineer contract that has the design professional performing inspections.

The building official is supposed to approve the special inspectors. Did the special inspectors suffer any consequences for systematically missing the problem?

Are the plans and calcs faulty or just the construction and inspections?

Once had a fabricator swich "floors" in a five story metal building. lighter steel was shipped on lower levels.

Crane Operator noticed the "extra" weight....

 

[mjesse]

This is the system working, I recently had a customer (mechanical engineer) ask: "Why all these multiple layers of inspection, you paid for the building permit and now I am paying a fortune in Special Inspection fees?" Special Inspection firms have become very profitable companies, I've had them fight to get special inspections, I had a Geotech doing pier inspections constantly ask for epoxy and welding special inspections, in fact he refused to issue his report until the owner gave him the welding inspections, my owner fired him and hired another geotech because of the blackmail. Special welding inspections are very profitable.

I know where you're going, and I don't completely disagree, however...

In the case of a high rise building as discussed in this thread, I think it's unreasonable to expect a local official to be onsite for the extended periods needed for such specialized inspections. Even if they were, the jurisdiction would need to have specific experts on staff to adequately handle the necessary inspections.

Requiring third-party special inspection reports is a benefit to all parties. Having an AHJ willing to point out an error/oversight by the special inspector, is an even bigger benefit that proves the system does work (in a good way, not in the way you cynically describe)

Are there ridiculous abuses of the special inspectors and associated fees? Of course, you are in California after all. What did you expect?

 

[conarb]

Requiring third-party special inspection reports is a benefit to all parties. Having an AHJ willing to point out an error/oversight by the special inspector, is an even bigger benefit that proves the system does work (in a good way, not in the way you cynically describe)Are there ridiculous abuses of the special inspectors and associated fees? Of course, you are in California after all. What did you expect?

In Germany the AHJs have certified welding inspectors who do all inspections, as far as continuous inspections I am beginning to question the value, in the end they always seem to want to do UT inspections anyway, I am now saying that I don't need the continuous shop and field inspections, I'll just pay for UT inspections when all is done, and I now think that Special Inspectors should be regulated after the experience of the blackmail attempt.

 

[Wayne]

Re: Flawed Casino Tower at Center of Vegas Trial

ChrisThe building official is supposed to approve the special inspectors. Did the special inspectors suffer any consequences for systematically missing the problem?

Yes they did. http://m.reviewjournal.com/business/harmon-hotel-inspector-hit-hard

I'll let you decide if it was appropriate.

In this jurisdiction architects and engineers only do observation reports not inspections. It's been this way for a long time. On large casino projects and the like the A/E probably only comes out when there is an issue that needs a drawing for the AHJ.

I hate casino work by the way. It's usually "come out and see what I built so you can draw it" kind of work.

 

[ICE]

Steel details on high rise buildings are such that to inspect them takes a long time. From the article I gather that the fault was inadequate concrete cover. Inspecting that takes hardly any time at all.

I have done a few complicated buildings and can tell you that the average AHJ inspector isn't going to verify every bar placement but the concrete cover is a no brainier and can make all the difference in the World.

There must have been a disconnect in inspections by the AHJ. I always go look at what I am accepting whether there is a deputy inspector or not. I get involved and ask questions. If the deputy is slow to answer or has no answer, I have been known to have that deputy replaced. I can count the number of times that this has happened on one hand but it is up to the AHJ to police the deputies.

One way to approach the inspection is to find a busy spot and quiz the deputy and rod buster about everything. If they get that part right, you can gain confidence that they are on top of the simple stuff.

 

[mjesse]

One way to approach the inspection is to find a busy spot and quiz the deputy and rod buster about everything. If they get that part right, you can gain confidence that they are on top of the simple stuff.

Agreed, quickly separates the pros from the schmos

 

[mark handler]

Perini to receive approximately $189.5 million on lien claims

http://www.casinocitytimes.com/article/sec-filing-perini-to-receive-approximately-$189-5-million-on-lien-claims-63886

18 December 2014

LAS VEGAS -- Tutor Perini Corp., the general contractor behind CityCenter and a party in a massive construction defect case involving the development’s Harmon Hotel, said Wednesday it would receive “total net settlement proceeds” of approximately $189.5 million on its lien claims.

None of the lawsuit parties have commented on the settlement because of a nondisclosure agreement, but the contractor, in a filing with the U.S. Securities and Exchange Commission, all but claims victory over the CityCenter development and MGM Resorts International, which owns the 67-acre complex in a 50-50 joint venture with Dubai World.

In the filing, Perini said the settlement — reached after 15 months of negotiations that included two marathon sessions earlier this month — “resolves Tutor Perini’s and the subcontractors’ lien claims against CityCenter and MGM, and all of CityCenter’s counter-claims against Tutor Perini and the related subcontractors.”

A spokesman for the contractor did not return a phone call Wednesday.

On Tuesday, MGM Resorts, in its own filing with the SEC, said the company would pay $173 million to resolve the lawsuit, with $20 million going to CityCenter and $153 million to Perini.

An MGM Resorts spokesman said the company wouldn’t comment beyond the SEC filing.

The Clark County District Court lawsuit began in 2010 and involved more than $400 million in damage claims. The trial was expected to last a year.

The planned 47-story Harmon hotel and condominium project was the only piece of the CityCenter complex not completed. Construction stopped at 26 floors after construction defects were found in 2008.

A structural engineer hired by MGM Resorts determined the building was unsafe and could topple if a 7.7-magnitude earthquake hit Las Vegas. Demolition is underway and should be completed by summer.

MGM Resorts blamed Perini for the Harmon’s failure and refused to pay construction costs for the unfinished hotel. Perini counter-sued, saying MGM’s designers were at fault for the Harmon, which was to have been the gateway to the CityCenter complex.

The building, never more than a shell behind a glass facade often wrapped with advertisements for CityCenter attractions, sat for years while the parties argued in court over its future, and whether it should remain standing as evidence or demolished.

In its filing, Perini said it would make cash contributions of approximately $11 million to CityCenter in addition to a waiver of a $2 million insurance bonus to resolve all CityCenter claims.

MGM Resorts said its SEC filing the company “prior Harmon-related insurance settlement proceeds of about $85 million” will result in total settlement proceeds to CityCenter of approximately $195 million on its Harmon construction defect claims.

Approximately $20 million will be a “contribution” from MGM Resorts.

Under the settlement agreement, “together with previous settlement agreements relating to the non-Harmon related lien claims,” MGM Resorts “has made or will make” cash payments of approximately $153 million to Perini to resolve the non-Harmon-related lien claims.

The company said the condominium proceeds became available to fund construction lien claims after the Perini lawsuit was settled.

Parties involved in the settlement include Century Steel Inc., whose subcontract was assigned to Pacific Coast Steel during construction, and CECO Concrete Construction.

Only a small portion of the case involving Show Canada Industries Inc. remains unresolved.

That matter will be heard by District Judge Elizabeth Gonzalez, who has been presiding over the case, during a bench trial next year.