Question of the Day May 26, 2015
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Q:I see that the demolition of the Harmon Hotel is proceeding. I know there were a number of lawsuits between the developers and the builders. Are they at an end, or are any still in contention? Also what, if anything, happened to those county inspectors who approved the continued construction of this fiasco? In sum what was the end result for each of the parties?
A:After months of wrangling and posturing, lawsuits and countersuits, the Harmon Hotel litigation ended in speedy and anticlimactic fashion last Dec. 16. On what was to have been the opening day of the tantalizingly delayed and much-anticipated trial, MGM Resorts International and general contractor Tutor Perini came to a resolution brokered by Chief District Judge Jennifer Togliatti. Jurors gasped, having been subjected to six weeks of jury selection. (Two days were set aside for 14 hours of opening statements and 100 banker’s boxes were required just to contain the exhibit list.) The settlement was meant to be confidential but details leaked almost immediately, thanks to a Securities & Exchange Commission filing that MGM was obliged to submit.
CityCenter received $110 million from contractors, insurers and sundry third parties – including MGM. Since MGM co-owns CityCenter with Dubai World, this created the surrealistic scenario of MGM paying $20 million in settlement money to itself. It was also obliged to pony up $153 million to Tutor Perini for "non Harmon-related liens." MGM was able to lay its hands on some of the settlement dough straightaway, having $58 million lying in escrow from condo sales at CityCenter. In turn, Perini paid MGM $160 million, a tidy sum that was just banked early this year.
The only holdout from this group hug was subcontractor Show Canada, which is suing Tutor Perini on an unrelated matter involving an Aria hotel-casino showroom. It opted for a non-jury trial.
The inspectors were neither employees nor subcontractors of Clark County. They were hired by then-MGM Mirage – a Clark County requirement attributable to manpower shortages, according to the Wall Street Journal’s Alexandra Berzon, who covered the Harmon kerfuffle extensively for the Las Vegas Sun (and won a Pulitzer Prize for her efforts). Converse Consultants was the firm in question and it "repeatedly filed rebar inspection reports indicating there were no problems," Berzon reported. The faulty structural steel was discovered by the hotel’s engineering firm of record, Halcrow Yolles, too late for the problem to be remediated.
Scott Edberg and Joseph Glenn Laurente were the Converse inspectors at fault. The county found that they had missed "severely deficient items." Said county Director of Development Services Ron Lynn, "the number of rebar was wrong and in some places it was in the wrong place." One at-fault inspector (Edberg) left Converse and the other was reassigned. Edberg was subsequently dropped from a Clark County roster of qualified inspectors, while Laurente was, in effect, demoted from a reinforcing-steel inspector to a soils inspector. Of Edberg’s resume, vetted by Clark County, Berzon discovered, "It listed no dates he attended school. It listed no educational degrees. It did not name any business that had ever employed him, or list the locations of projects where he had worked, as an inspector."
After an administrative hearing, it was determined that the two inspectors had deliberately falsified 62 reports, enabling them to cut corners on their examinations of the project. The county also found that Laurente and Edberg had not been properly trained, with Laurente confessing that he had never read construction plans before detailed to the Harmon. "I feel there’s a managerial deficiency here as well as direct inspector deficiency," said Lynn.
Without admitting culpability, subcontractor Pacific Coast Steel, which installed the faulty rebar, paid $14,105 in administrative fees to the Contractors Board. Converse was also fined and required to institute remedial measures that included rotating project inspectors between sites. Converse was also suspended from undertaking new projects for six months.