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Gaming Guru

Tim O'Reiley

Architectural, engineering firm drawn into Harmon Hotel

12 February 2013

LAS VEGAS -- CityCenter Holdings LLC's new legal team recast the massive construction defects litigation surrounding the unfinished Harmon Hotel by pulling an architectural and an engineering firm into the case for the first time.

Court papers filed late Friday in Clark County District Court contended that engineer Halcrow Yolles missed numerous improperly installed pieces of the Harmon's steel skeleton during its inspections of the project and did not report them for repairs before they were encased in concrete. In addition, a consultant hired by CityCenter found three instances where Halcrow's blueprints were substandard.

AAI Architects Inc. also became a defendant because its contract for designing the Harmon gave it direct responsibility for Halcrow's work.

Until now, CityCenter had pinned the entire blame for the Harmon fiasco on general contractor Perini Building Co. Inc., a subsidiary of Tutor Perini Corp.

Through nearly four years of hearings and papers, Perini has admitted to some mistakes it would fix under warranty but has said most of the problems stemmed from bad plans it could not control.

At a hearing in July, for example, CityCenter attorneys said Perini had set a price of $20 million to completely fix the Harmon but said only $4 million was due to its work.

An attorney for Perini declined to comment on the new filing. Representatives of Halcrow, a unit of CH2MHill, based in Englewood, Colo., and Toronto-based AAI, could not be reached for comment.

Through a spokesman, CityCenter said the "design issues are totally unrelated to construction defects."

Perini filed the lawsuit to force the payment of unpaid bills, now amounting to $191.3 million, from building CityCenter, the $8.5 billion crown jewel of MGM's Strip portfolio. Perini is owed about $120 million, with the rest due to subcontractors. CityCenter has countered by contending that it is due at least $300 million because its investment in the defect-riddled Harmon is a complete loss.

The two antagonists have sparred repeatedly over CityCenter's storyline that the Harmon was truncated at the 26th floor out of a planned 48 due to the construction problems. Perini has argued that the defects are a scapegoat because the 607 hotel and condo units no longer make economic sense.

In recent weeks, CityCenter has changed its lineup of lawyers as the case has ground to a halt while certain pieces of it have been appealed to the Nevada Supreme Court. A jury trial scheduled to start on June 24 on at least some issues has been scrubbed.

"The very real issues in this case seem to have gotten lost in some of what I think are collateral issues," said CityCenter attorney Mark Ferrario at a Feb. 1 hearing.

Speaking to Clark County District Judge Elizabeth Gonzalez, he added, "I think by the time we get to trial this isn't going to be as big of a mess as you think. I also think there's going to be an opportunity to resolve some issues once we can get in here and having some constructive dialogue instead of griping about everything."

From the bench, Gonzalez has urged both sides to settle. A full-blown trial could easily last a year, attorneys estimate.

Prior to filing its latest version of a countercomplaint, CityCenter commissioned the engineering firm of Raths, Raths & Johnson to review Halcrow's work. "[I]t is my belief that [Halcrow] failed to observe but should have observed critical missing, misplaced or cut reinforcing steel in link beams at numerous locations," wrote senior principal Otto Guedelhoefer III in a Feb. 7 report.

Link beams are important parts of a building's steel reinforcement.

In addition, Guedelhoefer found that Halcrow improperly designed three particular elements, including steel beams in the elevator lobbies that did not meet building code specifications for resisting certain structural stresses.