Tutor Perini and MGM Reach $190M Settlement on the Law Vegas Harmon Tower

As previously reported, the Harmon Tower, a new unfinished building located on the Las Vegas strip purportedly had such substantial structural defects that it was slated to be demolished.  Read our previous blog post here.  Seattleites are well-acquainted with new buildings being razed before their time.  The McGuire Building, a 25-story apartment in Belltown built in 2001, was taken apart piece-by-piece in 2011 and 2012 due to corroding post-tension rods throughout the concrete structure.

The Harmon Tower is part of an $8.5B City Center in the heart of Las Vegas and is co-owned by MGM Resorts International and Dubai World.  The general contractor on the project was Tutor Perini (formerly Perini Corporation), one of the largest general contractors in the United States.  Tutor Perini is headquartered in Sylmar, California and works on many high-profile construction projects throughout the United States and Canada.  For 2013, Tutor Perini’s revenue was approximately $4.2B.  Tutor Perini is presently the joint-venture partner of Dragados, who together form Seattle Tunnel Partners (“STP”).  STP is presently struggling to rescue Big Bertha (the tunnel boring machine), which sits broken 120 feet below the surface on the Alaskan Way Viaduct Project.

The 48-story Harmon Tower was halted at 26 stories after structural defects were discovered.  The whole hotel is currently being demolished.  While Tutor Perini has insisted that the building is structurally sound, MGM filed a lawsuit alleging shoddy construction in 2010.  Under a “confidential” settlement agreement, MGM is paying Tutor Perini $150M to satisfy construction lien claims “not related to the Harmon Building.” 

On December 17, 2014, however, Tutor Perini filed what it called a “clarification to MGM’s filing.”  The construction company said it is receiving net proceeds of $189.5M to settle all of its City Center lien claims.  That includes prior proceeds of $51M from City Center and an $11M “cash contribution” the construction company will put back into the project.  Tutor Perini said that the agreement settles all claims and counterclaims filed by all persons, including various subcontractors.  None of the parties admitted any wrongdoing as part of the agreement.  It is noteworthy that the Tutor Perini’s stock closed up $1.25 (or 6%) to $21.95 per share on the New York Stock Exchange after news of the settlement broke.

The lawsuit in Las Vegas spawned a number of other lawsuits, including a subcontractor claim against the structural engineer that was reported in our March 4, 2014 blog article available here.

Comment:  Perini was founded in 1894 by a stonemason named Bonfiglio Perini.  Under the direction of the founder’s grandson, Lou Perini, the company moved into the real estate business, developing 4,500 acres in Palm Beach County, Florida.  Later real estate ventures were less successful, leaving the company deeply in debt in the 1990s.  In 1997, Perini recapitalized, passing control to a California-based investor group led by Los Angeles-based construction executive Ron Tutor and investor Richard Blum.

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