Future of trial over CityCenter’s construction uncertain

The future of the trial over CityCenter's construction was scrambled on Wednesday after Clark County District Judge Elizabeth Gonzalez allowed the owners to test the Harmon hotel for more defects but with a list of caveats including one that would preclude its demolition for the indefinite future.

As part of a two-week hearing in July, Gonzalez gave permission to CityCenter, managed and half-owned by MGM Resorts International, to implode the unfinished 26-floor tower on the Strip.

"The conclusion (in July) that adequate testing has been done is apparently ... not well founded," said Gonzalez, explaining one of her conditions.

CityCenter also would have to pay legal and expert fees tied to the demolition issue, possibly running several million dollars, incurred by several construction companies that fought to keep the Harmon standing. Further, the case would be split into two separate jury trials, one concerning non-Harmon disputes that would start on June 24 and another focused on the Harmon that would begin about a year from now.

Attorney Steve Morris said CityCenter would decide in a week whether or not to accept the package.

In the meantime, he said he was planning to appeal to the Nevada Supreme Court a ruling in July regarding an arcane but crucial legal technique called extrapolation, which precipitated the turn of events. That, in turn, could lead the builders, led by general contractor Perini Building Co., to appeal the original demolition approval.

Both sides declined to comment afterward.

Extrapolation works much like political polling, predicting a result for the whole based on a representative sample. However, Gonzalez ruled in July that the way CityCenter consultants picked the pieces of the building to test did not meeting the judicial standards for extrapolation and disallowed it.

The financial consequences would be major. Using a sample number in court, Morris said, extrapolation would open the way for CityCenter to recover $200 million in damages from the contractors, although he expects the actual number to run higher. Without extrapolation, CityCenter could win an award based only on the actual flaws already uncovered, amounting to 27 percent of the whole or about $54 million.

In September, CityCenter proposed testing hundreds more locations to create a larger sample as a way to overcome Gonzalez' objections to its previous work. That was the plan on the table Wednesday.

In one part of her ruling, however, she declined to state ahead of time whether the new testing method would pass muster.

To the contractors, the fresh testing amounted to a do-over after CityCenter's first attempt fell short and would put them at a disadvantage.

In the broader dispute, Perini has claimed $191 million in unpaid bills for work on CityCenter. Much of the work involved the Harmon but comes in numerous other parts of the $8.5 billion lodging, gaming and shopping complex. CityCenter has requested reimbursement for allegedly defective construction, much of it tied to the $275 million spent on the Harmon before work halted.

Contact reporter Tim O'Reiley at
toreiley@reviewjournal.com or 702-387-5290.