Hsieh lands in court over plumbing problems at condos

Tony Hsieh, who has crusaded to revitalize downtown Las Vegas, has landed in court because of plumbing problems in one of his condominiums.

Continental Insurance Co. has sued Hsieh and several others for reimbursement of the $504,000 it paid to repair water damage to The Ogden condo tower, allegedly caused when a worker knocked off a sprinkler head in April 2012. The mishap occurred in unit 2509, one of a dozen top-floor residences leased by Hsieh and Jennifer Pham for a combined $24,190 a month.

The units were designated for use by employees of Zappos.com, the Amazon.com subsidiary where Hsieh is CEO. Court documents recount the scene of several Zappos employees frantically wielding brooms to try to keep the water from cascading into the hallways after the leak.

How far the case will go is uncertain. At a Friday hearing, Clark County District Judge Elizabeth Gonzalez raised concerns that a piece of evidence, the damaged sprinkler head, has gone missing.

In a broader context, she questioned the litigation’s basis.

“This is silly,” she said. “Can I send you to a settlement conference?”

Attorneys for both sides agreed to meet to try to reach a deal in mid-December.

In conjunction with his downtown redevelopment efforts that have included moving Zappos to the old City Hall, Hsieh and Pham leased the condos in 2011. Attorney David Carroll, representing both of them, declined to detail Pham’s background or explain her ties to Hsieh. Kim Schaeffer, a spokeswoman for Hsieh’s Downtown Project, the umbrella for his redevelopment efforts, would not comment on the case.

In a Google search for Jennifer Pham, the top hits refer to a 28-year-old beauty queen whose titles include Miss Vietnam Southern California and Miss Asia USA in 2006.

Continental argued that Hsieh and Pham “knew or should have known before the incident that the person who damaged the sprinkler head was unlicensed, unqualified or otherwise incompetent to perform the work … .” The complaint, filed Aug. 7, didn’t specify what the worker was trying to do.

On the chance that the worker, Joshua Hester, was working for Zappos or the Downtown Project, the two entities were added as defendants.

However, Carroll has moved to dismiss the case based on Nevada’s acceptance of the Sutton rule, which includes a tenant in a landlord’s insurance policy even if the tenant causes damage through his own mistake. Both Zappos and the Downtown Project have said they have no connection with the condo and that Hester isn’t on either payroll.

Continental’s underlying motive, Carroll contended, was “to rope in as many deep-pocket defendants as possible (despite having no factual basis for doing so), threaten them with the prospect of having to incur defense costs, and thereby extort unwarranted settlements.”

He has asked for sanctions, set for a Nov. 14 hearing, on Continental for including the corporate entities.

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