Missed deadline may bite MGM

The owners of CityCenter may have to pay hundreds of thousands of dollars of their opponents' expenses because they missed a 2010 deadline for settling accounts with the project subcontractors.

At a Wednesday hearing, Clark County District Judge Elizabeth Gonzalez said she would rule by early next week whether penalties would be due and how to calculate them. But her comments from the bench, including skepticism about items in the legal bills submitted by general contractor Perini Building Co. and discussion of different options for setting a final number, led several in the courtroom to conclude that sanctions are coming.

Perini attorney George Ogilvie requested reimbursement of $213,000 in legal fees that he said was spent on related matters, and an unspecified amount for more than 2,600 hours on the case put in by Perini employees themselves.

Fisk Electric, a subcontractor on the massive Strip project, requested $330,000 in legal and expert expenses plus $1.4 million in interest on the
$15.2 million said to have been paid more than a year late.

CityCenter half-owner and operator MGM Resorts International said in a statement that "CityCenter is deeply troubled that it is at risk of being punished for not meeting a court-ordered deadline for completing a detailed analysis of 5,000 change orders within 35 days in 2010."

Ogilvie did not comment after the hearing.

The $8.5 billion CityCenter, with three hotels, two condominium towers and a high-end shopping center, mostly opened in late 2009 after three and a half years of work. The main legal battle focuses on the unfinished Harmon Hotel, which MGM claims was so poorly built that it must be razed but Perini insists was really halted because of MGM financial woes. Both sides seek payments or damages over the work.

Trying to get CityCenter payment into the hands of subcontractors not involved in the Harmon dispute -- their checks were caught in a legal crossfire between MGM and Perini -- Gonzalez set an Aug. 20, 2010, date for finishing the process at a hearing one month earlier. But when the deadline came, MGM reported that it would not finish in time.

The following November, MGM said it had come to terms with all but 16 of its 222 subcontractors. That number has since been winnowed to seven, all of them somehow involved with the Harmon, with total payments running $237 million.

Ogilvie characterized the missed deadline as a sign of "arrogance," a belief that CityCenter could get away with defying the court.

"CityCenter blamed Perini and now blames the court for its inability to comply," he added later.

CityCenter attorney Steve Morris said MGM had raised concerns at a July 2010 hearing that the deadline was unrealistic.

"We didn't do this defiantly," he said. "We didn't (miss the deadline) ... as (Ogilvie) told you, to thumb our nose at the court."

Instead, he contended that Perini had dumped more than a million pages of documents and uncounted gigabytes of data on MGM before it was equipped to settle mass contract claims. Further, he said, the process entailed individual negotiations with each subcontractor, a time-consuming process.

"We did the very best we could," he said. "We got the subcontractors paid but we could not do it on the time schedule."

Ogilvie countered the accusation that had Perini abandoned the subcontractors and left a mess behind by producing a July 2010 estimate showing that CityCenter reportedly missed by only $620,000, or a fraction of 1 percent. However, Perini's estimates missed the actual dollar amounts paid to many of the individual contractors by a range of a few hundred dollars to several million.

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