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Aborted hotel tower leads to massive business litigation

| Dec 19, 2014 | Business Contracts & Disputes |

What happens when a proposed 47-story hotel tower is stopped midway through construction and declared by safety inspectors to be unfit to continue? Whether it is in North Carolina or another state, legal conflicts and business litigation between many different parties will likely result. One outcome from the 2008 stoppage of what was called the Harmon Tower is that the owner, MGM Resorts International, is demolishing the ill-fated first 26 floors.

The cessation of construction caused a massive, complex web of litigation between contractors, subcontractors, future stakeholders, the general contractor and the owner. Inspectors determined that the steel used on the first 26 floors would not support the remaining 22 floors. That was a critical defect that could not be corrected.

It led to charges and recriminations and the filing of numerous legal claims between and among many different litigants. The Harmon was one part of an $8.5 billion project in Las Vegas that was completed and opened in 2009. The tower remains standing and is, if nothing else, a monumental tourist attraction and a reminder that not every well-planned and well-financed project is infallible.

The trial between the maze of litigants was described by some observers as “impossible” to contemplate. To appreciate the massive volume of data in the case, one lawyer noted that the list of exhibits required 100 banker’s boxes – that was the list only, not the exhibits themselves. It was estimated that the trial could take years to finish.

However, literally on the eve of trial, the judge announced that a settlement had been reached in the complex business litigation. Although the settlement amounts were kept confidential, MGM made disclosures elsewhere that indicated settlement amounts totaling in the hundreds of millions. In North Carolina and all other jurisdictions, a settlement of this magnitude is in itself a major undertaking. The courts generally rely on the parties’ lawyers to reduce the agreements to accurate writings that will survive the test of time without allowing continuing disputes.

Source: lasvegassun.com, “Settlement reached in lawsuit over flawed Strip hotel tower“, Ken Ritter and Kimberly Pierceall, Dec. 16, 2014

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