Nevada High Court to Hear Flawed Vegas Hotel Case

By KEN RITTER | June 4, 2013

The Nevada Supreme Court hears arguments Tuesday about a flawed hotel tower designed to be the centerpiece of MGM Resorts International’s glittery CityCenter development on the Las Vegas Strip that the company now wants to tear down.

The question before five justices sitting in Las Vegas could go a long way toward determining whether and when the Harmon hotel structure can be demolished.

MGM Resorts argues the structure left unfinished and unopened when the rest of the $8.5 billion CityCenter project opened in December 2009 is “wholly unusable” due to “a cornucopia of construction defects” that imperil its structural integrity.

It points to a consultant’s report in April 2011 that the 26-story building set snugly at the entrance of the CityCenter development could collapse in a strong earthquake. It says the building should be torn down even before a Clark County District Court jury begins hearing a nearly $500 million construction defect lawsuit next January.

Project general contractor Tudor Perini Building Corp. argues that the work it did was good, and that designs for the blue, glass cylindrical tower were faulty from the start. Demolishing the tower now would destroy evidence about work that was completed and leave the impression in jurors’ minds that the building was unsafe and the builder was at fault, company lawyers say.

Attorney George Ogilvie, representing Perini, declined comment ahead of the Supreme Court arguments. But he told Clark County District Court Judge Elizabeth Gonzalez last July that demolishing the building would amount to letting MGM Resorts “bury its mistakes.”

“Essentially, your honor, MGM wants a do-over at Perini’s expense,” Ogilvie said.

Gonzalez gave the go-ahead for demolition, saying she would tell jurors the demolition was a business decision by MGM Resorts – not an acknowledgement that the building was badly built. But she withdrew her approval for demolition in December, pending further testing.

The legal question now before the justices hearing the case is narrow: Whether Gonzalez properly determined that tests conducted by tearing into parts of the structure met state legal standards to “extrapolate” conclusions about the rest of the building, and whether the judge improperly sanctioned MGM Resorts for failing to randomly choose test sites.

Chief Justice Kristina Pickering and Justice Ron Parraguirre have recused themselves due to personal ties with people involved in the case.

The Harmon was to have soared 48 stories, with upper floors sold as luxury condominiums. Once defects were found during construction in 2008, Clark County building inspectors ordered work to halt. MGM Resorts subsidiaries canceled the residential portion of the plan and cut the tower height to 26 floors.

The blue glass building today sits unfinished, empty and wrapped in massive advertisements. MGM Resorts has said it cost $275 million to construct and could cost $30 million to implode. Company officials now say the building might have to be demolished piece by piece.

MGM Resorts spokesman Gordon Absher released a statement ahead of the Supreme Court arguments saying the structural testing “clearly exposed widespread construction defects” and defended the quality and quantity of tests as sufficient to meet Nevada court evidence standards.

Absher said the company was “eager to share those results with a jury.”

The Harmon building and surrounding 67-acre master-planned development – including the glassy Aria, Veer, Vdara and Mandarin Oriental hotel towers, a casino and the upscale Crystals shopping and restaurant complex – are co-owned by MGM Resorts and Dubai World.

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