Resort sues contractor over power outage

Monday, Aug. 2, 1999 | 10:59 a.m.

MGM Grand Inc. is demanding more than $500,000 in damages from a local contractor, blaming it for a 1998 blackout that left its Las Vegas hotel-casino without power for eight hours.

Power was knocked out at the MGM on May 11, 1998, when a waterline ruptured near the hotel's primary power plant. The outage stranded more than 20 people in elevators and effectively shut down the casino.

In a lawsuit filed last week in state district court, MGM blames the outage on Southland Industries, the contractor that built MGM's central power plant in 1997 at a cost of $3.5 million.

MGM said Southland substituted materials in the plant's water cooling coils that were not capable of handling the water pressure that would be going through the coils. MGM said it was never told that Southland had deviated from the original design.

The joints in the water coils ruptured, causing water to knock out both the main power generator and back-up generators, MGM said.

MGM claims it is entitled to reimbursement for all damages caused by the blackout, including repairs to the generating system, loss of hotel and casino revenues, overtime paid to employees, and reimbursement paid to hotel guests for inconveniences and injuries. It said those damages are in excess of $500,000, but said that figure could be upgraded.

Southland officials declined to comment.