Deliberations continue in Venetian contractor case

Monday, May 19, 2003 | 11:10 a.m.

Millions of dollars are at stake as deliberations continue today in a civil court case between The Venetian hotel-casino and its general contractor, London-based Lehrer McGovern Bovis Inc.

The case -- the longest civil jury trial in state history -- began in August and has finally been turned over to a jury of four men and four women who must conclude how much, if any, should be paid by each side to the other.

Bovis, which accused The Venetian of breach of contract, is seeking $97.2 million in adjustments to the agreed-upon construction price and interest, while The Venetian is seeking $201.4 million, accusing Bovis of breach of contract for construction delays that postponed the grand opening of the Strip property in April 1999. The Venetian's complaint includes a calculation for damages that include lost income resulting from the delay as well as its own breach-of-contract complaint against Bovis.

Clark County Senior Judge James Brennan turned the case over to the jury Friday afternoon after 2 1/2 days of closing arguments and rebuttals. Attorneys for both companies said they believed that jurors were able to absorb hundreds of hours of testimony and understand about 10,000 documents entered into evidence. But neither predicted how long it would take for jurors to return with a verdict.

"I don't have any idea how long it's going to take," said Jennifer Fletcher, the lead attorney for Bovis. "But this jury has been great."

"We have a very intelligent jury," added Stephen Peek of the Las Vegas firm of Hale Lane Peek Dennison & Howard, representing The Venetian. "They were very attentive and I think they get it."

Peek said "it could be Wednesday at the very earliest (before a verdict is returned)."

When the case began about nine months ago, 250 prospective jurors were interviewed and 20 jurors and alternates were impaneled. By Friday, there were 14 left and just before the judge sent them to deliberate, a court officer read the names of the eight who would make the final decisions. In civil cases, only three-fourths of the jury -- six in this case -- must agree to reach a verdict.

Bovis and The Venetian summarized their cases last week, with each side contending the other was misrepresenting the case.

Bovis, a contractor that has built the world's tallest building in Kuala Lumpur, contends that Venetian management is to blame for the delays that led to the late opening of the property because it presented hundreds of change orders late in the construction process.

The Venetian responded that change orders are commonplace in the fast-paced world of hotel-casino design and construction and that Bovis simply wasn't up to the job.

Fletcher said The Venetian had the vision to develop a magnificent place, but part of the plan was to build it with other people's money. She said The Venetian didn't even have funding committed for the agreed-upon contract price when construction started.

Then, as the opening date neared, she said Venetian officials swamped the builders with an avalanche of changes they had no chance of keeping up with -- about 1,000 in a month. Arbitration of costs associated with those changes still hasn't been completed more than four years after The Venetian opened, she said.

Among the changes that received the most scrutiny was the hotel's safety system. A fire and smoke detection system was made more elaborate than codes require, with additional detectors placed on a single computer system.

However, the additional detectors prevented the system from reacting quickly enough and it had to be revamped.

Regardless of the problems, Fletcher said The Venetian received a temporary certificate of occupancy from the county that allowed the building to be opened. She said Venetian's management received bad advice on the timetable for opening the building to the public.

"They had beneficial use of the building and were getting paid by people to stay there," Fletcher said. "The Venetian has a scheme that has worked before and they're betting you (jurors) won't have the fortitude to stand up to them and say, 'No, stop it. We won't tolerate this.' "

The Venetian, through Peek and his co-counsel, Lee Roberts, said Bovis mismanaged the job and couldn't get the work done. Roberts even had a different tally of the number of changes that were ordered.

"Four hundred changes over 10 months isn't that much," Roberts said. "They knew they were in over their heads."

The Venetian attorneys said Bovis wasn't capable of managing the project and that's why the company hasn't been hired since for any major hotel-casino project in Las Vegas.

The $1.5 billion, 3,000-suite hotel was scheduled to open April 21, 1999, but the doors weren't opened to the public until 12:30 a.m., May 4. Other parts of the building -- high-roller suites on the top floors of the tower -- were due to open May 11, May 31 and June 16 of that year. An occupancy permit for the entire building wasn't issued until Nov. 12, 1999.

The company calculated lost profits of $75.6 million just from the opening delays. The company also said a grand opening celebration was botched and its reputation damaged when actress Sophia Loren, a guest of owner Sheldon Adelson for the opening, had to stay at another hotel when she arrived.

A convention scheduled at the property also was canceled, Venetian attorneys said.

"The changes that we made didn't affect them," Roberts said. "They were simply not able to handle a job this big."

Because the final price for The Venetian varied from the contracted amount and the two companies have sued each other, subcontractors have been left with no recourse but to file mechanics liens to be paid. There were 110 liens totaling more than $300 million filed in the case. Some have been adjudicated, but others are in dispute, awaiting the outcome of the trial to determine who will pay.

Other suits on the sideline of the Venetian-Bovis case involve the unusual circumstance of two Adelson-owned companies having to sue a third to recover damages. In March, Venetian parent company Las Vegas Sands Inc. and Venetian affiliate Grand Canal Shoppes Mall at The Venetian filed lawsuits against Venetian Casino Resorts LLC to recover more than $45 million in lost revenue and profits resulting from the botched opening.

Brennan ruled that, procedurally, the companies must sue Venetian in order to collect damages from Bovis.

Adelson, who attended the closing arguments of the trial, had no comment on his feelings about the possible outcome of the case.