Venetian owner ordered to pay $38.5 million

By Liz Benston (contact)

Thursday, April 7, 2005 | 11:04 a.m.

The owner of the Venetian resort faced a setback last month in a long-running construction lawsuit when a Clark County District Court judge ordered the company to pay interest, attorneys' fees and other costs totaling $38.5 million on top of a previous jury award of $42 million.

But Las Vegas Sands Corp. said it has appealed the payments as well as the original judgment and also said it expects the judgment to be reduced through recent arbitration proceedings.

General contractor Lehrer McGovern Bovis Inc. slapped the Venetian with a lawsuit in 1999 claiming it wasn't paid for work it did on the resort. Las Vegas Sands countersued, claiming Bovis violated a construction management agreement to complete the resort by April 1999. The resort opened the following month, with the Venetian walking customers to other hotels. The companies blame each other for failing to pay scores of subcontractors, with Venetian claiming that Bovis allowed defective work and failed to coordinate subcontractors' schedules to meet the opening deadline.

A Clark County jury in June 2003 sided with Bovis, awarding the contractor some $44 million in damages. In turn, Las Vegas Sands won a $2.3 million construction defect judgment against Bovis.

In its annual report, Las Vegas Sands Corp. said the company's total legal liabilities could be wiped clean if it wins all outstanding court and arbitration appeals. In a worst-case scenario, the company could wind up paying as much as $70 million, which includes the original verdict as well as $28 million related to indemnity claims and arbitration proceedings.

That $70 million doesn't include the $38.5 million in court fees.

Las Vegas Sands officials declined to comment on the lawsuits.

The company's post-trial motions were denied in June 2004 and were appealed to the state Supreme Court. The company also filed several motions for reconsideration in Clark County District Court which are still pending, according to the annual report.

The company said it was likely that some elements of the original verdict will be preempted because they duplicate items ordered to arbitration by a federal court before the state court jury trial began. In a hearing last month, a Clark County District Court judge "acknowledged that the verdict and the judgment on the verdict will need to be adjusted after the completion of the arbitrations," the report said.

Las Vegas Sands expects to submit more than $23 million in claims to arbitration over the next year. An arbitrator has so far sided with the Las Vegas Sands on about $5.1 million in claims. Taken together, the arbitration awards could offset about $28 million of the original verdict, the company said.