Businesses file suits claiming Fontainebleau bills went unpaid

By Steve Green

Thursday, June 18, 2009 | 7:34 p.m.

Even as the stalled Fontainebleau casino resort tries to reorganize its finances in Miami bankruptcy court, lawsuits over unpaid bills for the project are accumulating in Las Vegas outside of the bankruptcy process.

Since June 11, at least three subcontractors have sued Fontainebleau's general contractor, Turnberry West Construction Inc., over work they did at the resort.

In suits filed in Clark County District Court, Desert Plumbing & Heating Co. says it is owed $6.249 million; while PCI Group LLC and F. Rodgers Corp. didn't specify in their lawsuits how much they are owed.

Besides suing Turnberry West, PCI Group and F. Rodgers are suing Western Surety Co. in hopes of recovering funds under Turnberry's performance bond.

A spokesman for Turnberry West on Thursday said the company knew of no such suits and therefore could not comment on them. There's typically a delay between the time when suits are filed and when they are served on defendants.

Desert Plumbing & Heating said it was hired to work on the $2.9 billion resort's tower, garage, convention center, central plant, podium and garage; and that it stopped work on the project on Las Vegas Boulevard on May 13.

The subcontractor said that not only did Turnberry West fail to pay all that it's owed, it said Turnberry West breached an implied covenant of good faith and fair dealing.

"Turnberry West breached that duty by performing in a manner that was unfaithful to the purpose of the subcontracts," Desert Plumbing & Heating's suit charged. "Specifically, Turnberry West knew or should have known that it would be unable to honor Desert Plumbing's payment applications, but still required Desert Plumbing to perform its obligations."

Turnberry West, known in Las Vegas for building high-rise Turnberry condominiums, is controlled by the Soffer family of Miami. The Soffers are also developers of Fontainebleau.

While some of the Fontainebleau development companies filed for bankruptcy protection last week, Turnberry West was not among them.

The companies filing for bankruptcy were Fontainebleau Las Vegas Holdings LLC, Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas LLC.

In two of the cases, Turnberry West is listed as a creditor.

In the Fontainebleau Las Vegas LLC case, the company listed assets and liabilities of more than $1 billion apiece and estimated the number of creditors in the case would be 1,000 to 5,000.

Fontainebleau Las Vegas LLC is also the entity suing Bank of America and other banks that declared the project, 70 percent complete, to be in default on its construction loan and halted funding this spring.

Fontainebleau says this decision to shut off funding led to the bankruptcy filing last week and now Fontainebleau is asking the court to order the banks to release $656 million so the project can get back on track.

The banks, however, said they were told earlier this year by Fontainebleau officials that they planned to put the project into bankruptcy because of its financial problems.

Besides Bank of America, the lenders under a revolving loan agreement being sued are Merrill Lynch Capital Corp., JPMorgan Chase Bank, Barclays Bank PLC, Deutsche Bank Trust Company Americas, the Royal Bank of Scotland PLC, Sumitomo Mitsui Banking Corporation New York, Bank of Scotland, HSH Nordbank AG and MB Financial Bank N.A.