More subcontractors accuse Fontainebleau of failing to pay for work

Tuesday, June 23, 2009 | 2:05 a.m.

Fontainebleau Resort

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Two more Fontainebleau subcontractors have sued the resort's general contractor, charging it has wrongly failed to pay them for their work on the Las Vegas resort.

Three Fontainebleau development companies filed for bankruptcy protection June 9 after funding problems halted construction on the $2.9 billion project, which is about 70 percent complete.

Turnberry West Construction is Fontainebleau's general contractor and is a sister company to the Fontainebleau development firms. As of Friday, Turnberry West had not filed for bankruptcy protection.

This means subcontractors suing Turnberry West are doing so in Clark County District Court, and this month five have done so.

The latest to sue Friday were Tracy & Ryder Landscape Inc. and Ram Construction Services of Michigan Inc.

Tracy & Ryder is also suing Turnberry West's bonding company, Western Surety & Co.

Tracy & Ryder alleges that after disputes over payments for its work arose, it and Turnberry West attended mediation, resolved their differences and agreed to a payment arrangement.

But Turnberry West has failed to make all the required payments, the contractor alleges.

The suit claims Turnberry West has violated one or more provisions in Nevada law governing construction.

"Turnberry West failed to complete the project for the price stated in the contract and willfully and deliberately failed, without legal excuse, to prosecute the project with reasonable diligence, causing material injury to plaintiffs," the suit alleges.

And, or, the suit says: "Turnberry West diverted funds which were received for a specific purpose in the prosecution of the construction of the project and failed to pay subcontractors and suppliers and willfully and deliberately failed to pay money due for labor and materials provided to the project after receiving sufficient funds for payment."

Ram Construction Services, in its suit, alleges Turnberry West breached a covenant of good faith and fair dealing.

"Turnberry West knew or should have known that it would be unable to honor Ram Construction's payment applications, but still required Ram Construction to perform its obligations," the suit says.

Neither company said how much it is owed. Turnberry West hasn't responded to any of the suits filed this month.

Separately, an attorney for subcontractors in the bankruptcy case said Monday it's too early to say whether the case is headed toward resolution with a liquidation -- or with funding to get construction under way again.

Gregory Garman of the Las Vegas firm Gordon Silver said his clients hope a restructuring is approved that gets them paid and back to work on the resort. Absent that, he said, the failure of the project has the potential to put some of them out of business.

Representing clients seeking $111 million, Gordon Silver has teamed up with a Florida law firm on a motion to move the bankruptcy case from Miami to Las Vegas.

Garman says the move is necessary because most of the creditors and other players in the case are in Las Vegas.

"Bankruptcy is a participatory-based system," he said, arguing it makes sense for hearings and negotiations to be held in Las Vegas because that's where most of the participants live or are based.

And it's important for subcontractors to have the case heard in Las Vegas because the bankruptcy court in Nevada is familiar with Nevada's construction lien laws, Garman said.

As debts are prioritized in this case, those laws put the liens of subcontractors ahead of lenders' trust deeds, he said.

Discussion: 8 comments so far…

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By bdover

June 23, 2009

4:14 a.m.

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Can you imagine how much foolishness that the subcontractors are piling onto their claims? Yes, they're in trouble, but it's human nature and greed to throw every single thing into their liens. Like loss of their Union loafers productivity. What productivity? I hope all the companies do a Manila folder, and the F becomes a monument to stupidity, next to the Monorail.
By mrjb

June 23, 2009

6:10 a.m.

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Work for free! It's your duty as a citizen of the Obama nation.
By teambeam

June 23, 2009

6:52 a.m.

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lol...work 4 free
By unionstrong

June 23, 2009

6:55 a.m.

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The companies should get every penny that is owed to them.
By ynotjohn

June 23, 2009

11:20 a.m.

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The banks are stupid to lend more than 50% to a project with all cost over-runs to be covered by the equity partners. It is easy for the decision makers to spend "others" money with no impact to them.
By unionstrong

June 23, 2009

5:21 p.m.

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Great comment ynotjohn! finally someone has hit the nail on the head. Everybody will see that most projects that fail are due to mismanagement it all starts at the top. It's easy for the superintendents, architects, and designers to blame labor, if i was an idiot i would too!
By geenab65

June 24, 2009

8:13 p.m.

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Excellent comment !! Maybe you can pass on some of that knowledge to mrjb, but don't hurt yourself.
By rodtig

June 25, 2009

7:58 a.m.

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Right now anything they do has no promising end.I will say that the job site halt has put a hurt in the locals here and the families of the construction worker who was working at Fountainbleau.It is ashame that so many people have been effected by this but reality is what reality is.I truely believe that my tax dollars are being wasted by the banks. The Banks need to continue to fund the project so that there are new jobs created.Jobs is what is going to help this economy.Funding is what could turn things around.In the mean time the greed of the coorperate giants continues and the banks dominate the lively hoods of each and every American.The banks need to be forced to repay the bailout money immediately if they dont want to invest in the people it serves