Tutor Perini, developer fight over lien, claims of defective work at Florida hotel

Dive Brief:

Tutor Perini Building Corp. and a hotel developer are locked in a legal battle over a mechanic's lien and allegations of defective work, delays and unpaid subcontractors on a project in Fort Lauderdale, Florida.
In October, Tutor Perini filed a lawsuit against its customer Federal Master, an affiliate of Philadelphia-based Wurzak Hotel Group, seeking payment for change order work performed by the contractor and its subcontractors on a dual-branded (Tribute/Element) Dalmar Hotel. In July of 2019, Tutor Perini filed a lien against the property claiming it was still owed more than $2.7 million out of $60.9 million of work performed. Tutor Perini, according to Federal Master's counterclaim, went on to demand a balance due of almost $8 million as of the end of December 2019.
In its counterclaim filed earlier this month, Federal Master said that Tutor Perini breached the terms of its $55 million guaranteed maximum price contract by, among other claims, failing to meet its substantial and final completion deadline; failing to properly secure the site, which resulted in the theft of Federal Master property; failing to provide adequate supervision; failure to pay liquidated damages of $12,000 per day; improperly billing Federal Master for amounts beyond the GMP; filing a fraudulent lien; and failing to issue credits for defective work. Subcontractors have filed a total of $7 million worth of mechanic's liens against the property. Federal Master is seeking $12 million in damages.

Dive Insight:

Federal Master maintains that there are still trench drain, stormwater system, water leak and elevator issues at the hotel that have not yet been addressed. Since the hotel's opening, Federal Master said that there have been 24 incidents of individuals becoming trapped in the property's elevators.

Federal Master's attorney, Michael Kurzman, partner at the law firm of Weiss Serota Helfman Cole & Bierman P.L. in Ft. Lauderdale, told Construction Dive, "The owner is very disappointed in Tutor Perini's performance on the project and is looking forward to resolving these issues through the court system."

Tutor Perini declined to comment.

In its combined year-end and fourth-quarter earnings report, Tutor Perini acknowledged that both periods were negatively affected by approximately $124 million after it lost a Washington state court case related to the Alaskan Way Viaduct Replacement project in Seattle. However, the company said it would appeal that decision.

Due in large part to that write-down and a goodwill impairment charge of almost $380 million due to a decrease in the company's stock price, Tutor Perini announced a $387.7 million net loss for the full-year 2019 and a net loss of $86.1 million for the fourth quarter.

Tutor Perini recently confirmed that it is in talks that could result in its acquisition. The company has not revealed any other details about the potential deal, but a Reuters report based on anonymous sources said that private equity firm Apollo Global Management is interested in purchasing the company for as much as $1 billion.