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Business
May. 01, 2008
Copyright © Las Vegas Review-Journal

Sullivan Square developer sues 'bullying' Ireland company

By HUBBLE SMITH
REVIEW-JOURNAL

The Las Vegas-based developer of Sullivan Square filed a lawsuit Wednesday against Harcourt Developments, a private company from Dublin, Ireland, that had agreed to finance up to $800 million for the mixed-use project.

The lawsuit, filed in Clark County District Court, alleges breach of contract by Harcourt Nevada for failure to perform funding obligations and breach of fiduciary duty.

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    • Harcourt and its principal, Patrick Doherty, engaged in a "scheme" to use the resources of local developer Glen, Smith & Glen to get Sullivan Square out of the ground and is now taking control of the project, attorney John Manly said.

    "Essentially, Harcourt is pushing Glen, Smith & Glen out of the project and they intend to build it themselves," the California lawyer said. "It amounts to economic bullying."

    Harcourt has repeatedly promised to pay subcontractors for work on the project, Manly said.

    Meanwhile, two lawsuits and eight liens totaling more than $2 million have been filed against Sullivan Square. Another $2 million in back payments is owed to consultants and vendors. Among those owed are SR Construction and Flack + Kurtz mechanical and electrical contractors.

    Sullivan Square, on 16 acres at the Las Vegas Beltway and Durango Drive, is planned for 1,300 residential units, 45,000 square feet of retail and office buildings, and a central park. It's regarded as a good example of urban development coming to Las Vegas.

    Construction cost for the first phase, which began last year with dynamite blasting for excavation, was estimated at $150 million. Vertical construction of the 20-story, 152-unit first tower was scheduled to begin earlier this year, after reservations were converted to binding contracts.

    Kenneth Smith, principal of Glen, Smith & Glen, said he's been on the "front line" handling calls from subcontractors who haven't been paid and buyers wondering what's happening. He sent a letter to Sullivan Square home buyers explaining the situation.

    "You know me. I'm not that kind of businessman," Smith said. "I've been yelling and screaming (at Harcourt) and their response is, 'So what?' They actually got more onerous. Now they're saying GSG should fund this part of the loan with full knowledge that we're not capable and it's not part of the agreement. They intend to plow ahead with this and freeze us out in the meantime."

    He said Martin-Harris Construction had been directed by Harcourt to send a letter to subcontractors assuring them that Sullivan Square would start vertical construction in July and everybody would be paid, even though no contract for a guaranteed maximum price had been signed.

    Frank Martin of Martin-Harris did not return phone calls for comments.

    GSG has been working on Sullivan Square for three years, acquiring the land, getting it fully entitled and launching sales and marketing campaigns.

    "The thing that gets under my skin is our company's reputation has been damaged and the other thing is the sadness of what they're doing to a very good project," Smith said. "I get it from people who aren't even our buyers who say they're excited about the project and so glad we're doing it. To have it go down not because of market conditions or credit, that's just sad. I don't know any other word."

    Harcourt became a 60 percent partner in Sullivan Square in August 2006. Doherty, with an estimated net worth of $1 billion, attended the ceremonial groundbreaking last year.

    Harcourt's projects include Ireland's largest business park, Carlisle Bay hotel in Antigua and the Titanic Quarter regeneration project in Belfast.

    Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.



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    JRL wrote on May 05, 2008 10:15 AM: I've heard terrible things about that company. I doubt they need a foreign investor to destroy their reputation. From what I heard, they aren't paying their bills on other jobs, one's that are just them. Besides, the project is failing due to lack of sales, not investor problems. If the units were selling, there would be no article. Who are these people!!!


    Vote out the Shills wrote on May 01, 2008 12:52 PM: When are Nevadan's going to wake up and realize that we are the most corporate controlled state in the US ... The sham contractors board is just another example. VOTE OUT THE PAWNS of corporations ... start supporting independent candidates (or run for office yourself) as rare as they are.


    bn wrote on May 01, 2008 11:58 AM: dodger,

    That is not exactly how this "scheme" works.The owners will contract a General Contractor to oversee the project and in many cases (design build)so that change orders are kept to a minimum.As the project progresses the owners are expected to make progress payments and this is where they make their sting. They often only pay enough to cover the subcontractors labor and not materials or overhead! To make a long story short this is how they get their projects financed.If the general contractor makes too much of a scene, the owners will look for another General Contractor that in turn disputes the progress of the project making it even more of a circus. Subcontractors and material suppliers are often left out on a limb for months. I have heard horror stories of Sheldon Adelson, Martin-Harris and a number of others that conduct business this way.


    dodger wrote on May 01, 2008 10:38 AM: bn has it right, business as usual in Nevada. This state is so desperate to force growth and project a positive business environment that it lost the rules. Start a business, employ some immigrants for less than mimimum wages, rip some people off, then get out of town. No doubt this company is pulling this stunt because they feel they can get away with it.


    Henry wrote on May 01, 2008 08:37 AM: And don't forget about the 'change-order' specialists. These contractors have a way of manipulating the facts to have you believe you have been paid for 90% of the project but on paper you have completed 100% of the project so they don't owe you anything!!! Despite what and how your contract reads they have a way of stealing your 10% profit.


    bn wrote on May 01, 2008 08:17 AM: Business as usual in Nevada. Contractors Board with teeth, that`s funny. Nevada law! even funnier.What`s not so funny is that this type of scam happens here all the time.


    AP wrote on May 01, 2008 07:23 AM: So the contractors get screwed while this case spends the next 10 years in court. What a shame!


    O'Sal wrote on May 01, 2008 07:09 AM: So where is the teeth of the Nevada State Contractor's Board??? Can they not help facilitate enforcement of payment to sub-contractors?? It is sad, indeed, as Smith states, to have a project of this magnitude fail due to non-payment issues. Financial irresponsibility has been the downfall on many projects in Vegas....and has a negative domino effect on the rest of us.


    Ted wrote on May 01, 2008 06:58 AM: Does Sheldon Adelson somehow control Harcourt? Sounds a lot like his business practices in action.