The Other Lawsuits

This article gives more information about the murky waters that run deep in Las Vegas.

I would draw the readers eye to the statement made by Harcourt in tonight's CTV

http://www5.channelonline.tv/news/templates/jerseynews2.aspx?articleid=15110&zoneid=1

"the Nevada civil action is against a Harcourt subsidiary, and does not involve anything like the figure which has been quoted in the media as variously $800m and $800bn. $800m was the value of the proposed development, not the legal action, which will involve a massively smaller amount, if anything at all."

I would have thought that the sum which is already mentioned in the additional lawsuits, of more than two million (see below) was still a substantial sum.

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http://www.inbusinesslasvegas.com/2008/05/09/realdev.html

The lawsuit alleges that Glen, Smith & Glen has been financially exploited and defrauded by Harcourt, which had committed to finance the project's $800 million construction costs. Harcourt had been paying Glen, Smith & Glen to oversee the project, but quit doing so at the end of last year and owes millions of dollars, the local company's officials say.

"(Harcourt officials) were engaged in a classic force-out," Glen, Smith & Glen attorney John Manly says. "They are trying to steal this project. Essentially, they stopped paying, not because of market conditions ... all of the indications are they plan to build the project. They are forcing (Glen, Smith & Glen) out and taking the profits."

Nancy Rapoport, a law professor at UNLV, says the dynamics of the case will take shape in the upcoming weeks when Harcourt files its answer to the complaint. It will be curious to see if they blame the worldwide credit crunch for the problems, she says.

"The ripple effect, if the project doesn't get completed, will be a bevy of lawsuits from the folks who put down deposits for condos, and those lawsuits may try to argue that the condo depositors shouldn't only get their deposits back plus perhaps interest but also some portion of market appreciation had the project been completed," Rapoport says. "On the other hand, in today's market, that's a dangerous argument to make, because real estate prices are going down, not up, and the condo depositors don't want to put themselves in the position of admitting that they entered into losing contracts."

The problems started last fall when Harcourt made only partial payments to consultants or didn't pay them at all, Smith says. Excavation and utility work started last summer, and Harcourt started pushing the construction timetable back last fall, Smith says.

Eight liens and two lawsuits totaling more than $2 million have been filed by firms against Sullivan Square, and back payments owed to consultants and vendors total another $2 million, Smith says.

The problems started last fall when Harcourt made only partial payments to consultants or didn't pay them at all, Smith says. Excavation and utility work started last summer, and Harcourt started pushing the construction timetable back last fall, Smith says.

He says he met with Doherty two months ago and received assurances the project would be funded and back on track, but nothing happened. That inaction forced him to pursue legal action.

Manly said he will seek lost profits and punitive damages, but didn't know what the amounts would be.

"Foreign developers are welcome to come here and make money, but they have to live within the law and not exploit the local community for monetary gain," Manly says. "I am hoping for a large award to send a message to others that we don't tolerate this type of conduct here."