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\tBy TIM O\u2019REILEY
\n\tLAS VEGAS REVIEW-JOURNAL
\n\tInsurance questions have frozen plans to demolish CityCenter\u2019s never-finished Harmon Hotel.<\/p>\n
\tAt a Friday hearing, District Judge Elizabeth Gonzalez withdrew the approval she granted on Aug. 23 for CityCenter, operated and half-owned by MGM Resorts International, to pull down the 26-story tower. She did so after FM Global, which wrote the insurance policy covering the Harmon\u2019s construction, said it would need more time to complete an in-house investigation of CityCenter\u2019s $393.8 million claim for the hotel as a total loss.<\/p>\n
\tThe judge will conduct another hearing on Dec. 6 to determine how much more time, if any, to give FM Global. Although the structural problems came to light more than five years ago, enough to raise questions about whether the Harmon would survive a major earthquake, CityCenter did not file the formal proof of loss for the entire building until Aug. 27.<\/p>\n
\tLVI Services of Nevada Inc., the demolition expert CityCenter picked to dismantle and cart away the Harmon, secured approval from the Clark County Building Department on Thursday to proceed with the work. It began planning the project on Oct. 3 and expected to start removing the glass skin on Dec. 2.<\/p>\n
\t\u201cThat\u2019s where CityCenter finds itself on the horns of a dilemma,\u201d City Center attorney Alexander Robertson IV said.<\/p>\n
\tOn one hand, he said, the demolition was moving ahead, with preliminary work underway, in response to a county demand on Sept. 4 to mend the Harmon\u2019s deficiencies. Gonzalez, however, placed a hold on the process.<\/p>\n
\t\u201cWe don\u2019t want to cross the line with either authority,\u201d Robertson said.<\/p>\n
\tBut Jeffrey Garolfalo, an attorney for subcontractor Ceco Concrete Construction, called this a \u201cfalse dilemma.\u201d<\/p>\n
\t\u201cThey (CityCenter) are not ordered to demolish the building, they are ordered to abate\u201d the dangerous conditions, he said.<\/p>\n
\tThe seeds of the latest turn in the expensive legal battle over assessing blame for the Harmon\u2019s defects were planted at the Aug. 23 hearing. At the time, Gonzalez stressed, as she had previously, that she had not ruled on its safety but merely allowed CityCenter to exercise its business judgment with its property.<\/p>\n
\tThe insurance issue came up at the time, but no one from FM Global intervened. CityCenter attorneys said they started the insurance process years earlier, calling the proof of claim \u201ca simple, fill-in-the-box form (that) provided no new information\u201d in court papers.<\/p>\n
\tFM Global saw it differently. A Sept. 3 letter from senior general adjuster Chris Roza contended that the proof of claim raised a \u201cnumber of new issues\u201d that far exceeded the previous claims. It would be impossible to pore over all the material from other experts plus check out crucial building components in person before the scheduled demolition, he wrote.<\/p>\n
\tThree days later, Scott Stickney, a Seattle-based attorney representing FM Global, scorched the CityCenter attorneys for in-court comments he called \u201cnot only inaccurate, but disparaging of my clients \u2026 and me personally.\u201d In particular, he contended, FM Global never had looked at evidence for many of the problems first raised in the Aug. 27 proof of claim. The previous submissions dealt only with the podium, the four floors at the base of the Harmon tower and certain components called link beams.<\/p>\n
\t\u201cIf there was no claim presented, what were you (FM Global) doing out there conducting the most extensive investigation of anyone?\u201d CityCenter attorney Mark Ferrario asked on Friday. \u201cThat was the practical reality of the situation.\u201d<\/p>\n
\tNevertheless, former CityCenter general contractor Perini Building Co. presented the two letters as new information sufficient to halt demolition, at least temporarily. Perini has sued CityCenter for $191 million in unpaid bills, while CityCenter has countered for reimbursement on the Harmon as a total loss because of poor workmanship.<\/p>\n
\tIn July 2012, Gonzalez allowed demolition but then withdrew that permission three months later when CityCenter opted to collect more physical evidence to prepare for trial. When CityCenter finished what is called destructive testing, in which engineers knock away concrete from structural members to see the steel reinforcement inside, it again asked for demolition.<\/p>\n
\tIn August 2011, CityCenter drew up a plan for imploding the Harmon in much the style as other former Strip resorts used during the past two decades. Last month, however, a new blueprint called for taking it down floor by floor, finishing the job next November.<\/p>\n