Litigation
Tutor Perini Ordered to Pay $175M Over Philadelphia Hotel Project
A tangle of about 30 lawsuits resulted from disputes over the construction of the 51-story structure.
A Pennsylvania state court judge has ordered Tutor Perini to pay $175 million in damages to a Philadelphia developer whose hotel was completed years late and far over budget.
The planned 51-story tower, for the dual-branded W and Element Hotel by Chestlen Development, had floor slab deflections large enough to pose problems for the owner and the window wall subcontractor. Elevation variances—plus rebar in unexpected locations—created anchorage problems at the slab edges, slowing window wall installation enough to cause a significant schedule lag. The hotel opened in 2021.
A tangle of about 30 lawsuits resulting from disputes added to the imbroglio.
In the end, the building was delivered to Chestlen 2,797 days late. At $35,000 a day, that came to $98 million in contractual liquidated damages. Prejudgment interest, calculated at $21,645 per day, added $27.4 million. Legal and consulting fees came to another $14.1 million.
Damage to repair and replace windows accounted for the highest construction-related cost, at $8 million.
The damages decision came several months after a five-week bench trial on liability, in which Judge James Crumlish III found Tutor Perini liable for breach of contract and rejected the contractor's counterclaims against Chestlen.
A spokesman for Tutor Perini (NYSE: TPC) said "we strongly disagree with the ruling and believe it does not reflect the merits of the case. We intend to appeal and will continue to pursue all appropriate legal remedies."
The big Sylmar, Calif.-based construction manager had argued that poor design was to blame for the trouble and that the developer improperly took advantage of the situation by withholding payments.
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Facing a $155 million claim by Chestlen, Tutor Perini, in a separate lawsuit also before Crumlish, sought tens of millions of dollars from its main subcontractor for the building frame, Thomas P. Carney Inc.
That company began to camber floor slabs to prevent excessive deflections, according to court records reviewed by ENR. According to the deposition testimony of its president, Bob Carney, the firm did so under stressful, confused circumstances and made no record of what was done.
Three law firms represented Chestlen: Blank Rome, Royer Cooper Cohen Braunfeld, and California-based Glaser Weil. The latter primarily represents owners and designers; Glaser Weil has previously represented clients in at least one lawsuit against Tutor Perini.
Peter Sheridan, who heads Glaser Weil's construction practice, praised his client's "effort and strong-hearted countenance to keep going against the Number 25 contractor" in the U.S.
Tutor Perini has been involved with numerous payment and claim disputes over the years. The company has indicated it plans to reduce the number of lawsuits that it pursues.
