Tutor Perini Building Corp. faces a potentially expensive damages trial next year after a Pennsylvania state court judge ruled in late October that the company breached its contract with the developer of a 52-story downtown Philadelphia hotel in which floor slab deviations delayed curtain wall installation and increased completion delays and cost overruns.
Judge James Crumlish III ruled that Tutor Perini, the project’s main contractor, breached its contract with Chestlen Development Inc. for the estimated $280 million hotel project that began construction in 2015 and was scheduled to be completed in 2018. It took until 2021 to issue a certificate of occupancy.
The dispute between the contractor and the developer was decided among a tangle of about 30 lawsuits involving subcontractors and key underwriters.
The damages portion of the dispute is scheduled to begin next month.
Tutor Perini officials could not immediately be reached for comment on the case, but the company has consistently argued that poor design work was behind the problem and that the developer took advantage of the situation by withholding payments.
In a recount of the events accompanying his sentencing, Crumlish criticized both the contractor and the developer for what he characterized as excessive trial tactics and overly lengthy court filings that did not cut to the heart of the dispute. (ENR has not separately reviewed the Pennsylvania court record.)
“From the beginning” of the legal disputes that began in 2019, Crumlish wrote, “the parties have abandoned problem-solving approaches to the completion of the project and have turned this litigation into a major challenge that has made any efforts at resolution impossible.”
The judge stated that “what the record overwhelmingly shows is a level of animosity and mistrust developed between the parties…that caused the construction manager, in derogation of his obligations to act in the best interests of the project, to engage in a widespread pattern of obfuscation, polemics and deception” and also “provoking the subcontractors of his project.”
The project’s architects and engineers had previously settled claims involving them, so the remainder of their insurance policy limits were available to be tapped in the damages phase of the case, Crumlish wrote.
The unusual project involved the construction of the three-star extended-stay Element Hotel at the bottom of the concrete tower and the four-star full-service W Hotel at the top. Each had their own entrances. The original maximum guaranteed price was $239 million with 1,017 days to complete the work and $35,000 per day in liquidated damages, excluding time extensions allowed.
Structural engineer O’Donnell & Naccarato designed the tower podium with 12-in. slabs and tower floors with 9-in. slabs, and Tutor Perini hired contractor Thomas P. Carney Inc. to do the concrete work. Both Carney and Tutor Perini agreed to a four-day cycle for floor-to-floor concrete placement, Crumlish wrote.
Tutor Perini also executed a subcontract with the Ventana facade glass company for the installation of the tower’s cladding system.
As work began on the facade, it became clear that the concrete slabs had numerous problems with deviations that exceeded tolerances and that these would make installation of the facade difficult, Crumlish wrote. That started a spiral of blame and obfuscation, he said.
Slab edge chipped and rectified
On numerous floors, many concrete slabs required chipping and edge grinding by guardian Perini, the judge noted. According to Crumlish, Tutor Perini failed to report the sanding work to the developer and continued to deny there were any major problems with the concrete work, even after hiring its own consultant to investigate.
According to Crumlish, significant evidence and testimony during the trial seemed to point to possible slab shoring failures as the source of the concrete slab problems.
In the five-month trial, Tutor Perini claimed that Chestlen breached its contract with Tutor Perini, provided inadequate plans, used anticipated deficiencies to obtain better land than it had contracted to receive, schemed to slow down the project and improperly relied on the right to receive liquidated damages.
