Multimillion dollar lawsuit filed against Hard Rock Hotel & Casino
STATELINE — A contractor has filed a multimillion-dollar lien, plus labor and services rendered suit against the owners of Hard Rock Hotel and Casino.
SMC Construction filed the lawsuit on May 5 in Nevada’s Ninth Judicial District Court, alleging fraud, failure to pay and breach of contract against Neva One LLC, and Jon and David Park.
SMC is seeking a $9.6 million lien against the hotel, plus costs for services, labor, punitive damages and legal costs.
SMC was the primary contractor that overhauled the casino and hotel, formerly Horizon Casino.
Jon and David Park are managing members of Neva One, which closed on the purchase of the former Horizon Casino in April 2014. The project was initially going to be called Park Tahoe Casino, according to the court documents.
Hard Rock Hotel opened Jan. 28.
The legal document highlights the scope of work on the hotel and casino went through significant changes, causing SMC and its subcontractor to incur overtime, additional manpower on the job, inefficiencies caused by work conditions and fatigued workers.
SMC estimated total costs for its work at $18.9 million, according to the increase, having completed the “punch list” of improvements and work required by the owner.
Neva One couldn’t discuss details the matter for litigation reasons, but Jon Park said in a Tuesday statement that matters could be handled.
“We have been seeking to resolve this directly with the contractor, and would have preferred to go this route rather than litigation,” Park said in the statement. “We hope to resolve the close-out issues as soon as we can.”
The initial scope of work was approximately $9.6 million.
According to court documents, eight revisions beyond the initial scope of work contributed to additional costs, all of which “demonstrates the bad faith and unscrupulous practices of Neva One, its agents and representatives.”
The changes doubled the amount of work without extending the construction timeline beyond the desired Jan. 28 opening date.
SMC also alleged Neva One knew Hard Rock would insist on changes “long prior to entering into a contractor” and failed to inform the construction company.
The legal document alleges Neva One failed to pay SMC despite an oral promise in a telephone conservation on Dec. 31, 2014.
SMC said Neva One has commenced an audit on the company and its subcontractors as a reason for nonpayment.
SMC, in its lawsuit, said Neva One, along with Jon and David Park, misrepresented the scope of work for Hard Rock Hotel and Casino, knowing it wasn’t valid when an agreement came to convert the property to Hard Rock.
SMC also cited the scope of change in its allegations of fraud.
The defendants lowered budgeted costs by reducing the scopes of work in certain line item categories, according to the court document. Changing the order during construction re-introduced additional work, driving up costs.
SMC said if it had known about the “dramatic expansion of the scope of work and burden and costs,” the company or its subcontractors would never contracted with the hotel owner.
SMC, in its lawsuit, said Neva One solicited bids in spring 2014 for proposed work on Hard Rock, based on construction drawings 70 percent completed. SMC’s original April 2014 bid estimate equaled $15.56 million. Revised “complete” plans in June lowered the estimate to $11 million.
A second revised set of plans given to SMC formed the Aug. 6, 2014 contract for $9.6 million between Neva One and the construction company.
A fifth revision for construction was issued Sept. 8, 2014, with work having just started. SMC said the owners issued revised drawings through Nov. 9, 2014. Beyond that, the hotel owner provided various other changes outside of written or oral contract or direction.
“The work of construction became so frenzied at the direction of the owner that the architect did not have available time to issue further drawing revisions beyond Revision No. 9 in November 2014,” SMC said in its lawsuit.