re: Part of the new Hard Rock Hotel collapses (NOLA) 3 dead, Cranes Down-ish

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1. Hard Rock will send a letter that they can't take over the property. This will start the snowball.

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Who owns the property?
Who hired the GC?
Who hired the Architect?
All of this will matter.
I don’t think Hard Rock is anything but the leasee or the hotel operator.

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Who owns the property?

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I believe this is an LLC comprised of the developer (Mohan Kailas, a somewhat shady figure), the president of Citadel (who is an investor in the project in addition to owning the GC), and other investors.

I would assume they hired the GC and the architect

Hard Rock is the "flag" (under a licensing agreement) and also was going to have a management agreement to run the hotel. But they were to have no substantial ownership in the property (maybe they ended up with a small ownership to just have skin in the game).

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. I would have thought Citadel would have more of a public face here, leading this situation, after all, it is their build.

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What they hell would Citadel being saying or doing in front of the public eye? What in the world would they have to offer?

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Hard Rock is the "flag" (under a licensing agreement) and also was going to have a management agreement to run the hotel. But they were to have no substantial ownership in the property (maybe they ended up with a small ownership to just have skin in the game).

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That’s why I believe they are really not relevant to the legal discussion.

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Correct

Now they won't have a leasee. The bonding company can't complete the project and has no one to turn it over to.

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The GC’s bonding company is bound to the owner. Hard Rock isn’t important, it’s not their property and the bond(if there is one) does not involve them.

The bond would be between the owner and the GC if there is one.

This will definitely be a performance bond claim. The limits of the bond, which I do not know in this case, would be determined by the contractor's bonding capacity, which is calculated by an underwriting process factoring in the size of the contractor and the projects it had ongoing at the time the bond was issued. The question is will the cost of demolition and reconstruction exceed the limit of the bond? If so, then it would be up to the developer to come up with the cash to finish the work.

The other side of the story are the builder's risk and CGL policies and their limits. I bet there are some under-insured parties that will have to declare bankruptcy, as their primary and excess limits only get them to a couple of million or so in coverage, which will be woefully inadequate. An Orleans Parish jury will hang everyone who touched this project on both the design and build side. The builder will blame the designer and vice versa, but a New Orleans jury won't like that or care.

Do you know if there is a bond?

I’ve seen cases where the owner snd GC are financially related that there is no bond.

I’m not saying that’s the case here, but you never know.

And you are right about insurance, there are limits. Whomever is at fault here is at risk.

It’s a shame too that subs and perhaps suppliers who are owed money and who have money tied up in retainage or in unpaid draws won’t get paid anytime soon or if ever.

The construction business can be rewarding, but it can be risky.

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He squeezes a nickel until a booger pops out of Thomas Jefferson's nose.

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They are going to sue and get a lot of money from lost business which looks like might go for a year now assuming they don't have to rebuild if it collapses on the Saenger.

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Get a lot of money from whom, exactly?

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For the property damage: The Saenger's own building insurance (who will sue the contractor/developer)

For loss of business: The Saenger should have Business Interruption Insurance to cover money lost in a disaster. They probably got the policy for hurricanes, but this will qualify as a disaster.

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Mohan Kailas, a somewhat shady figure


I can't say what he did on this project, but 20 years ago I worked in management with a company that some construction related dealings with the Kailas Company. He squeezes a nickel until a booger pops out of Thomas Jefferson's nose.

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The Kailas company/family committed fraud a few years ago on a Road Home contract. His oldest son went to prison for it. They were comically overbilling for work that wasn't done.

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