HOTEL : Deadlock Broken on Fees for Ritz-Carlton Builders

A five-month stalemate in negotiations over final payments to builders of the lavish Ritz-Carlton Hotel in Laguna Niguel was broken this week, according to the hotel’s owner and the general contractor on the $41-million project.

Representatives of Atlanta-based W. B. Johnson Properties, owner of the seaside resort hotel, which opened last August, and of Stolte Inc., the Los Angeles-based general contractor, said that on Thursday they agreed to pay about $2 million to satisfy approximately 40 of the 55 subcontractors who together are claiming $6.4 million worth of unpaid bills. In addition, Stolte, which hired the subcontractors to work on the Ritz-Carlton project, contends that Johnson Properties owes it $2.5 million.

Johnson Properties has disputed about $1 million of the total $8.9 million in claims on which payment has been delayed. The first 40 subcontractors to be reimbursed were selected because most of their claims are undisputed, according to Stolte and Johnson Properties officials.

Jim Selna, attorney for Johnson Properties, said Stolter and Johnson Properties have decided to pay only 10 of the 40 subcontractors less than what they requested. He said that next week, Stolte and Johnson negotiators hope to meet with those 10 subcontrators and ask them to accept reduced payments.

Selna said that any subcontractor who accepts payment for its claim will be required to drop any lawsuits or liens filed against the hotel and Stolte.

In the remainder of the subcontractor claims, much larger amounts are in dispute, and these could take “several more months” to settle, he said. Among those still to be resolved is Stolte’s claim. Johnson stopped making payments to the contractor last July, when it undertook a review of the many construction changes ordered. Midway through the building of the hotel, Johnson acquired the license rights to the Ritz-Carlton name, and plans for the hotel were extensively upgraded.

An estimated 30 to 40 subcontractors have filed liens against the hotel property, and 13 lawsuits have been filed against Johnson Properties and Stolte. Stolte also is suing Johnson Properties.

“This is the beginning of the resolution of the entire dispute,” attorney Selna said Friday.