Ritz-Carlton Bills Dispute Simmers : Subcontractors Claim They’re Still Owed $1.3 Million

More than a year after the Ritz-Carlton’s splashy grand opening, two building subcontractors are claiming that they still are owed nearly $1.3 million for work on the $100-million hotel.

The contractors made their claims despite a financial settlement announced last week between the Ritz-Carlton Hotel and Stolte Inc., the hotel’s Los Angeles-based general contractor. The two subcontractors said that Stolte owes them the money, but both have liens against the hotel as well.

And while Stolte received a final $1.1-million check last week from W. B. Johnson Properties of Atlanta, developer of the Laguna Niguel hotel, the two subcontractors said none of the money has been passed along to them.

Dispute Over Payment

The Ritz-Carlton’s brief history has been marred by a running dispute over payment for construction work. Although it appears that only two of the 15 subcontractors still have not been paid, many who have been paid complain that the hotel’s owners paid less than 100% of their bills and took an excessive amount of time to do it.

Of the two unpaid companies, Durrand Door, the Whittier firm that installed the hotel’s doors, still is owed nearly $1 million, according to Ed Miller, an attorney for the firm. “The money has not been paid,” he said, but he added: “We fully expect to get a check within the next few days.”

Less optimistic is Albert Rossi, a Huntington Beach contractor whose company, Rossi Construction Co., filed a $5-million punitive damage suit against Stolte on Aug. 14 in Orange County Superior Court. Rossi said that his company’s business has been slowed because he is forced to pay suppliers out of his own till while awaiting payment from Stolte, a process that reduces his operating capital. “It’s been extremely irritating and frustrating,” Rossi said.

Hotel Owners Named

In addition to suing Stolte for punitive damages, Rossi’s suit names the hotel’s owners in an action seeking $274,000 that Rossi said he is owed for the sewage system, domestic water system and fire protection water system that his company installed in the hotel.

Rossi said that he is especially angered by published reports last week that owners of the 397-room hotel settled their debts with all contractors. “If they’ve paid their general contractor, then why haven’t I been paid?” he asked.

Bruce Herold, attorney for Stolte, said the firm is arranging meetings with both subcontractors next week. “These subcontractors will very shortly be paid the amount that Stolte feels is owed,” he said.

Between them, the two subcontractors said they are owed nearly $1.3 million. “We drastically disagree with those amounts,” said Herold, who would not specify what the subcontractors would be paid.

$5-Million Suit

Of the $5-million suit for punitive damages, Herold said: “They can ask for the moon, but it doesn’t mean that one penny of it is justified.”

Meanwhile, W. B. Johnson, a 10% owner of the hotel (the other 90% is owned by Prudential Insurance Co.), has paid Stolte and its subcontractors “everything we feel they were entitled to,” said Mike Willoughby, an attorney for W. B. Johnson. “It’s none of our business any longer what kind of agreement is worked out between Stolte and the subcontractors.”

Two other subcontractors who settled with the hotel company had mixed opinions on the outcome. Ernest Jewell, general manager of Cowelco, a Long Beach metal fabricator that made many of the exterior metal ladders and stairways for the hotel, said that he was paid all but $3,847 of the $111,694 that was owed to his company. “They stretched us out a long time, but we feel lucky to get out without getting hurt worse.”