The sourest note emanating from Walt Disney Concert Hall these days is resounding in Los Angeles County Superior Court, where a hearing Friday involved 22 different litigants who are suing and being countersued over $43.3 million in allegedly unpaid construction bills.
That’s how much M.A. Mortenson Co., the project’s general contractor, says it and a long list of its subcontractors are owed by Walt Disney Concert Hall Inc., the nonprofit organization that planned and built the project and raised $274 million to pay for it. If Mortenson should win its claim -- more than $50 million with interest -- that bill could balloon.
Since its opening in October, Disney Hall has been internationally acclaimed for its visual and acoustic splendor. The case is not about any flaws in the building itself but about who is to blame for delays and difficulties during construction that the two main litigants agree led to cost escalations.
Mortenson, a Minneapolis-based company with revenues of more than $1 billion a year, says Disney Hall made unreasonable demands for changes and extra work after construction began. In a countersuit, the Disney Hall corporation seeks more than $6 million for extra costs it says it incurred because of mistakes and poor planning by Mortenson, including more than $3.5 million paid to Frank Gehry’s firm for consultations during the construction process.
The Disney Hall corporation’s spokesman, Ron Hartwig, said Friday that it is “not prepared to discuss” whether insurance would cover the cost should the corporation lose or settle the case.
“We don’t believe this is a suit that will prevail, and we have plenty of money to deal with the legitimate claims anyone might have on us,” said Edward J. “Jack” Brunell, president of Walt Disney Concert Hall Inc. “We’re making no contingency plans” to line up extra funding to deal with possible damages.
Lawsuits from subcontractors began flying last summer, before the building was finished, according to court files. Mortenson sued in November 2003, and Disney Hall countersued in January.
Mortenson maintains it was undermined from the start by “defective, deficient, incomplete, erroneous and inaccurate construction documents” supplied by Disney Hall and its architects. When the Disney Hall corporation asked for variations from the original building plan, Mortenson maintains, those changes “far exceeded, in both number and scope, the design changes that could have been reasonably anticipated.” Disney Hall, Mortenson says, refused to negotiate price increases reflecting the new demands.
Paul Campbell, a senior vice president of Mortenson, said Friday that the changes escalated the basic construction cost from the $180 million specified in Mortenson’s November 1999 contract to a final $212 million.
Disney Hall contends that Mortenson knew what it was getting into when it signed the contract and agreed to complete construction in a little more than three years after site work began. It already had been paid $2.5 million to work with Gehry during a 20-month planning phase in 1998 and 1999, familiarizing itself with the unusual computer-generated design for the hall, the special building techniques that would be required and the construction costs they would entail, Disney Hall says.
Despite that head start, Disney Hall maintains, “Mortenson failed to ... competently plan, organize, monitor, manage, supervise and control work on the project, failed to accurately ... assess its own engineering and management skills, and failed to ... maintain accurate cost estimates, budgets and schedules.”
Interviewed on Friday, however, Mortenson’s Campbell and Brunell, the Disney Hall corporation president, sounded far more conciliatory notes.
Instead of marching toward a trial, they said, executives on both sides have been trying to reach a settlement. Both said that suits of this sort are commonplace on big, complicated projects such as Disney Hall and that the dispute over construction costs does not tarnish the building’s luster.
“It’s a phenomenally successful project from every aspect,” Campbell said. “The accomplishments are going to be long-lived, and people will recognize that much longer than these issues will last.”
On Friday, Superior Court Judge Victoria Gerrard Chaney began to develop ground rules for a complex and potentially long-lasting legal fray. She already had consolidated the 13 lawsuits over Disney Hall’s construction costs into a single case. In a telephone conference with a mediator and 21 attorneys for the various parties, she began to work out how they would handle mediation, gather and share evidence and winnow down the number of parties by settling some of the smaller subcontractor claims.
“I know that some of you are probably in for the long haul,” Chaney said.