A construction contractor says the temporary closure of the downtown Race Rock Cafe may prove permanent unless the restaurant pays more than $1 million in unpaid construction fees.
Frank Martin, president of Martin-Harris Construction, called a press conference this morning to discuss legal options. He alleges the Race Rock has not paid the contractor for services it provided to build the 30,000-square-foot, two-level retail, entertainment and full-service restaurant in 1999.
Martin on Friday filed a mechanics lien against the property and was granted a preliminary injunction. The injunction prohibits Race Rock officials from removing memorabilia or static displays until a judge rules on the matter.
A mechanics lien is seen as the last legal resort for an unpaid contractor. By filing a lien, Martin-Harris Construction is attempting to force an auction of the property to cover unpaid construction bills.
A judge will decide April 19 and April 20 whether to make the temporary injunction permanent.
Race Rock officials said the restaurant was experiencing declining revenue due, in part, to construction at the nearby Neonopolis at Las Vegas Boulevard and Fremont Street. The restaurant closed Monday.
Andy Newman, chief executive officer of Race Rock International, based in Orlando, Fla., could not be reached for comment this morning.
Martin said Race Rock paid the company $4.3 million of the original contract when the restaurant opened yet still owes more than $1.4 million for extra work, which was approved by Race Rock.
"We were paid $4.3 million when the Race Rock opened, but all the motivation to pay us seemed to leave after that," Martin said. "I have never before been faced with the attitude that the people of Race Rock have taken."
Martin went through arbitration with Race Rock last year, when it offered to pay Martin-Harris Construction 50 cents on the dollar for services rendered. Three months ago, Race Rock offered 3 cents on the dollar, which Martin said was unacceptable.
One of Martin-Harris Construction's subcontractors, Vegas Steel, Inc., which worked on the restaurant, in June filed a foreclosure suit against Race Rock. The suit alleges Vegas Steel, Inc. is owed for work on the downtown property. The suit also named Martin-Harris, Fremont Street Experience Corp., Pioneer Citizens Bank of Nevada and American Casualty Co. of Reading, Pa. That suit is ongoing.
Martin says he can't pay the subcontractors until Race Rock pays Martin-Harris Construction, the general contractor.
And Martin says the liens don't only affect Race Rock, but also the underlying property -- the Fremont Street Experience.
Mark Paris, president of the Fremont Street Experience, said he did not know whether it could be held liable. He said the matter would be decided in the courts.
"If Martin-Harris and the subcontractors choose to enjoin the Fremont Street Experience, they have the right to do that," Paris said.
A similar situation occurred recently in the wake of cost overruns and disputes related to the Venetian project. The Venetian refused to pay general contractor Lehrer McGovern Bovis for the extra costs; officials at the Venetian contended they had already paid the project's maximum guaranteed price. Bovis then refused to pay the contractors for the extra work and said the company would not until Bovis was paid by the Venetian.
The dispute resulted in more than $300 million in mechanics liens being filed against the Venetian, which has avoided a court-ordered sale by providing bonds that can be used to make payments to contractors.
Two new bills introduced during this year's Legislature could help contractors who are trying to collect money they say they are owed.
Senate Bill 370 would eliminate the "no lien" clauses in construction contracts. Many subcontractors on the Venetian project signed contracts that forbade the filing of mechanics liens against the property.
The Senate Commerce and Labor Committee has also introduced Senate Bill 274, which states the subcontractor must receive payment within 30 days after submitting a bill or within 10 days after the contractor has been paid, whichever comes first.
If the bills do not leave committee by Monday they will be dead.
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