Vail developer says he was overcharged by $4M
Vail, CO Colorado
VAIL – Solaris developer Peter Knobel is suing his project’s construction manager after an audit that he said reveals nearly $4 million in overcharges.
Knobel’s suit, filed under his company Solaris Property Owner, LLC, alleges that The Weitz Company, LLC, committed fraud, negligence and a breach of contractual obligations.
Gerry Poye, the head of construction representing Solaris, said The Weitz Company charged universal rates and never adjusted those rates down to reflect the amount of money actually paid to subcontractors and other costs.
“Our agreement with them, regardless of what typical charging rates would be, was that all we were paying is what was actually paid out to an individual,” Poye said. “We started seeing things that had nothing to do with Solaris, being charged to Solaris.”
Poye said the charges are indefensible and completely outside of industry standards.
The Weitz Company’s senior vice president of its Denver office, Orville Hinerman, issued the following statement Tuesday:
“The Weitz Company is proud to be a part of the Solaris project; one of the finest residential resort buildings in the State of Colorado. We continue to seek a mutually satisfactory resolution with Solaris Property Owner, LLC, but cannot comment on ongoing litigation.”
Solaris, located in Vail Village near the International Bridge, is partially completed and includes condos, stores, restaurants, a bowling alley, a movie theater and a plaza.
The lawsuit, filed in Denver District Court, accuses The Weitz Company of not only overcharging Solaris, but also for misrepresenting true job costs. The suit also claims that the construction manager made many mistakes during the construction process that caused Solaris to have to pay for the same work more than once in order to fix the mistakes.
Solaris hired Clifton Gunderson LLP to conduct the audit of The Weitz Company’s charging rates, compensation and overhead costs in 2008. Solaris had Clifton Gunderson conduct a second audit in 2010, which studied work performed in 2009 and projections for 2010.
Clifton Gunderson provided a report of both audits this past June, concluding that “in general, the project’s charging rates exceed the actual costs for wages and overhead.”
The lawsuit alleges that the first audit shows overcharges to Solaris between $2.5 million and nearly $6 million.
“Based on its review of the second audit and supporting materials, Solaris believes that Weitz has overcharged Solaris no less than $3,958,478,” according to the Solaris Property Owner’s complaint.
When Solaris showed the findings to Weitz, the complaint alleges that the construction company refused to offset future bills to make up for the overcharges, but rather demanded Solaris make additional payments to the company in excess of $1 million.
“It was out of left field,” Knobel said in a statement, referring to the additional charges. “We definitely did not see that coming.”
The Weitz Company also filed a mechanics’ lien against Solaris on Sept. 10 for more than $1.5 million. A mechanics’ lien provides the holder, in this case The Weitz Company, with a security interest in the construction project and the real property. It’s like a deed of trust in that it’s a recorded interest in real property that acts as collateral for payment.
Knobel said he couldn’t comment on the mechanics’ lien, but that his company wasn’t sure on how Weitz came to the $1.5 million lien amount.
The Weitz Company would not comment on the mechanics’ lien when asked about it Tuesday.
Community Editor Lauren Glendenning can be reached at 970-748-2983 or email@example.com.