Turner Construction Company is suing Flight Center Hotel, owner of the former TWA terminal turned upscale hotel at JFK airport, for $22.5 million in damages.
The complaint states that the owner entered into a construction management agreement (CMA) with Turner in October 2015 in which Turner agreed to manage the TWA project. The owner decided to pay Turner on a cost plus a fee basis rather than guaranteed maximum price, meaning that Turner did not warrant or guarantee its work product, estimates or schedules according to the CMA.
Turner alleges that the cost of the work increased due to “piecemeal design issuance” which led to constructability issues, delays and additional design changes. Turner also alleges that its work was impacted because many of the drawings issued by the owner’s design team were incomplete and lacked construction details.
In the lawsuit, Turner claims that in July 2018 it notified the owner that the opening date would be August 28, 2019 instead of the originally scheduled date of April 4, 2019 due to several design-caused delays. In February 2019, Turner alleges that the owner verbally directed it to complete the work so the hotel could open in May 2019.
Turner states that it and its subcontractors worked premium time, which expanded the extent of the punch list work that had to be performed. The hotel opened May 15, 2019 and Turner alleges that the efforts resulted in significant additional costs to the company.
“Throughout the project, Turner submitted timely and complete applications for payment in accordance with the terms of the CMA,” reads the complaint. “Starting from about the October 2017 application for payment, the owner engaged in a pattern of taking deductions from subcontractor payments without timely and legitimate justifications; these deductions grew to more than $2 million by June 30, 2019.”
Turner also alleges that the owner failed to make subcontractor payments in excess of $13.4 million. The company states that it sent the owner a notice of breach for non-payment on February 3, 2020. However, Turner alleges that the owner neither responded nor cured its breaches of contract.
In total, the complaint alleges that Flight Center Hotel breached the CMA, leaving an unpaid sum of $22.5 million, including the cost of work and the CM fee, plus interest.