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Contractor building Austin’s Fairmont hotel files $27 million lawsuit


The general contractor building what will soon be Austin’s largest hotel has filed a lawsuit seeking at least $27 million in damages against a subcontractor that allegedly caused the project to fall behind schedule.

That hotel, the 1,048-room Fairmont Austin, at 101 Red River St., is supposed to open Aug. 9 and its developer says that will still happen, despite the looming court battle.

“What’s important for people to know is that Fairmont Austin remains on track to open in early August,” said Doug Manchester, president of Manchester Texas Financial Group. “Delays that were incurred have been accounted for, and we’d be opening even earlier had they not happened. We look forward to delivering a stellar project in approximately five months.”

In documents filed in U.S. District Court in Austin, Hunt Construction Group Inc. accuses Cobb Mechanical Contractors Inc. of not providing enough workers to keep the construction of the 37-story tower on schedule.

In addition, some of Cobb’s work was reportedly subpar, according to Hunt.

Hunt declined to comment. Calls from the American-Statesman to Cobb’s Austin-area office and its corporate headquarters in Colorado Springs, Colo., seeking comment Thursday afternoon were not immediately returned.

Liberty Mutual Insurance Co., which issued Cobb’s performance bond for the project, is also named as a defendant in the suit.

Hunt claims it notified Cobb’s representatives on multiple occasions that they were behind schedule before finally moving in November to partially terminate its $31 million contract with Cobb, which had been tasked with handling mechanical and plumbing systems for the luxury high-rise.

The partial contract termination called for Cobb’s crews to stop work on the hotel’s podium – its first seven floors – and focus instead on the upper floors of the hotel tower.

Hunt says it was required to secure a replacement subcontractor, “incurring significant additional costs.”

“The subcontract provides that Hunt is not required to sit by and wait while delays and damages mount up,” the suit states.

So far, Hunt alleges, Liberty Mutual has refused to reimburse Hunt via the performance bond the insurer issued.

Hunt describes the hotel as a “fast-track oriented project.” Construction is sequenced, so when one company – such as Cobb – falls behind, other work is delayed, as well, Hunt said.

In addition to allegedly not having enough workers on site, Hunt says some of Cobb’s workers were responsible for “quality issues,” such as supposedly not resealing a temporary roof structure before a rainstorm, which led to “significant” damage.

The suit accuses Cobb and Liberty Mutual both of breach of contract and seeks more than $27 million in damages, plus court costs and attorneys’ fees.

A trial date has not been set.

Last month, the federal Occupational Safety and Health Administration opened an investigation involving the Fairmont project after a metal bracket fell from an external construction elevator at the site at East Cesar Chavez and Red River streets, where the $370 million project is underway.

Asked last week about any update in the probe, Juan Rodriguez, deputy regional director in the Office of Public Affairs for OSHA, said there was nothing new to report.

“The investigation is open and ongoing,” Rodriguez said in an email.

In a written statement about the incident last month, Hunt said: “This morning a small metal bracket on an external hoist fell to the ground. No one came in contact with the bracket and there were no injuries. The matter is being investigated, but there have been no prior safety issues with the hoist.”



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