Miami Panorama Tower Developer Sues General Contractor Over Project Funding Lapses

The general contractor on the landmark Miami Panorama Tower is accused in a new lawsuit of failing to pay subcontractors on time, using project funds to beef up its own balance sheet and hiding its cash-flow issues from shareholders in the publicly traded company.

Los Angeles-based Tutor Perini Corp. eventually accounted for all the money provided by the developer, but not before taking it out of a project account to boost its own financial, the complaint said. The combination slowed subcontractor payments as well as construction of the tallest residential tower south of New York.

Panorama developer and owner Florida East Coast Realty LLC leveled the allegations in a federal lawsuit filed in Miami by affiliate TWJ 1101 LLC against one of the nation’s largest building contractors.

Tutor Perini “took the money out of the correct account. This was purposeful,” said attorney Gary Phillips, who filed the complaint. “It was tens of millions of dollars, but it could have been over a couple hundred million. When the subcontractors weren’t paid timely, they started demobilizing. They didn’t work promptly, they didn’t finish the scope of their work because they weren’t being paid, and that’s what caused us problems.”

Phillips, a founding shareholder and managing partner at Phillips, Cantor & Shalek in Hollywood, filed the complaint Dec. 4 over work on the 862-foot tower in Miami’s Brickell Financial District.

Court records do not list an attorney for Tutor Perini, and the company didn’t respond to a request for comment by deadline.

Tutor Perini and Florida East Coast Realty have been court adversaries before. The contractor filed a Miami-Dade Circuit Court complaint in 2017 alleging slow payments for millions of dollars worth of work and late design changes, which added to Tutor Perini’s work.

Katz Barron attorney R. Steven Holt in Miami filed the state complaint for Tutor Perini. Holt didn’t respond to a request for comment on the new federal case.

The Tutor Perini lawsuit against Florida East Coast Realty moved to private arbitration with the American Arbitration Association, and testimony in arbitration gave rise to the latest lawsuit.

Andrew Colb, who headed Tutor Perini Florida’s accounting during Panorama construction, testified the contractor’s corporate account took control of project funds provided by Florida East Coast Realty and released money to the project and subcontractors at its own discretion, according to the complaint.

The Panorama general contractor agreement was with Tutor Perini Building Corp., a subsidiary of Tutor Perini, but the subsidiary had no independent control over project funds provided by Florida East Coast Realty, according to Colb’s testimony cited in the suit.

As the main project manager, Tutor Perini was in charge of paying subcontractors and anyone else who worked on Panorama within 10 days of receiving funds from Florida East Coast Realty, but the complaint said it missed the deadline several times by taking “pervasive control” over payments and micromanaging the funds.

Colb testified the financial gap at one point was $8 million after a 20-day funding lapse.

Email from the contractor’s treasury department said no money would be released in a particular week. One allocation was “for mandatory payables only” for things like rent, utilities and garbage collection, which would be cut off for nonpayment.

Colb understood the goal was to conserve cash and “to help with the corporate cash flow situation.”

Tutor Perini’s ultimate goal allegedly was to disguise its own financial issues to the detriment of shareholders and potential investors. The Nasdaq-traded stock with a market capitalization of $687 million opened trading Monday at $13.50 a share on the high side of a one-year range of $2.61 to $15.92.

Florida East Coast Realty filed its federal lawsuit suit under the Florida Deceptive and Unfair Trade Practices Act alleging conversion, aiding and abetting breach of fiduciary duty, tortious interference and fraudulent inducement.

The 85-story Panorama tower on Biscayne Bay opened in mid-2018 at 1101 Brickell Bay Drive with 821 apartments and a 208-key Hyatt Centric hotel.

Read the complaint: 

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