Philly Developer Wins $175M Suit Over Hotel Delays

Can you put a price on time? A Philadelphia judge just did, much to the detriment of a construction firm responsible for building a Center City hotel.

A judge with the Philadelphia County Court of Common Pleas awarded $174.6 million in damages to Chestlen Development over delays to the W Hotel and Element Hotel at 1441 Chestnut Street, Bisnow reported. Contractor Tutor Perini is on the hook for the damages assessed regarding the 755-key development.

“This award confirms what Chestlen has maintained from the start: accountability matters, regardless of the size of the contractor,” the firm that represented Chestlen said in a statement. Tutor Perini plans to appeal the ruling.

The saga over the Center City hotel dates back to 2015, when Tutor Perini was awarded a $239 million contract to build the hotel. The expected completion date: 2018.

But several years passed between 2018 and when the hotel was actually completed in 2021. Before its opening, Chestlen even broadcast a press release making direct reference to the delay.

That year, Chestlen filed a lawsuit against Tutor Perini, according to the Philadelphia Business Journal, seeking $30 million over delays and inadequate work. But Chestlen received much more than it bargained for.

The biggest determinant in favor of Chestlen was a contract stipulation requiring the building to be completed by Aug. 3, 2018; the penalty for failing to meet that deadline was $35,000 a day. That expense alone added up to nearly $98 million in damages. Moreover, those liquidated damages will keep accruing until a yet-to-be determined final judgment date.

In October, the judge ruled in favor of the developer after a five-week trial. The damages trial began in January.

Plans for the site dated even further back after Brook Lenfest’s firm acquired the property in 2000 for a mixed-use development. No project came to fruition, though, and the site later went up for auction, which Lenfest won with a $12 million bid.

— Holden Walter-Warner