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Lease Crutcher Lewis Files Suit for $24 million Against
Developer of Seattle's Four Seasons Hotel

By Eric Pryne, Seattle TimesMcClatchy-Tribune Regional News

Apr. 9, 2010--The general contractor who built the ultraluxury Four Seasons Hotel and Private Residences filed suit against the developer of the downtown Seattle project this week, seeking $24 million it says it's still owed for work on the tower.

In the lawsuit filed Tuesday in King County Superior Court, Lease Crutcher Lewis said it effectively loaned money to developer Seattle Hotel Group (SHG) starting in September 2008 to finish the 21-story project when funding ran short.

"They hadn't sold as many condos as they had hoped," Lease Crutcher Lewis CEO Bill Lewis said in an interview Thursday. "We agreed to do it to show support for the project. I don't think any of us thought the market was going to be as miserable as it was."

An SHG spokeswoman did not return a call or an e-mail.

The $120 million Four Seasons, at First Avenue and Union Street, opened in late 2008. It consists of 36 spacious condos atop a 149-room hotel.

While the condos -- perhaps Seattle's most expensive multifamily residences ever -- generated considerable buzz during construction, presales stalled when the economy tanked.

Despite price cuts, 12 still remain unsold, according to county records. Just two have sold since February 2009.

Lewis said his firm continues to negotiate with SHG and is making progress. It wouldn't have filed the lawsuit but for a legal deadline, he said.

Lease Crutcher Lewis recorded a lien claim seeking payment from SHG last August. Under state law, that meant it had eight months -- until this month -- to settle with the developer or go to court to preserve its rights.

More than a dozen other firms that helped design or build the Four Seasons -- most of them Lewis subcontractors -- also have recorded liens against the project. Several have sued.

Lease Crutcher Lewis says in its lawsuit that, during construction, SHG informed it there was a $20 million gap between the project's estimated completion cost and its budget and construction financing.

"The owners represented the issue as a temporary 'cash flow' and 'timing' issue, and that the funds would be available to cover construction costs," says the suit.

In September 2008, it continues, SHG and Lewis signed an agreement in which SHG agreed to raise an additional $3 million and an unidentified lender agreed to provide another $3 million.

In return, Lewis agreed not to bill SHG for remaining construction costs or change orders.

The amounts owed "were identified and to be treated as a loan by Lewis to the property owners," the suit says.

Lewis was to be repaid no later than Sept. 1, 2009, according to the suit, but "despite repeated demand, the owners have failed to pay Lewis. ... "

Lewis is seeking nearly $24 million plus interest, sales tax and attorney's fees.

Like all construction-lien lawsuits, this one asks that the court order the property sold to satisfy Lewis' claim. But construction-industry insiders say disputes rarely go that far.

SHG's managing partner is John Oppenheimer, president and CEO of Columbia Hospitality, a hotel and conference-center management and consulting firm. Other partners include former Seattle Mayor Paul Schell and venture capitalist Tom Alberg.

The Four Seasons' condos range in size from 1,300 to 10,000 square feet and have sold for between $1.26 million and $11.4 million.

Buyers include high-tech entrepreneur and investor Peter van Oppen, retired Burlington Northern President Richard Bressler, and former Sonics owner Barry Ackerley.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

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Copyright (c) 2010, Seattle Times

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