A complex lawsuit over who should bear unexpectedly high construction costs for Walt Disney Concert Hall has been settled, with builders to receive $13.3 million from the hall's parent corporation and an additional $4.5 million under architect Frank Gehry's professional liability insurance policy.
Steve Getzug, a spokesman for Walt Disney Concert Hall Inc., said Friday that it will meet its $13.3-million share with about $2 million left over from the $274-million construction budget, plus $11 million from "a number of supporters of the Music Center and Disney Hall" who want to be anonymous. Getzug said he didn't know whether the money was raised specifically to pay the settlement. As a result of the settlement, he said, the price tag for Disney Hall now jumps to about $284 million.
The suit was filed less than a month after the concert hall's October 2003 opening. M.A. Mortenson Co., the project's general contractor, contended that it and a long list of subcontractors were owed $43.3 million because changes from the original design and flawed construction plans had caused delays and cost escalations. Disney Hall Inc. countersued, saying it was entitled to more than $6 million from builders who had been given advance study time to master the complex plans.
Notice of the settlement was filed July 20 in Los Angeles Superior Court; Mortenson's attorney, Jose Padilla Jr., said the financial terms had been hashed out nearly a year ago, but that lawyers for the 18 litigants involved needed additional time to fine-tune the terms for implementing the agreement. He said the required payouts have not yet been made and are due by Sept. 14.
Minneapolis-based Mortenson will receive $1.5 million; 10 subcontractors will share the rest, with payments ranging from $98,000 to the company that insulated pipes to $6.1 million for ACCO Engineering Systems Inc., which installed the hall's plumbing, heating, ventilation, air-conditioning and fire safety systems.
Under the settlement, none of the parties admits blame or wrongdoing for cost overruns. Construction flaws were not an issue in the case, which was solely about costs.
"It's a classic settlement that no one is 100% happy with," said Los Angeles County Supervisor Zev Yaroslavsky, an ex officio member of the Disney Hall Inc. board. "The important thing is that it's a manageable amount, the maximum range of what was manageable for the concert hall. To pursue a trial on either side would have been senseless, because it would have put a lot more money at risk than this."
Paul Cossette, the Mortenson senior vice president who was project manager for Disney Hall's construction, said the settlement "was something that needed to be done to put it behind us. It's important that no one lose perspective on what a great building it is, and all of the accomplishments of the people involved to build that beautiful, complex structure."
Terry Bell, the Gehry partner who was project manager for Disney Hall, said the firm's insurance policy came into play in the settlement because the Disney Hall corporation was included under its coverage. Gehry's firm was not a party to the suit, although the builders did criticize its work in court pleadings. The settlement includes a "non-disparagement" clause that prohibits Mortenson and its subcontractors from criticizing Gehry's work; it also prohibits Mortenson and three subcontractors from using Gehry's name in written advertising or marketing materials touting their work on Disney Hall.
The settlement notes some minor problems with the building that cropped up after it opened, including a leaky skylight, grout stains on some of the steel cladding that could not be removed without great expense, cooling problems impacting the building's system for sound amplification, and problems with rooftop machinery used in cleaning the building.
"Those have been taken care of, and we've not been called for any other problems," Cossette said.
If the complex case had gone to trial, it could have lasted 80 days and rung up combined legal bills of $10 million, estimated Padilla, the Mortenson attorney. He credited Judge Victoria Gerrard Chaney and mediator Randall Wulff with pushing the parties toward the settlement.