Eye-popping bill at the Proper Hotel: Contractor sues for unpaid steel work

Brad Korzen, Kor Group CEO

At the under-construction Proper Hotel in Downtown, a steel contractor is alleging the development firm has not been following the rules.

Brownco Construction Company filed a lawsuit against The Kor Group, charging the Los Angeles-based company owes it nearly $2.4 million in unpaid steel and labor. The 148-key boutique hotel is set to open in September at 1106 S. Broadway. It has been undergoing extensive renovation at the historic Case Hotel building.

The Kor Group, led by founder and CEO Brad Korzen, developed the project under its entities Case Owner, LLC and Case Real Estate Partners I, LLC. Both of those LLCs were named as defendants in the lawsuit, filed in L.A. County Superior Court. McGuire Builders Inc. — a hotel renovation and construction company — is also a defendant. McGuire is accused of issuing multiple and excessive changes, according to the lawsuit.

Brownco claims it is still owed for the original contract work, as well as for project delays and retention, adding up to nearly $2.4 million. Brent R. Phillips, who represents Brownco, said the project was supposed to take eight months but has lasted over two years.

Bank OZK — formally Bank of the Ozarks — is also a defendant. The Arkansas-based bank financed the project and claims right or interest in the property, according the suit. Bank OZK has been one of the top commercial lenders in L.A. County the past few years.

The Kor Group, McGuire Builders and Bank OZK did not respond to requests for comment.

Nova Drywall Systems, a different contractor on the same project, filed a separate suit against Kor, McGuire and Bank OZK, alleging $1 million in unpaid work. That case is on hold pending arbitration.

The other Proper Hotel is in Downtown Santa Monica.

L.A. is in a hotel construction boom, which has propelled the county to the top of California’s hotel development, according to a survey released earlier this year. Nearby the Proper Hotel construction project, Sandstone Properties is working on a 730-room hotel on Pico Boulevard.