Waterscape Resort, the owner of the new, 43-story Cassa Hotel and Residences at 70 West 45th Street is suing construction firm Pavarini McGovern for fraud, alleging that it never obtained insurance to cover defaults by its subcontractors, despite Pavarini's claims that it had obtained such insurance and paid hundreds of thousands of dollars in premiums on the policy, according to an article by Marine Cole in today's edition of Crain's.

Waterscape filed the case late last month with the Supreme Court of the State of New York and is asking for $30 million in damages, the article said.

"Our position is that Waterscape's allegations against Pavarini McGovern are totally without merit," said Joel Sciascia, general counsel at the firm, in an e-mail to Crain's.

Waterscape hired Pavarini Mc Govern in June 2007 to for its Cassa project and the article said that "part of the construction-management agreement mandated the purchase of Subguard insurance by Pavarini McGovern to protect against potential default by its subcontractors. The construction company charged Waterscape $200,000 in insurance premiums for nearly two years."

"Subguard insurance," the article continued, "is an increasingly popular alternative to a performance bond and pays for any cost associated with delays on construction if a subcontractor goes out of business or is unable to perform a job, according to Barry LePatner, a construction lawyer with LePatner & Associates.

"In 2008, the concrete subcontractor on the Cassa tower project, Broadway Concrete, began to default," the article said, "prompting the plaintiff to ask Pavarini McGovern to activate the insurance to cover mounting costs. But the construction company wasn't able to produce a copy of the policy. According to the lawsuit, Pavarini McGovern confessed in June 2009 that there was no such coverage. Although the concrete work was ultimately completed, it was done eight months later than planned, creating delays for other subcontractors and increasing costs for Waterscape Resort."

"They gave us credit for the premiums, but it's nothing," said Solly Assa, a managing member of Waterscape Resort and chief executive of Assa Properties, the developer of the building, the article said.

A September 17, 2010 article by Marc Santora in The New York Times said that Mr. Assa said that "although the mainly foreign buyers at his property were willing to pay $950,000 to $18 million for the condos, they were looking to save money on carrying costs," adding that as a result the Cassa "will offer many of hotel amenities 'a la carte' instead of including them in the common charge. The lower monthly fees, starting at about $1,200, are one reason the apartments have sold quickly, allowing him to raise prices three times already, he said. Of the 57 residences for sale, 40 are in the process of closing, he said.

The mid-block building, which overlooks a large and lushly landscaped plaza across the street, was designed by Enrique Norten of Ten Arquitectos and Cetra/Ruddy.

Enrique Norten is the architect of 1 York Street in TriBeCa and the Guggenheim Museum Guadalajara and he had designed some important projects featured in a recent exhibition at the Museum of the City of New York that were not built, a mixed-use building on Park Avenue at 125th Street that was notable for its wavy waffle-like facade and bright colors, and a library in Brooklyn near the Brooklyn Academy of Music.

The hotel portion of the building will be operated by Desires Hotels whose properties include the Hotel Mela here and the Sagamore Hotel in South Beach, Miami.

The residential condominium apartments will have a 24-hour concierge and room service, full housekeeping and turndown services, pet-car services, limousine and valet services, child-car services and overnight shoeshine service.

The tower is distinguished by its asymmetrical fenestration patterns.