Thank you for sharing!

Your article was successfully shared with the contacts you provided.

LAS VEGAS-A lawsuit has been added to the troubles of Neonopolis, a 250,000-square-foot retail and entertainment complex fronting the Fremont Street Experience in Downtown Las Vegas. Just weeks after the only remaining significant tenant–a movie theater—closed its doors, the company with the cooling contract for the development has sued Neonopolis for breach of contract and unjust enrichment among other things.

The company with the cooling contract is E. Three Custom Energy Solutions, which is owned by Ameresco Inc. of Framingham, MA. The owners of Neonopolis are FAEC Wirrulla Holdings LLC and Wirrulla Hayward LLC, both of which are controlled by Wirrulla USA Inc. or its ownership, which includes Dharmesh Bhanabhai. Wirrulla official Rohit Johsi operates the property, which is largely empty.

The lawsuit claims that Neonopolis stopped paying for E. Three’s chilled water cooling services in September 2008 despite a three-year-old, 20-year contract it inherited in 2006 when it acquired the under-performing complex for $25 million, one-quarter of what it cost to develop just a few years earlier. E. Three shut off service in November but waited until earlier this month to file the lawsuit, hoping to resolve things with Wirrulla. The bill now totals nearly $300,000, including interest and penalties.

Joshi tells GlobeSt.com that the contract calls for ownership to pay for the cooling, the cooling system itself and for the capacity of the system, which was costing $60,000 per month. So even without the system operating he’s still being charged $30,000 per month. Neonopolis can no longer afford the bill, he says, because there are no longer enough tenants in the development onto which he can pass the costs.

“Even though the agreement was signed that way we want a release for various reasons,” Joshi says. “First, we are not using any HVAC at all and I can’t pay the [facility and capacity charges] under the circumstances. Secondly, they’ve been paid [facility and capacity] charges for seven years; they’ve already been paid more than the system is worth. So something was not done right [with regard to the contract] and all we are asking for is relief on the capacity and facility charges.”

The breach of contract claim is for not paying its bill; the unjust enrichment claim is for not passing along the monies tenants paid the building owners for the cooling services. E. Three also accuses Neonopolis of breaching the implied covenant of good faith and fair dealing by “leading [it] to believe at all relevant times that the defendant would pay for the services contracted for and received; offering false excuses and justifications for failing to pay…; and engaging in stalling and delay tactics under the pretext of working to resolve the unpaid invoices… .”

E. Three claims it was justified in shutting off service because Joshi previously asserted that Neonopolis “has no intention of complying with their obligations under the service agreement.” Moreover, due to said “anticipatory breach of contract,” E. Three asserts that it is entitled not only to all amounts past due but also all future amounts due for the remainder of the 20-year contract. A representative of E. Three could not be reached Monday afternoon for additional comment and Joshi had to end his interview with GlobeSt.com before he could respond specifically to the allegations.

“I can see their point of view, we have a contract. We are at an impasse,” Joshi says, generally speaking. “The last two years I’ve been telling them I was ready to buy the system from them and [at one point] they were willing to sell but [it didn't happen]. We’ve been paying for three years now and we just can’t do it anymore. It is a sign of the times.”

Looking ahead, Joshi tells GlobeSt.com that the solution to Neonopolis’ huge vacancy is a new Star Trek Experience attraction that is now scheduled to open all at once sometime next year. At one point the plan was to open a portion of the new venue at the same time the new movie came out last month but that was nixed in favor of opening the whole thing in one fell swoop next year, he says.

“That’s the savior of the whole project,” he says. “Not only the project but also for Downtown. They need more entertainment.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.