Score One For The Contractors: The Nevada Supreme Court Declines To Subject Mechanic’s Lien Claimants To Equitable Subrogation

As anyone who follows legal matters in Nevada can attest, the fate of the partially completed Fontainebleau project is one of the most visible symbols of the economic downturn across the nation and Nevada's construction "boom" gone "bust." Built at a cost of $2.8 billion, the Fontainebleau employed hundreds of contractors, subcontractors and materialmen and the building was (approximately) 70% complete before funds ran dry and the project was shuttered.

In June 2009, the Fontainebleau filed for bankruptcy protection and a struggle among the property's various creditors ensued, which continues to this day. In late 2009, financier Carl Icahn (through his entity, Icahn Nevada Gaming Acquisition, LLC) purchased the property out of bankruptcy with a successful bid of $156 million. With the Icahn purchase, the bankruptcy estate (i.e., the debtor) realized approximately $100 million for disbursement to the project's creditors.

Thus began a struggle between the bank that had provided financing for (and...