Glen, Smith & Glen Development closed the sales office of Sullivan Square on May 2, but Kenneth Smith, the firm's managing partner and president, says Irish-based Harcourt Developments will apparently open a new sales office and start construction on the 16.5-acre project this summer. He said he's uncertain of Harcourt's plans since company officials are no longer communicating with him about the plans.

On April 30, Smith revealed his company's legal strategy to In Business after a reporter made inquiries about speculation the project was canceled.

The lawsuit alleges that Glen, Smith & Glen has been financially exploited and defrauded by Harcourt, which had committed to finance the project's $800 million construction costs. Harcourt had been paying Glen, Smith & Glen to oversee the project, but quit doing so at the end of last year and owes millions of dollars, the local company's officials say.

"(Harcourt officials) were engaged in a classic force-out," Glen, Smith & Glen attorney John Manly says. "They are trying to steal this project. Essentially, they stopped paying, not because of market conditions ... all of the indications are they plan to build the project. They are forcing (Glen, Smith & Glen) out and taking the profits."

Pat Doherty, one of Ireland's most successful and wealthy developers, heads Harcourt. Andrew Parker Bowles, the former husband of Camilla, wife of Prince Charles, is a director of the firm.

Harcourt responded to In Business inquiries, but has declined to comment.

Glen, Smith & Glen, a commercial and residential developer, acquired the site in the southwest valley near Interstate 215. It sought out Harcourt as a partner, and the Irish firm secured financing from the Anglo-Irish Bank, Smith says. Under the terms, Glen, Smith & Glen retained a 40 percent interest and Harcourt would cover the expenses, he says.

"We were doing all the work, and they would bring in the money," Smith says.

Although Smith says he didn't realize it at the time, he now believes this form of economic bullying may be a normal course of business for Harcourt. The Irish firm started changing terms of the deal and putting financial responsibility on Glen, Smith & Glen, Smith says. In the end, it has hurt his company's reputation.

"I would like to think I was a better judge of character," Smith says. "We thought they would be a good partner, and they were excited about Las Vegas. It was my mistake. I thought everybody does business like me, but I was stupid."

One market observer suggests the turmoil will make local developers leery of partnering with foreign companies. It appears to be a move simply of greed.

"That may have been their plan all along," the observer says.

Given the slowdown in the housing market, the project had been considered successful up until this point, but what happens now is anybody's guess. If the two companies settle their differences, the project could still work.

The question that remains is whether the sales that have already been made will go through. If not, projects such as Manhattan West and others under construction stand to benefit.

Glen, Smith & Glen has proposed a similar project in Henderson, but that project is still in the planning stages.

Nancy Rapoport, a law professor at UNLV, says the dynamics of the case will take shape in the upcoming weeks when Harcourt files its answer to the complaint. It will be curious to see if they blame the worldwide credit crunch for the problems, she says.

"The ripple effect, if the project doesn't get completed, will be a bevy of lawsuits from the folks who put down deposits for condos, and those lawsuits may try to argue that the condo depositors shouldn't only get their deposits back plus perhaps interest but also some portion of market appreciation had the project been completed," Rapoport says. "On the other hand, in today's market, that's a dangerous argument to make, because real estate prices are going down, not up, and the condo depositors don't want to put themselves in the position of admitting that they entered into losing contracts."

The problems started last fall when Harcourt made only partial payments to consultants or didn't pay them at all, Smith says. Excavation and utility work started last summer, and Harcourt started pushing the construction timetable back last fall, Smith says.

Eight liens and two lawsuits totaling more than $2 million have been filed by firms against Sullivan Square, and back payments owed to consultants and vendors total another $2 million, Smith says.

He says he met with Doherty two months ago and received assurances the project would be funded and back on track, but nothing happened. That inaction forced him to pursue legal action.

Smith says it appears Harcourt is going forward with the project because he heard from a broker calling his firm about its plans to open a sales center. In addition, there was apparently a letter sent to its contractor, Martin Harris, that construction would begin in July.

"I got a letter from (Harcourt) last week threatening us not to contact the lender about what was going on with the liens and lawsuit," Smith says.

Sullivan Square had 95 signed contracts in escrow and 30 pending, Smith says. The first block is to have 485 of the 1,300 units built. The development was expected to feature offices and retail space.

Manly said he will seek lost profits and punitive damages, but didn't know what the amounts would be.

"Foreign developers are welcome to come here and make money, but they have to live within the law and not exploit the local community for monetary gain," Manly says. "I am hoping for a large award to send a message to others that we don't tolerate this type of conduct here."

Smith says it's disappointing to no longer be a part of a project that offered something new to Las Vegas with a mixture of lofts, high-rise towers, brownstones and live-work space geared for local buyers who don't want to live in a single-family home. A letter will be sent to buyers letting them know what's happening and that the project is in flux.

"It is sad for the community because it needs alternative projects like Sullivan Square," Smith says.

Brian Wargo covers real estate and development for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4011 or by e-mail at wargo@lasvegassun.com.