your timeline/story are a bit off.
It goes back to the Sunset Blvd. debacle. LuPone signed on to do Sunset Blvd. in London with the understanding that she would open the New York production. When she didn't (which is documented elsewhere), she sued ALW, they reached a settlement, end of story.
However, after this, she did not want to start in with a new show unless she was totally guarenteed that she would be able to open the New York production. When Laurents wouldn't agree to that she turned it down. This was apparently publicized enough (or at least she had been attached to it for enough time), that when she pulled out, the already not-so-great show did even worse and didn't make it.
Being the jerk he is, Laurents decided to blame LuPone (instead of himself). When the Sam Mendes revival was in it's early stages, they wanted LuPone to do it, but Laurents, still being pissy said "no way will she do it on Broadway. Or any other piece I've written."
Flash to the Ravinia concert, which being a concert in Chicago allowed her to do it, where she got great reviews, Laurents saw it, and got over himself.
http://www.youtube.com/huskcharmer