La. DBE files suit against Pennsylvania-based 84 Lumber
28th October 2013 · 0 Comments
By Mason Harrison
A Louisiana business owner is embroiled in a legal battle with one of the country’s largest construction firms following a problematic end to a contractual agreement to build two southeast Louisiana schools in 2010, after the injection of millions of dollars in post-Katrina federal funds to rebuild area classrooms.
Addie Mills, owner of the now-shuttered J&A Construction Management firm, is suing 84 Lumber, a Pennsylvania-based building materials supplier, after, she alleges, the company failed to provide required services and balked on a promise to help secure bonds for the two projects the firms were tasked to complete.
Three years ago, the Chicago-based construction company, F.H. Paschen, began work, along with J&A, to build South Plaquemines High School in Port Sulphur, La., and Mildred Osborne Elementary School in New Orleans. J&A, Mills says, brought on 84 Lumber as a subcontractor to help manage the projects.
But from the start, Mills says, construction delays and inexperienced staffers plagued the projects. “I could tell that they didn’t know what they were doing,” she states. “They would send salespeople to manage the projects and, at one point, brought in a roofing contractor to help with laying the foundation.”
Mills says her frustrations grew as the stalled projects drew on and the tone of her working relationship with 84 Lumber began to change. “They were nice enough to get the contract, but then they started telling me what I was going to do and what I wasn’t going to do,” Mills adds. “It had a sexist tone to it.”
As the construction snarled, F.H. Paschen yanked funding for the building projects and halted payment to J&A and 84 Lumber. The Pennsylvania firm sued F.H. Paschen in federal district court to recover more than a $1 million it claims it is owed. Paschen responded to the suit and added J&A as a third-party defendant.
With the projects at a standstill, Mills attempted to use her insurance bonds to recover her losses, but claims her work on the projects was not insured. “I paid 84 Lumber more than $200,000 to purchase $7 million worth of bonds,” Mills says. “I found out that they had only given the insurance company about $50,000 to secure bonds and that those bonds were not even in my name. So, they pocketed the rest of the money and left me without any insurance.”
A spokesperson for 84 Lumber declined to comment on Mills’ allegations, but says the matter is now headed to arbitration. But Kristen Morris, an attorney representing Mills at Gauthier, Houghtaling & Williams, says 84 Lumber has reneged on its promise to enter into arbitration and is pushing to return the litigation to federal court. “We would like to have all of our claims addressed in arbitration,” Morris says.
[Editor's Note: Since the publication of this story, Kristen Morris has contacted our office to clarify her statement. "We would prefer to have all of our claims addressed in litigation, not in arbitration," Ms. Morris said. "If all of the claims cannot be heard in federal court, then as an alternative we would like all of the claims to be brought together in arbitration."]
The case has touched off a debate about the treatment of small minority firms by big corporations and underscores longstanding tensions between Black small business owners and white entities.
Mills says she first learned about 84 Lumber’s desire to contract with minority firms through the Baton Rouge chapter of the National Association for the Advancement of Colored People. “They were going around the state targeting minority contractors,” Mills, who is Black, says. “They needed to have minorities to qualify for federal contracts. The funding to build those schools came through [the Federal Emergency Management Agency].”
Barbara Major, who led efforts to strengthen New Orleans’ program for disadvantaged business enterprises, calls Mills’ charges of mistreatment a sore example of the worst possible outcome of interactions between large and small firms. “One of things we have to do,” Major says, “is investigate the firms we plan to do business with and make sure that we read our contracts with our lawyers before signing them.”
Mills alleges 84 Lumber tried to strong-arm her into accepting an agreement that would leave her with two percent of the projects’ profits. “Unfortunately, I didn’t read the contract with my lawyers before signing it, but we were able to get the agreement amended to where I would be receiving 40 percent,” Mills says.
But after providing more than $4 million in uncompensated work, Mills’ business of more than 30 years is in shambles. “I closed J&A in 2011 and was forced to lay off dozens of employees and I have lost my home. What 84 Lumber did was unacceptable and they have no concern for the people that they hurt.”
Officials with the Baton Rouge chapter of the NAACP could not be reached for comment and a receptionist at the Chicago headquarters of F.H. Paschen said the company’s principals would not answer questions about any legal matters involving 84 Lumber, J&A construction, or the accompanying allegations.
“I don’t know where the NAACP is on this,” Major says. “They are the ones introducing us to these firms and they just can’t remain silent while we’re out here fighting when things go bad. They have to be fighting with us. They were used in this situation as well and are just as much the victims as anyone.”
For Mills, the episode that destroyed the business she built over the past three decades can’t come to an end soon enough. “This situation has been absolutely devastating for me and the people I employed. But I want people to know what occurred and that I certainly have a case of buyer’s remorse.”
This article originally published in the October 28, 2013 print edition of The Louisiana Weekly newspaper.