A contractor’s lawsuit against Livingston Parish for $52 million in unpaid bills for Hurricane Gustav cleanup work was revived from a nearly three-year slumber this week, as the contractor’s bank searches for assets to seize on a defaulted loan.
International Equipment Distributors, the parish’s primary debris removal contractor following the 2008 storm, had allowed its case against the parish to lie dormant since July 2012. The contractor had agreed not to press forward with the lawsuit while the parish fought the Federal Emergency Management Agency for reimbursement of the parish’s cleanup costs.
But that fight ended June 30, when a three-judge panel of the U.S. Civilian Board of Contract Appeals ruled in arbitration that FEMA was correct to deny the parish’s $59 million in claims.
Parish officials said after the ruling that they did not believe IED would resume its lawsuit, knowing the parish had no money to pay a judgment, unless the contractor’s bank stepped in to force the issue.
IED owes SE Property Holdings LLC, a subsidiary of Park National Corp., roughly $26 million in unpaid loans related to the contractor’s debris removal work for the parish. The holding company obtained a federal court judgment against IED for that debt in September 2013 but agreed not to take further action against the contractor until it became necessary to do so.
In the meantime, the bank financed Livingston’s quest for FEMA reimbursement by paying for the parish’s Washington, D.C., arbitration attorneys, who were projected to run up about $2 million in legal fees. After losing at arbitration, parish officials were doubtful that the bank would want to double-down on that investment by paying additional legal fees to advance IED’s lawsuit against the parish.
But late Monday, IED’s attorneys filed a request for discovery from the parish. The request included only one question: Who in Livingston Parish government negotiated the debris removal contract with IED?
IED attorney Pepper Allgood, of Jones Walker, declined to comment Wednesday on the reasons for the request.
Parish legal adviser Christopher Moody said state law allows for a lawsuit to be dismissed if it stays dormant for three years, suggesting the request may have been filed to keep the case active.
SE Property Holdings in September obtained a writ of execution in federal court against Livingston Parish and other entities that either have assets belonging to IED or “are indebted or shall become indebted” to IED. The writ would allow the bank to garnish or seize those assets to help satisfy the contractor’s debt, which has grown to $34 million including interest.
In Livingston’s case, whatever money it might owe IED depends on the outcome of the contractor’s lawsuit against the parish for debris removal costs.
That might give the bank a reason to want the case open, Parish President Layton Ricks said, but state law would not require the parish to pay any judgment that might be rendered against it.
“I don’t want to speak for them, but it doesn’t make much sense to move forward on the lawsuit because of the cost and expense in doing so and then not getting anything for it at the end of the day,” Ricks said.
Follow Heidi R. Kinchen on Twitter, @HeidiRKinchen. Contact her by phone at (225) 336-6981.