Pennsylvania-based 84 Lumber avoided having its Louisiana contractor’s license revoked Thursday after agreeing not to use bonding and insurance practices that two minority firms claim destroyed their companies.
The owners of the minority businesses expressed frustration with the decision.
Maurice Hurst, owner of The Olympic Group in Metairie, and Addie Mills, former owner of J&A Construction Management Resources in Gonzales, said 84 Lumber got a slap on the wrist.
“They don’t get nothing. I got three years’ probation because the bond they supplied me was bogus,” Hurst said. “And the fact that they didn’t do the work got me thrown off the job.”
The dispute involved three federally funded post-Katrina rebuilding projects: the Mildred C. Osborne School in New Orleans, South Plaquemines High School and the Paincourtville Fire Station.
84 Lumber struck deals with J&A and The Olympic Group to do all the work on the projects and to help the two contractors get bonds guaranteeing the construction. The minority contractors were to get 40 percent of the gross profits.
“I guess that’s not that bad of a deal on its face … with one exception: 84 failed to complete the work,” said Murphy Foster, an attorney for the State Licensing Board for Contractors. “Now J&A is out of business, and Olympic almost went out of business.”
Among the problems with 84 Lumber’s business practices is that only insurance companies can collect a fee for selling a bond in Louisiana, Foster said. 84 Lumber acted like a “bond shark” and charged J&A about four times what the lumber company paid for the bonds, he said.
Foster described 84 Lumber’s business practice as “a game” in which the corporation takes over minority contractors’ jobs, gets minority contractors to pay “outrageous” amounts for bonds and then fails to complete the projects.
Foster said the practice is taking place all over the country and is destroying the integrity of the Disadvantaged Business Enterprise Program, a federal program designed so minority firms can compete fairly for contracts.
“And that puts a black eye on the construction industry overall in this state,” Foster said.
Foster said he intended to ask the board to revoke 84 Lumber’s license in Louisiana.
However, 84 Lumber attorney Mark Frilot said the issues with the contractors are merely commercial disputes that eventually will be decided in court or arbitration.
He noted that if the board took action, it could be revoking 84 Lumber’s license over disputes the company could win in court.
In addition, the company is no longer involved in any arrangements like those that involved J&A or Olympic, Frilot said.
Board member Garland Meredith suggested 84 Lumber voluntarily suspend its work in Louisiana for one year.
After a 15-minute recess so Frilot could talk to his clients, the attorney offered an alternative: the company would not repeat the bond and insurance practices that led to the problems.
“I can promise you that 84 Lumber will never do this again on my watch,” Frilot said.
Foster said a probation agreement with 84 would end a damaging business practice and allow the board to avoid a full hearing on the issue.
Under the agreement, the board also will monitor 84 Lumber’s business in Louisiana. The company will have to make monthly reports to the board for a year on the contracts it bids on in Louisiana and those it wins.
La Koshia Roberts, an attorney representing Mills and Hurst, said the board’s action would prevent other contractors from suffering the same sort of damages as her clients.
Follow Ted Griggs on Twitter, @tedgriggsbr.