Monday, November 15, 2010

Contractor Involved in Excessive Subcontractor Lawsuits

Ebenal General, Inc., a Bellingham, Washington based contractor has racked up at least 35 lawsuits by subcontractors since 1999, with 14 of those lawsuits in just 2009 and 2010.  That doesn't count the eleven times since 1998 that Ebenal has sued subcontractors to force them "to live up to their agreement," according to the owner of the construction company.  

Statistics such as these are outside the norm for most general contractors.  Contractors with business practices responsible for multiple lawsuits can be problematic for both subcontractors and owners.  

Risks for Subcontractors:  Subcontractors need to be knowledgeable about the integrity and practices of the general contractors they work for.  One project where a contractor fails to pay a subcontractor can be the cause of a subcontractor going out of business.  

Risks for Owners:  Owners who hire general contractors with a poor record of subcontractor relationships and payments and a history of lawsuits can cause project completion to be delayed, often with substantial additional costs to the owner.  Ebenal has recently failed to complete on time a dormitory project at Western Washington University  in Bellingham.

Bidder Responsibility Criteria:  In 2007, the Washington State Legislature adopted RCW 39.04.350 which provides public agencies with the right to establish supplemental bidder responsibility criteria to address issues such as having an excessive history of lawsuits and failure to pay subcontractors in a timely manner.

More Information:  To read an article from The Western Front Online about Ebenal, click here.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates)

1 comment:

Anonymous said...

Add me to the list of staunch anti-Ebenal crusaders - where do I get the tattoo?

My company has been performing publics works projects as a subcontractor for almost 40-years, and never have I seen a general contractor play the game as they do. I relate his shell games, intimidation and payment delay tactics to such greats as Bernie Ebbers; it didn't work out so well for Bernie (he's still in jail). One person asked how Ebenal can keep getting Bonds? Here's how; Ebenal is in so deep with his Sureties that the best way for the bonding company to lose a minimum is to keep kicking the can down the road, by doing things like issuing "Retainage Bonds". Even if you have a claim for retention against the projects main bond, if you aren't on top of it to know that retention funds have been paid via a separate bond, you could be out in the cold if you don't go after that specific retention bond. In our case, the School Distirct had to release $450k to Ebenal (by law) when a retainage bond was provided. This was done at least a year before the project was even completed, let alone closed-out (it still hasn't closed - probably never will unless the 3-current lawsuits against Ebenal on the project force the issue).This gave Ebenal funds to waste that are intended by design to ensure that a project is closed out and all ligitimate claims are paid. The shame in this advance payment scheme is framed by the law - that's how he usually beats you. Fortunately for my company, I hired a Lawyer very early on who had encountered Ebenal in the past and I paid him well to stay on top of the games. I will eventually be paid, and my company is well-heeled enough to survive the cashflow hit - many other subs don't have that ability. If his name even remotely wafts past a project I'm bidding, I will gladly spend the time and effort making sure others know how this firm works