Grand jury looking into 84 Lumber deal with La. company

July 15--A Louisiana businesswoman who claims a deal with 84 Lumber ruined her 30-year-old contracting company has been subpoenaed to testify Wednesday before a federal grand jury in Baton Rouge about the contract she had with the Washington County business for two school construction projects funded by the Federal Emergency Management Agency following Hurricane Katrina.

Addie Mills, 59, owner of the now-defunct J&A Construction Management Resource Co. in Jena, La., said she lost her livelihood, her home and her credit as a result of entering a deal with 84 Lumber's National Corporate Install Program.

She said the Pennsylvania company agreed to provide labor and materials and to manage the sites on two contracts she obtained in late 2010 and early 2011 to help rebuild a high school in Port Sulpher, La., and an elementary school in New Orleans.

The value of the two contracts was $7.3 million. FEMA awarded the contracts to Chicago-based F.H. Paschen, S.N. Nielsen & Associates, which subcontracted the foundation and structural work to J&A Construction. J&A hired 84 Lumber to do the work through the Pennsylvania company'?s National Install Program, a program that frees builders from having to be at the construction site.

But the deal went sour, Ms. Mills says, because 84 Lumber didn't uphold its end of the agreement.

84 Lumber spokesman Jeff Nobers declined to discuss the company's litigation with J&A Construction, but he did confirm that a grand jury in Baton Rouge has subpoenaed the company to supply documents related to the school construction projects with J&A.

"Obviously federal funds are involved in these projects," Mr. Nobers said. "We were involved in the projects, but we are not commenting on an ongoing case."

Ms. Mills claims she received bonding for the project through 84 Lumber's insurance arm, Maggie'?s Management, but found that 84 Lumber had registered the bonds in its own name, not J&A's. Maggie'?s Management also charged Ms. Mills $218,399 for the bonds, but had only paid $53,526 and kept the difference.

She also claims 84 Lumber did not provide supplies, hired unqualified contractors, withheld payment for work and tried to claim as much as 98 percent of the profits.

"Because 84 Lumber knows the difficulty a minority contractor generally has in obtaining bonding, 84 enters into agreements with the minority contractors to supposedly assist in procuring all necessary payment and performance bonds on behalf of the minority contractor and 84," Ms. Mills said.

"84 is to serve as the subcontractor to the minority contractor," she said. "However, in reality, 84 sabotages the construction projects, fails to provide materials, equipment and labor as contracted, and causes the minority contractor to default, all while 84 attempts to take all the profits."

84 Lumber has sued Paschen for millions in unpaid balances on the school project. Paschen responded with another court filing to 84 Lumber's lawsuit adding J&A as a third party. J&A then sued 84 Lumber for breach of contract, unjust enrichment and other charges.

Danette Willis, a spokeperson for the U.S. Attorney in Baton Rouge, did not return messages seeking comment.

Meanwhile, Gregory Mortimer, a developer in Deep Creek, Md. who also is in litigation with 84 Lumber, said federal investigators have contacted him about his case against the company.

In April 2011, 84 Lumber sued Mr. Mortimer for $600,000 in the Allegheny County Court of Common Pleas for unpaid labor and supplies. Mr. Mortimer countersued the same month in the U.S. District Court for the Western District of Pennsylvania, claiming the poor quality of work 84 Lumber did for him while building luxury villas in Deep Creek, Md., killed his real estate business.

Mr. Mortimer also hired 84 Lumber through its National Install Program in 2008 to build homes in the resort community. He said he discovered the homes were plagued with leaky roofs and other building defects so severe the residents who bought them had their homeowners insurance policies cancelled.

"I plan to fully cooperate as the grand jury continues," Mr. Mortimer said, who added that his own case has reached the summary judgement phase.

He said at the end of May, an officer from the Department of Homeland Security, which oversees FEMA, contacted him regarding his case with 84 Lumber and stated that he was looking into the company'?s dealings with contractors in New Orleans along with other federal agencies.

Mr. Mortimer said he met for more than three hours with the Baltimore FBI related to 84 Lumber. He said the FBI agents stated their interest in his case revolves around the number of people -- 28 homeowners -- affected by the failure of his development; the amount of monetary damages -- over $5 million; and the concern that 84 Lumber may be using the legal system to avoid damages.

Mr. Nober, at 84 Lumber, said the cases involving Ms. Mills and Mr. Mortimer are entirely different situations.

"To tie those two together would not be the right thing to do," he said.

"We believe we will be successful in both situations, but I will not get into the minutia of either one."

Tim Grant: [email protected] or 412-263-1591.

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