Electrical contractor forges on with lawsuit against state despite roadblocks

J&L Steel’s President and CEO LouAnne Berg stands at her office in Hudson recently. Berg is fighting the state in court over an extra $217,499 her company spent on a communications system for a veterans home project in Chippewa Falls. (Photo by Dolan Newswires’ Bill Klotz)

An electrical contractor who is suing the state in a dispute over a Chippewa Falls veterans home project will be going to trial early next year, despite entering into mediation with some of the parties she is suing.

In May 2011, Hudson-based J&L Steel and Electrical Services won a $2.2 million contract that called for installing a nurse call system for the 72-bed Wisconsin Veterans Home at Chippewa Falls, which opened in January 2013.

The contract called for installing a “Rauland Responder 4000 or approved equal system.” J&L instead based its bid on the cost of a different system – a product made by Chicago-based Jeron Electronic Systems Inc. J&L contended the Jeron system was equivalent to the Rauland. Yet, months after J&L had won the bid with its proposed use of the Jeron product, the state demanded that the company instead install the Rauland.

J&L maintains that the replacement at that late date cost it $217,499.

“It’s very clear that (the Jeron system) was an equal or better product,” LouAnne Berg, J&L’s owner and chief executive, said Friday. “If it was a substitute… you have to have 10-day approval. So what we’re just asking for is what we provided on the job.”

The state contends, according to court documents, that J&L was supposed to get pre-bid approval to use the Jeron system. The state also argued that the use of the Jeron product counted as a substitution rather than an equivalent to the Rauland. Also, the state argued that even if it had approved the Jeron system, the cost savings would have belonged to the state, not J&L.

The state Department of Administration, which oversees state construction projects, did not immediately comment Friday afternoon.
After failing in attempts to recover the $217,499 difference from the state Legislature and Claims Board, J&L sued the state, as well as the engineer and architect on the project, for that amount plus attorney’s fees.

“The whole process is just wrong,” Berg said.

She noted that, before she could sue the state, she had to at least try to get the state Senate and the Assembly to agree to pass legislation that would have awarded her company the $217,499. The Senate voted in favor of the bill on Jan. 14, 2014, but it never got a hearing or vote in the Assembly.

J&L met with A&O, the project engineer, and Frisbie Architects in July for mediation and entered an agreement with Frisbie.

The lawsuit has dragged on for so long that Frisbie has since been taken over by Ayres Associates, and A&O has gone out of business. Berg said she is dealing primarily with their insurance companies, and not the people she says made the mistakes.

Berg declined to discuss the details of the agreement reached with Frisbie.

She said the company tried to reach a similar deal with state officials, but they did not even appear at the mediation meeting. Berg said she found that alarming.

“My concern as a small business in Wisconsin is that it’s been four years since this happened,” Berg said Friday, “and we have spent four years going through all the contractual documents … and we’ve followed (all the steps). And they’re not even willing to come to mediation and avoid going to court.”

She said her company has already racked up around $100,000 in attorney’s fees and will likely spend between $20,000 and $30,000 going to trial.

And the roadblocks, Berg said, keep coming.

Court records show that the state is now arguing that the contract J&L had with the state included a waiver of any jury trial. For that reason, the state is now contending that the trial, which is scheduled for the week of Jan. 8, must be held before a judge. Berg said she just found out about the state’s argument this week.

She said she is frustrated and that, if she cannot recover the $217,499, the company will no longer work on state projects. Berg said she can see why many contractors would hesitate to take the state to court.

“Most would have walked away by now,” Berg said. “I walked off the St. Croix River Bridge project, and that took a lot… But I’m a fighter. When I feel I’m right and I’ve done the right things, there should be justification.”

J&L is closing its steel erection division after walking off the St. Croix River Crossing project in July. Berg said the current lawsuit has not harmed the company’s electrical business.

“The electrical division is doing just fine,” Berg said. “If anything (the lawsuit) is just a distraction in terms of the time I spend on it and the money we spend on attorneys and going to Madison.”