Contractor settles suit against state (UPDATE)

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A western Wisconsin contractor has settled a lawsuit alleging that she was out $217,499 after being forced to install a specific type of nurse-call system at a Chippewa Falls veterans home.

LouAnne Berg, president and chief executive of J&L Steel and Electrical Services, said Monday that she decided to settle after concluding that her company could not afford to continue pursuing the case. Berg said she has spent $120,000 on the dispute so far and that her lawyers had told her it would cost another $60,000 to go to trial.

Even if she would have ultimately won, she said, it was not clear that the court would order the defendants to cover her legal costs.

“This has not been settled to my satisfaction or happiness,” Berg said Monday. “But it has been settled.”

Jason Tarasek, the lawyer who represented J&L Steel in the case, declined to comment.

J&L Steel sued the state in May 2014 over a contract it had won roughly three years before to install a nurse-call system in a 72-bed state veterans home being built in Chippewa Falls. The plans had called for the use of a certain type of system — “a Rauland Responder 4000 or approved equal.”

J&L officials took the phrase “or approved equal” to mean that they could install a rival product made by Jeron Electronic Systems, of Chicago. The state disagreed but did not tell J&L directly of its position until months after the company had won the veterans-home contract with the help of the cheaper Jeron product.

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

The state countered by pointing out that the project specs had told bidders that they could not use an equivalent system without getting their choice approved before handing in a bid. The state also argued that the Jeron product counted as a “substitution” rather than an “equivalent” of the Rauland Responder 4000.

As part of the settlement, J&L Steel will receive a payment from the insurance company for Arnold & O’Sheridan Inc., the now out-of-business engineering firm that had worked on the Chippewa Falls veterans home. She declined to identify the amount but said it — even combined with a similar payment from Frisbie Architects, the architect on the project — will not be enough to cover her company’s legal fees.

Berg said she got no money from the state. She said lawyers for the state’s Department of Administration, which oversees building projects, had not shown up at mediation sessions in the case.

“It’s impossible for a small business in Wisconsin to sue the state,” she said. “Their attorneys are already being paid, win or lose, by taxpayers. The state has nothing to lose by dragging these things out.”

Attempts to reach a DOA spokesman were unsuccessful Monday.

Berg said her company is now on the verge of going out of business, but not because of its suit against the state. The money troubles instead mostly stem from the company’s work on the St. Croix River Crossing project, a nearly $650 million mile-long bridge being built between Oak Park Heights, Minn., and St. Joseph, Wis.

Berg last week told The Daily Reporter’s sister newspaper, Minnesota Finance & Commerce, that she had shut down her company’s steel operations following complications during its work as a subcontractor on the St. Croix project. She also said that her company had sold its electrical operation, as well as its headquarters building in Hudson, to pay off debts stemming from the project.

On Monday, she said her company has one job to wrap up — work on an Interstate 90 bridge in La Crosse. She said she has already laid off 150 workers and the rest will probably be let go in June, when her last project is scheduled for completion.

Berg said she hasn’t decided what she’ll do next. She said she has spent 38 years in the construction industry.

“I’ll probably be taking a month off to rest and relax and then re-energize,” she said. “I don’t know if I’ll be in construction ever again.”

Besides the state and the engineering and architecture firms on the Chippewa Falls project, J&L Steel’s suit also named Communications Mid-America Inc., a seller of Rauland products; and three insurance companies: Beazley Group (USA), Travelers Casualty and Surety Co. of America, and XYZ Insurance Co.

J&L Steel’s battle with the state had been long and convoluted.

Before Berg could even file her suit against the state, legal procedures had required her to first at least try to get the Wisconsin Senate and the Assembly to agree to pass legislation that would have awarded her company the $217,499 without the need to go to court. The Senate voted in favor of the bill on Jan. 14, 2014, but it never got a hearing or vote in the Assembly.

“Unless you are the big dog, it’s really tough,” Berg said. “Subcontracting is really tough to make money in.” Follow @TDR_WLJDan