Contracting Big Headaches R. Redding Construction Tries To Recover After Being Hit With An Avalanche Of Lawsuits Over The Past Two Years

After a dozen phone calls and letters promising she’d be paid, Bette Grenier decided she’d had enough.

She filed a lawsuit against R. Redding Construction, the general contractor she claims still owes her $73,000 from a roofing job her company completed at Liberty High School 16 months ago.

It’s only the second lawsuit she’s filed in the 10 years she and her husband, Don, have operated their business, Pro Roofing.

But hers is not the only company to file suit against Redding. More than 35 other Eastern Washington subcontractors and suppliers have sued Redding, saying they’re owed money from construction projects.

Nearly all of those lawsuits stem from projects for school districts, the state of Washington or for the city of Kennewick, where Redding was general contractor on a $3 million new library.

Redding’s owners insist they’ll pay all legitimate claims to people they’ve hired. Most claims are inflated and should never have been filed, said Don Redding, the 44-year-old co-owner of the company.

The high number of lawsuits against the Reddings and the harsh feelings fueling those disputes illustrate the risks facing anyone managing multi-million construction projects, say those involved in the business.

“I’ve had to camp on the Reddings’ door some weeks to get payments out of them,” said Dan Settle, manager of the Eastern Washington Association of Subcontractors and Suppliers Association.

His job is to collect payments for area subcontractors from the contractors. Settle said Redding isn’t the first Spokane general contractor hit by lawsuits from unhappy subcontractors, but he says the number of suits is unusually high.

“All I know is they (the Reddings) have a job that I wouldn’t want. So many things can go wrong, what with the number of people involved the owner, architects, suppliers and all the subs,” Settle said.

As general contractor for a project, Redding chooses and supervises the subcontractors and must resolve all disputes over workmanship or payments.

“We’re only as good as the subcontractors we hire,” said Gary Redding, 34, who with brother Don runs the company.

Gary Redding said several large projects were derailed temporarily by subcontractors failing to perform or by going out of business at critical times in a project schedule.

An electrical subcontractor working on two school district projects in 1998 quit several weeks before his work was due to be completed, the Reddings said.

They’d already paid that subcontractor $150,000. The Reddings had to find replacement electrical supplies and hire another subcontractor to finish the work.

“So you see, we’ve hit a few speed bumps along the way,” Don Redding said.

“But we’re working night and day to take care of the problems and get everybody squared away.”

Those speed bumps include not getting $600,000 from the Kennewick project, not receiving about $250,000 from the state of Washington for an Airway Heights Correctional Center project and not getting about $400,000 from work for the Pullman School District.

Those amounts are being withheld as the agencies and Redding resolve problems about workmanship and payments to suppliers.

In all three cases, the Reddings said state laws allow them to withhold final payments to subcontractors until the owners accept the project and make final payments to Redding Construction. “It’s called `pay when paid,’ and yes, we follow that principle to protect ourselves,” said Gary Redding.

In nearly all the projects, no one accuses the Reddings of not doing their job competently. All the problems stem from slow payments to subcontractors hired by Redding or from Redding not finishing on schedule.

Most of the past three months, the two brothers have tried to deal with angry subcontractors. In many cases, they continue disputing the actual amounts owed for work.

In the case of Pro Roofing, they insist they owe the Greniers far less than $73,000 from the Liberty High School project.

They contend the roof installed on the school has serious leak problems. They’ll have to deduct a yet-undetermined sum from the final amount to the Greniers for those repairs, said Don Redding.

Bette Grenier counters that the roof was properly installed and passed an inspection. She said the leaks occurred months later and product warranties should apply. Payments to her company should not be withheld, she said.

“We’re a small firm with just six workers. That (unpaid) amount has turned 1999 into a loss for us,” said Grenier, whose husband, Don, runs the on-site part of the business.

“We’re $40,000 in the hole for last year because of them,” she added.

The Greniers fall somewhere in the middle of dollar amounts sought from the Reddings. Some suits seek as little as $4,000.

Some, such as Spokane contractor 3-Dimensions Mechanical, seek nearly $300,000 from Redding.

The Reddings said they are surprised by the avalanche of court documents directed at them the past two years.

They now run the family business started by their father, Ralph Redding, 35 years ago. Ralph Redding retired about six years ago but is still “semi-active” in the company, Don Redding said.

They consider themselves a small to mid-sized general contractor. Their biggest-volume year was 1995, when they totaled about $20 million in projects. Most of those are for public works construction.

“We’ve kind of concentrated to some extent on public school projects,” said Don Redding.

The high number of suits seems out of place for a business whose office is a nondescript one-floor building on Spotted Road in the West Plains area near Marshall.

“I get the feeling that a lot of those suits occurred when people panicked,” said Don Redding. “It really surprised me and hurt me to see some of those people file against us.”

He acknowledges the company has fallen far behind in making payments to some subcontractors, but said the company isn’t folding.

“We’re resilient. We’ll continue to bid on projects and take care of all our obligations,” he said.

Most of the more than 35 suits have been filed in Spokane County.

About 10 lawsuits have been filed in Benton County by subcontractors from the $3 million Kennewick Library.

The rest are from subcontractors or suppliers who worked with Redding on school projects in Pullman and Quincy, Wash.

“These are all public works projects that are covered by bonds,” said Gary Redding. “Everyone is covered.”

State law requires that a bond be posted by the contractor to ensure that all workers get paid.

But the company that posts that bond for Redding, United Insurance Co. of the State of Pennsylvania, has not made payments to subcontractors from the bonded projects.

They’ve refused because in some cases Redding disputes the claim amount. In all other cases, the bond company has told subcontractors they’ll be paid only if Redding goes out of business.

Some lawsuits also stem from subcontractors and suppliers who say there is a pattern of Redding taking payments from one project and paying bills from previous projects.

“I acknowledge we’ve done that from time to time,” Don Redding said.

Skip Waller, who has owned and operated 3-Dimensions Mechanical for more than 20 years, said he reluctantly decided to file a suit against Redding for $289,000 he said he is owed.

The Reddings dispute that amount and the quality of work, saying boiler work 3-Dimensions performed at the Airway Heights project may not be acceptable to the state. Until that work is approved, the Reddings won’t pay Waller.

Waller said he had problems years ago collecting from Redding.

“He was slow to pay. But you expected that,” said Waller, adding he thinks the slow-pay problem has now grown worse.

“I decided we were just being ignored. The Reddings made all sorts of promises but never stepped up and started paying,” Waller said.

All of the projects that have spawned the lawsuits have been finished to the point where owners have been able to use the buildings.

But a problem all the projects share is the long delay it takes Redding to close out the work and get final approval.

“We’ve gone around with them for two years. They’ve been much slower than any other contractor we’ve had,” said Steve Howard, facilities manager for the Deer Park School District.

The district hired Redding for a $3.5 million expansion and renovation of Deer Park Middle School.

The slow close-out is due to several factors, the Reddings explain.

One reason is a subcontractor backlash to the Reddings’ “pay-when paid” policy. When the Reddings hold back payments to subcontractors, those same laborers don’t eagerly come back and help finish off a project.

As a result the district doesn’t approve the project. “We don’t get our final payment, and then we can’t pay the subs,” said Don Redding.

The Reddings said they’d finish the Deer Park project by August 1997. Students started using the school that autumn, but the District still hasn’t accepted the project as complete.

Howard said the district is frustrated waiting for Redding to address a range of problems - from fixing minor mechanical issues to providing documents proving the contractor has paid state taxes and its subcontractors.

Said Gary Redding: “We’re going to take care of those things.

He added that he’ll spend the next year “fixing fences” and repairing their relationships with area workers and suppliers.

“As a company, we’ve had down times before,” said Gary Redding. “We’ve always come back. We will again.”