Contractor sues sub claiming it failed to pay lower tiers

Kelly Holleran Nov. 12, 2009, 4:00am

The general contractor of a construction project at Wingate Manor in Shiloh has filed suit against its subcontractor, alleging it failed to pay lower-tier subcontractors for their work.

Gundaker Commercial Group claims it hired A & R Excavating and Motor Sales Inc. to be its subcontractor and to perform rough grading, erosion control, storm and sanitary sewers, water main, finish grade and backfill work on its project.

According to the complaint filed Nov. 3 in St. Clair County Circuit Court, Gundaker agreed to pay A & R Excavating $118,893.68 for its work. In its agreement with A & R Excavating, Gundaker also stipulated that A & R Excavating pay all lower-tier subcontractors for their work and that the company turn the finished work over to Gundaker clear of all liens.

To complete its work and to provide materials for its work, A & R Excavating hired many lower-tier subcontractors, then requested money from Gundaker to pay the lower-tier subcontractors, the suit states.

Gundaker provided A & R with $84,060, and A & R told Gundaker the money had been used to pay the labor and materials it used on the project, the complaint says.

Later, however, Gundaker claims it learned A & R failed to pay its lower-tier subcontractors for work and materials they provided.

"A & R wrongfully retained the funds that Gundaker paid to A & R for the work performed and/or materials supplied by the lower-tier subcontractors and vendors on the Project, rather than paying those lower-tier subcontractors and vendors pursuant to A & R's contractual obligations," the suit states.

After discovering A & R's failure to pay, Gundaker contacted its director and co-defendant, Allan Kattenbraker, who admitted the company owed the lower-tier subcontractors money, according to the complaint.

So, on June 25, Gundaker sent A & R a letter, demanding it make payments due to the lower-tier subcontractors, the complaint says.

Still, A & R has not paid the subcontractors, Gundaker claims.

"To date, Gundaker has paid or will be forced to pay $58,978.23 directly to A & R's lower-tier subcontractors and vendors for the Project," the suit states. "As of the date of the filing of this Complaint, Gundaker continues to learn of additional lower-tier subcontractors and vendors used by A & R on the Project who were also not paid by A & R for the work performed and/or materials supplied for the Project. Any amounts that Gundaker is forced to pay any additional subcontractors and/or vendors for the Project after the filing of this Complaint are also amounts that are owed by A & R to Gundaker under the Agreement and shall be included in Gundaker's prayer for damages herein."

Because Gundaker paid the $58,978.23 directly to the lower-tier subcontractors and because it paid $84,060 to A & R, it says A & R owes it at least $24,144.55 after accounting for the contract price of $118,893.68.

In addition to the amount it says it is due interest, attorneys' fees and costs and other relief the court deems just. It is also seeking a judgment of more than $60,000 and unspecified punitive damages.

John J. Gazzoli Jr. and Theresa A. Phelps of Rosenblum, Goldenhersh, Silverstein and Zafft in St. Louis will be representing it.

St. Clair County Circuit Court case number: 09-L-595.

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Organizations in this Story

Rosenblum Goldenhersh
7733 Forsyth Boulevard
St. Louis, MO 63105

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