Litigation

For several years, Colonial Mechanical Corporation has performed construction and maintenance work for a variety of industrial, commercial and residential customers. While Colonial is based in Richmond, Virginia, they conduct work throughout the southeast coastal states, from Virginia to Florida.

Along with Colonial’s expanding body of work, there has come a growing chorus of complaints from Colonial’s customers. Colonial Mechanical has been mired in many lawsuits. Colonial has sued its own customers and has also been sued by its customers. Colonial has even sued it’s own health insurance company.

Colonial has stated that it’s own accident rate is far too high. Colonial’s many accidents could threaten the financial well being of Colonial’s customers, if Colonial’s injured employees sued the construction customer who controls the job site where the Colonial employees were injured.

Some of these problems may be caused by the takeover of Colonial Mechanical on paper by a massive power plant holding company with no experience in mechanical contracting. FirstEnergy, an Ohio utility company, has recently bought up Colonial Mechanical.

The Contractors Critic doubts that a takeover of a small contractor by an absentee owner with no experience in the construction business will be healthy for Colonial. Judging from the recent history of corporate takeovers, FirstEnergy’s first priority will be its short-term bottom line, not the long-term financial health of Colonial.

FirstEnergy has only been in business for two years and is already displaying some of the characteristics of a company that is prepared to rank customer service below its profit margins. FirstEnergy laid off 485 employees at its subsidiary, the Cleveland Electric Illuminating Company (CEIC) only six months after buying CEIC. While this move will reduce FirstEnergy’s expenses, The Critic wonders how the resulting understaffed company will properly service their customers. Once FirstEnergy finishes slashing its power company work force, will its construction subsidiaries such as Colonial be far behind?

The question is can FirstEnergy with no construction experience accurately judge what is the necessary work force for a construction company such as Colonial? In The Critic’s opinion, future Colonial customers could be seeing understaffed construction jobs. If so, customers can also expect delays in completion of their projects.

The absentee FirstEnergy ownership could very well magnify some of Colonial’s past problems. Colonial’s history already includes court suits and liens against their own customers, an adverse court judgment in a petroleum tank explosion case and a 26% increase in the company’s accident rate. Since FirstEnergy is playing hardball with its own work force, this same trend may increase at Colonial. The result could be job site disruptions for Colonial customers. The following court cases are samples of the lengthy litigation history of Colonial Mechanical.

Colonial Mechanical had a construction job at the White Hall Robins’ facility in the City of Richmond, Virginia. Colonial rented a boom truck from W.O. Grubb for part of that work. The Colonial boom truck driver negligently operated the equipment and the boom truck flipped over, causing almost $39,000 in damages to the truck, according to the Grubb court suit.

Colonial was installing a tank on a construction job, when the tank was damaged by negligent operation of a forklift type of vehicle. It cost $200,000 to repair the tank and to pay the related expenses. According to the court complaint, Colonial sued JEFCO, claiming it was their fault, since the forklift was owned or leased by JEFCO.

In 1999, Colonial was hired by Prestige Construction Group to work on the renovation of the Watkins Cottrell brick buildings at 109-125 South 14th Street, Richmond, Virginia. ICM Enterprises was the project owner. At the end of the job, Colonial said they were still owed $267,548. In July 2000 Colonial filed liens against ICM Enterprises for $86,998, $55,464, $45,925, $41,388 and $38,772. Colonial also sued Prestige’s insurance company, Travelers Casualty for the sum of $267,548. A month later Colonial claimed in a court filing that they were still owed $40,242, and in another motion that they were still owed a separate $229,829.

Travelers Casualty objected, stating they had not breached any obligations to Colonial, and asked the court to dismiss the suit with prejudice and in turn award Travelers their costs.

According to the court suit, Resort International hired Colonial to perform construction and maintenance work at their Shenandoah Cross project in Gordonsville, Virginia. Colonial says that Resort International still owes them $28,063. In this case, Colonial sued its own customer.

According to the court suit, Jesson & Frantz was the general contractor for the construction of the American Family Health and Racquet Club in Henrico County, Virginia. Jesson & Frantz subcontracted part of the work to Colonial for $206,169. Colonial Mechanical then claimed that Jesson & Frantz approved change orders thus owing Colonial more money. Colonial sued for over $33,000. Jesson & Frantz counterclaimed that the owner had not paid them, and that they were not contractually obligated to pay Colonial until the owner paid them. Colonial also filed a lien for $33,084 against Sigma BR Associates, who were the owners of the racquet club.

Colonial hired Liberty Life as their health insurance company, under the assurance that Colonial would never have to pay more than a specified amount. Colonial also paid Liberty Life a reserved amount. When Colonial cancelled the account with Liberty Life, Colonial claimed in their court complaint that Liberty Life refused to refund the reserve payment of over $35,000.

Some of Colonial’s employees have become mired in garnishment court actions. While in itself, this may not affect the construction customer, these court actions may be signs of other problems among Colonial’s employees. These problems may include lower than average pay or Colonial’s hiring of unreliable workers and these problems will ultimately affect the job site. For instance, a garnishment action was filed in January 2001, against Jerome Warren, a Colonial employee in Henrico County, Virginia.