Canadian pool building company ruffles local contractor

Two years ago, when Patterson Enterprises presented its first bill to The Pool Co., part of a large Canadian enterprise hired to build the city's pools, the company refused to pay and accused him of walking off the job.

Facing financial ruin, Patterson sought relief in court. As the case moved toward trial, legal bills piled up. To pay those and his employees, Patterson took out a second mortgage on his home, and he and his right-hand man worked weekends.

Last month, Patterson prevailed in Missoula County District Court. A jury demanded The Pool Co. pay Patterson Enterprises $222,500, and more than one juror expressed disapproval at the Canadian group's dealings in Missoula.

"It was just ugly, I thought. The whole thing," said Sara Burlingame, who served as an alternate juror on the case. "The big guys did come in and try and sock it to the little guys."

So far, the victory in court is only a moral one. The Pool Co. is appealing and has yet to pay Patterson Enterprises a dime.

According to The Pool Co.'s attorney, that's with good reason. Charles Hansberry said the money isn't owed because Patterson refused to work and forced The Pool Co. to terminate a contract and quickly find a replacement. And that costs money.

The court will decide, but for Patterson Enterprises, the troubles reach beyond the jurisdiction of the justice system. Josh's father is Jeff Patterson, a private investigator and certified fraud examiner who volunteered to investigate the company doing battle with his son.

What he learned led him to believe The Pool Co. had deceived the city of Missoula and its contractors when it applied for the job. Missoula and its partners in the pools should have heeded early signs warning the city against doing business with The Pool Co., he said. But they did not.

And when things went sour, he said, the city didn't reprove The Pool Co., or back the local excavator.

But city attorney Jim Nugent said the city treated The Pool Co. no differently than it treats other businesses, and does not have all the authority Jeff Patterson is assigning it. Also, the fight between the Pattersons and The Pool Co. was well under way when the disagreement came to the city's attention. It was also outside the city's control.

Mayor John Engen pointed out the city awarded Patterson Enterprises another job just days ago.

The Pattersons, however, remain frustrated that their government had a hand in nearly bankrupting a small business that writes paychecks to local workers. They will not sue the city because to them, that's like suing fellow taxpayers. They won't sue other local contractors, either. "I'll be honest with you. We're Montana boys," said Jeff Patterson.

But he said the city and the companies it paid aren't without blame in the bad hand dealt Patterson Enterprises two years ago.

"I still hold them responsible," Jeff Patterson said.

Josh Patterson had been building up his business for about six years when he saw an announcement for pool excavation work in 2005. He bid on the job, and his company got it that spring.

The big job was good news for him and his employees, including some 10 people who worked with him from the beginning. Adam Pummill is one of those guys, a key employee from the start.

"Everybody had planned on having three or four or five months of good, prevailing wage work to go into the winter with," Pummill said.

It wouldn't turn out that way at all, though, but folks with Patterson Enterprises didn't know that when they were digging out the splash deck at Bonner Park that summer. It was when they landed at Playfair Park that they got an inkling the winter wouldn't be quite as comfortable as they'd expected.

"That's when everything went bad," Pummill said.

By Wednesday morning, Aug. 24, 2005, Patterson Enterprises had rolled dump trucks and a track hoe onto Playfair Park. They were ready to dig a big hole and haul away gravel. The Pool Co. wasn't ready for them, though, the Pattersons said.

So Josh Patterson and his crew were told to leave. First, though, Patterson presented his bill for the work at Bonner. The work had been more than expected, so the bill was higher, too.

Poking a finger in Patterson's chest, a Pool Co. employee warned Josh that his boss wouldn't pay a bill he didn't like, said Jeff Patterson, who stood by.

The next day, the company refused to pay, Jeff Patterson said. Phone calls flew back and forth, and the parties agreed to sit down at a meeting that Friday. At the meeting, negotiations fell apart.

The Pool Co. said it would pick up the few thousand dollars on the Bonner job if Patterson agreed to other changes amounting to close to half a million dollars, Jeff Patterson said.

On Monday, Patterson received a letter from The Pool Co.'s attorney demanding he return to work or lose the job: "Patterson left the excavation job sites last week as a result of a contract dispute with The Pool Company and has refused to perform its excavation obligations under the contract since that time."

Patterson said he had left because The Pool Co. wasn't ready for excavation. And only the weekend had passed since the meeting. The letter, though, said the company could not afford the delay and stated The Pool Co. reserved the right to recover damages from Patterson's "refusal to perform its contractual obligations."

Anyone who has worked in the business knows contractor quarrels aren't unusual. Josh Patterson had yelled and been yelled at before in parking-lot contract disputes. But he and his rivals would work it out. This time, though, things were different.

"They basically said they weren't going to pay us for anything," Josh Patterson said.

Hansberry said Patterson Enterprises was legitimately fired for walking off the job.

It was clear the matter was heading to court, so Patterson Enterprises decided to file a lawsuit first. And Jeff Patterson decided to find out just who it was his son had been working for.

He immediately saw problems as he looked at an application form The Pool Co. submitted to qualify for the job.

"It didn't take me very long to see the red flags start popping up all over this," Jeff Patterson said.

They came one after another after another, and Jeff Patterson pursued them.

He learned the president of the company had worked in Montana before - but under a different company name. That company owed unpaid overtime to a worker from a previous job in Montana, according to the Department of Labor.

And that wasn't all. The Pool Co. hadn't bought workers compensation for its employees before starting the job in Missoula. It hadn't registered with the Secretary of State's office, either. It had also started work without a city business license.

Hansberry, The Pool Co.'s lawyer, said the aquatics project moved forward quickly that summer and any mistakes the company made, it corrected. Hansberry said the company believed it had insurance from the get-go and did purchase workers compensation once it learned otherwise, after a worker was injured. It carries workers compensation on all its jobs, he said.

It eventually registered with the state and bought a city business license, too. Records show the overtime charges were later paid in full.

The Pattersons, though, saw a company behaving badly. Jeff Patterson believed the warning signs had been clear on the company's application form, and a routine reference check by architects on the pool project would have disqualified the business from the start.

Instead, The Pool Co. landed on a list of pre-qualified contractors.

"We thought it was pretty safe to make an assumption on a project of that magnitude that the pre-qualified contractors would be legitimate and legal," Josh Patterson said.

The architectural firm on the project was MacArthur, Means and Wells Architects. MMW's Kent Means said a consultant reviewed The Pool Co.'s application. Initially, the consultant left the company off the list because it didn't provide the requested financial information.

"We didn't even review his stuff because it was an incomplete form. Sorry, no time to babysit contractors. Obviously if it was asked for, it is needed," wrote the consultant in an e-mail to MMW.

But The Pool Co. squawked at not making the cut. E-mails show city officials agreed to include the company if it had good credit and if reference checks came out clean.

Neither the city nor MMW have a record of reference checks, but both Means and the consultant said The Pool Co. delivered quality work and performed a good service.

"They're still providing good service on the warranty level," Means said.

He said the city and MMW were under no obligation to screen the companies as thoroughly as they did. Going through an initial "prequalification" was above and beyond expectations.

At any rate, The Pool Co. made the cut and later landed the job with a low bid. At that point, it was up to the general contractor to ensure the company held a proper license and was qualified to do business in Montana.

The general contractor on the job was Quality Construction, owned by Kevin Mytty. Mytty declined to comment for this story.

That construction season, Patterson Enterprises hurt, as did its employees. The lawsuit put pressure on the company, now strapped for cash.

"That (pool job) was a major part of the work that we had scheduled for that year. And when it all fell through in a matter of days, we definitely slowed down," Pummill said.

They were also strained by the pending trial. Forced to work on the lawsuit, Patterson left his responsibilities in the office to Pummill. Pummill abandoned work in the field to do paperwork. They worked weekends trying to get more contracts.

Both wanted to keep everybody employed, and Patterson said he succeeded in never laying off anyone. To make paychecks good, he took out a second mortgage on his home. That year, though, employees got little or no Christmas bonuses because of the financial burden on the company.

"From an employee standpoint, it was much tougher," Pummill said.

The Pattersons tried to get help from the city and county, but were unsuccessful. They talked with Mayor Engen, who explained the city hires general contractors for a reason.

"We made it fairly clear that the reason we have a general contractor is so that we don't have to deal with subcontractors," Engen said.

The dispute was between Patterson and The Pool Co. - and the city's contract was with Quality Construction.

Jeff Patterson also turned over the results of his investigation to detectives in the Missoula Police Department, who completed a report about the case. They forwarded the file to the County Attorney's Office for further examination. The deputy county attorney declined to prosecute.

At one council committee meeting, Councilman John Hendrickson took up the Pattersons' cause, but he didn't get far. Chief administrative officer Bruce Bender told him the same thing Engen had said: The city's contract was with Quality.

Jeff Patterson believes the matter does have relevance to the city, though. For starters, he suspected The Pool Co. had committed fraud when it presented false information to a public agency on its application form, a sworn statement. If the city went to court against The Pool Co. and won, Patterson believes the long-awaited 50-meter pool would be paid for.

The City Attorney's Office reviewed Patterson's allegations. Deputy City Attorney Andrew Scott said Patterson was seeing conspiracies were there were none. Hansberry said there was an incorrect statement on the application, but "no knowing misrepresentations."

Last month, the Pattersons' case against The Pool Co. went to trial.

"It was either win or go bankrupt," said Josh Patterson.

The trial lasted five days, and early on the president of The Pool Co. gave the Pattersons an unexpected leg up. He made a poor impression on the jury when he introduced himself on the witness stand, Burlingame said.

"This guy says, 'My name is Dwight Love, and I'm a very, very rich man,' " Burlingame said.

She believed she knew what he meant - that he was a successful businessman. But some of the jurors didn't like his announcement.

"I thought, 'If you're so damn rich, why can't you pay this little guy the few thousand dollars he's asked for?' "

The jury ruled 11-1 in favor of the Pattersons. A civil suit requires an eight-member majority.

Afterward, Burlingame talked with Josh Patterson. He told her it had been a bad year for his employees. He told her about not being able to offer them good Christmas bonuses and how he hoped to make it up to them once The Pool Co. paid up.

"And you know, he meant it. He didn't have to say any of that stuff. He told me this after the trial," Burlingame said.

In a brief telephone conversation, Love commented on the dispute before directing all questions to his attorney: "You've got a bunch of bull-- going on. And it's ridiculous."

The Pool Co. is appealing the verdict. That means more legal fees for the Pattersons and more time researching the case for Jeff Patterson, who estimated he spent 260 hours on the first case and is in it tens of thousands of dollars.

Even if he wins the appeal, Josh Patterson said none of the money will buy back the time with his family he lost working on this lawsuit. He said he will continue to take city jobs, but will do legwork ahead of time to protect himself and his company.

The Pattersons also suspect The Pool Co. wasn't really the lowest bidder on the job. Anyone can make a low bid if they aren't taking into account workers compensation. A worker for The Pool Co. later told Jeff Patterson he never was paid overtime, though he sometimes worked 60 hours a week.

Hansberry admitted the company could have gotten away without ever paying workers compensation had a worker not been injured.

"That was certainly never the intention," Hansberry said.

He rejects the idea the company did so on purpose to artificially lower its bid: "Perhaps that's a possibility, if you're out looking for a conspiracy."

While the company made mistakes, Hansberry said it corrected them and always operated in good faith. He said he wasn't aware of any allegation The Pool Co. hadn't paid its workers overtime.

Burlingame said she hopes Josh's company does well and recovers from the losses on the pool project. She sees wonderful pools in the city for the children, but Burlingame said they don't tell the story behind the scenes of how the job almost crippled Patterson Enterprises for good.

"I think it was pretty darn terrible, really. He's an honest man. He built his company. He's got quite a few people working for him now. He's done a lot of other jobs in town. And I think he was definitely taken advantage of," Burlingame said.