Dive Brief:

Building supply giant 84 Lumber skirted a blow to its business on Monday when the Louisiana Licensing Board for Contractors agreed the retailer could keep its commercial construction license.

The Pennsylvania-based lumber dealer had been accused by two minority-owned contractors of failing to complete the work it contracted to do on three federally funded rebuilding projects after Hurricane Katrina. 84 Lumber reportedly had agreed to do all of the work on the projects and to help the contractors get bonds guaranteeing the construction, according to The Advocate, a New Orleans newspaper.

In a settlement with the state, the dealer agreed not to use that bonding practice on future projects.

Dive Insight:

The problem came to light when the two contractors said 84 Lumber not only failed to complete the work, but supplied them with bogus bonds. One of the companies reportedly went out of business as a result, and the other “almost” did, Murphy Foster, an attorney for the state board.

Foster said 84 Lumber served as a sort of “bond shark,” charging one of the companies approximately four times more for the bond than the lumber company paid for them, The Advocate reported.

Foster told the newspaper that 84 Lumber made “a game” out of the arrangement, taking over minority contractors’ jobs, extracting “outrageous” fees from them for the bonds, and then failing to do the work. He said the dealer operates the same way “all over the country.”

Yet instead of revoking 84 Lumber’s state commercial construction license, the board decided to let the courts settle the dispute. The owner of one of the affected business called the retailer’s agreement with the state “a slap on the wrist,” The Advocate reported.