A construction company has been ordered to pay a combined $30 million resulting from several judgments related to its allegedly fraudulent activities in obtaining contracts to work on Bald Head Island homes damaged by Hurricane Florence.
The cases surround the alleged illegal conduct of Disaster America USA LLC and its subsidiary, Disaster America of North Carolina LLC. Houston-based Disaster America allegedly used the license of a North Carolina-based general contractor, JCG & Associates Inc., without the firm’s knowledge, according to a press release from attorney Cory Reiss of Reiss & Nutt PLLC, who represented the plaintiffs.
This week, the appeal period for the latest $17.2 million judgment expired for an order issued against the company last month by a North Carolina Business Court judge.
That order included $5.3 million to be paid to JCG for service mark infringement. Evidence arising from the suits showed that company officers obtained a copy of JCG’s North Carolina license from a middleman in New Orleans, the release states, and used the information in an attempt to legitimize contracts the firm was obtaining in the state. JCG had never heard of Disaster America. Reiss described this scheme as “especially brazen.”
Before the latest order, Superior Court judges in New Hanover and Brunswick counties had entered five separate judgments against the company in the fall of 2021 totaling $12.8 million. In all, 13 property owners were represented in the six cases. The judges found the firm liable under violations of the state’s racketeering statutes related to claims of insurance fraud and unfair trade practices, according to the release.
This represents just a share of the total contracts the company obtained in North Carolina – nearly all on Bald Head Island – which amounts to about 40, according to Reiss. Homeowners accused Disaster America of causing additional damage to their properties or not completing promised work.
So far, Reiss said the firm has been unable to collect any funds from the company, despite the lofty award totals. The firm has partnered with Texas-based Scott H. Palmer P.C. in an attempt to collect on the debts. Asked whether he thought the firm had any of the funds it has been ordered to pay, Reiss said, “Pretty much any case involving a contractor like this, you don't know until you go to the end of the rainbow and see what's there. So our mission from the beginning was to chase this company to the ends of the earth and figure that out when we got there.”
Pursuing the litigation, without a guarantee of payment, presented a risk for the firm, Reiss said. Still, he said he's not giving up. “We are going to do our best to find as much of it as we can for [the homeowners],” he said Friday.
Disaster America profited $5.3 million from the jobs the firm obtained in North Carolina, Reiss said.
Frank Wiesner, executive director for the North Carolina Licensing Board for General Contractors, said the board filed a case against a subsidiary of Disaster America in 2021 and is seeking a permanent injunction against the firm. The board also has a pending hearing for disciplinary action against the firm, which Wiesner said he anticipates it will hear before the summer. The claims are related to work conducted on the coast after Hurricane Florence, he said. "It's an open investigation," he said.
Reiss said his firm was required to serve the North Carolina Attorney General's Office with a copy of one of its complaints against Disaster America because it contained Racketeer Influenced and Corrupt Organizations Act claims.
A spokesperson for the North Carolina Attorney General's Office said they were not aware of a complaint against the company and that no consumer had filed one with the office. "Additionally, we do not have criminal investigative or prosecutorial authority in most matters – under state law, that authority belongs to local law enforcement and district attorneys," the NCAG spokesperson said.
A representative of Disaster America did not immediately respond to a request for comment.