A Minnesota-based company is blasting the state for its handling of a contract for cleanup efforts following Hurricane Sandy, claiming it is owed more than $23 million plus damages incurred due to “an abuse of power.”
ProSource Technologies, a private consulting firm that manages storm damage recovery projects, filed a lawsuit on Nov. 20 in state Supreme Court in Albany County against the Housing Trust Fund Corporation, a subsidiary of the New York Housing Finance Agency, and Moss Cape, a construction company based in Alaska.
ProSource was recruited by the state in an “emergency” contract to assist in storm disaster recovery after Hurricane Sandy struck in 2012. According to the lawsuit, the national company pulled employees from existing contracts and hired and trained more than 400 people to work on the project.
“In doing so, ProSource invested heavily in its New York-based operations and sought to protect itself through contracts with subcontractors and its employees that prohibited them from competing with ProSource,” the lawsuit states.
Under the contract, ProSource was “urged by state officials” to hire several companies, including Moss Cape and IEM, as subcontractors. ProSource hired a total of 28 subcontractors at a total cost of more than $16 million.
The lawsuit claims the state refused to pay ProSource millions of dollars unless the company allowed the subcontractors with “strong New York political relationships” to take over some of its contract work and absorb its employees.
“After the state announced its expectation that ProSource make its employees available to IEM, ProSource advised the state that IEM and ProSource employees had non-compete agreements with ProSource,” the lawsuit states. “The state then refused to pay ProSource for millions of dollars in already earned payment for past services unless ProSource waived its non-competes and allowed IEM to simply absorb and take over a significant percentage of ProSource’s trained and valuable employees.”
The lawsuit describes the actions taken by the state as “unethical and illegal conduct” and a zeal to “take political credit” for the handling of Hurricane Sandy cleanup efforts.
The lawsuit alleges that Gov. Andrew Cuomo’s staff was “directly involved” with ProSource’s contract and payment for services through the Governor’s Office of Storm Recovery (GOSR).
According to the lawsuit, ProSource was in direct contact with the director of GOSR, James Rubin, who continuously assured company officials that ProSource would be paid what it was owed by the state.
“During a call with ProSource on March 21, 2014, Rubin assured ProSource that his position on Governor Cuomo’s staff put him in a position to make sure that ProSource would get paid,” the lawsuit states.
Transcripts of a telephone call at the time between ProSource officials and Rubin quotes Rubin saying, “I run this program … I report directly to the governor … I will get you paid.”
The governor’s office declined to comment on the lawsuit, citing pending litigation.
ProSource says in the lawsuit that the events, which unfolded from mid-2013 through August 2014, were a big blow to the company.
“In addition to the loss of its entire New York operations, ProSource lost valuable business opportunities nationwide in 2013 and 2014 while dedicating its substantial efforts and resources to the Hurricane Sandy project.”
The lawsuit states that ProSource made a written demand for payment on August 14, but the state failed and refused to make the payment.
The lawsuit against the state and Moss Cape lists total damages as “yet to be fully determined,” but the company argues it is owed more than $25 million by contract and that total damages would likely exceed $50 million.
“ProSource has been owed over $23 million for months, and the state is just stringing it along, hoping that ProSource will be forced to cave in and accept more strong-arm tactics,” the lawsuit states. “ProSource will not be coerced by such unethical conduct.”