NEWS
NORTH CAROLINA PLAINTIFFS WIN $30 MILLION AGAINST TEXAS STORM CHASER
February 24, 2023—A Texas storm chasing contractor has been ordered to pay $30 million to North Carolina property owners and a general contractor for obtaining fraudulent reconstruction contracts in the wake of Hurricane Florence in 2018.
Disaster America USA, LLC, its subsidiary Disaster America of North Carolina, LLC, and the estate of their owner, Donald Husk, who died in 2021, racked up a series of judgments in lawsuits brought by the Wilmington firm Reiss & Nutt, PLLC.
The Houston-based companies used the license of a Greensboro general contractor, JCG & Associates, Inc., without its knowledge to acquire dozens of contracts primarily on the exclusive resort of Bald Head Island.
In the lawsuits, 13 property owners complained Disaster America did not do the work it promised, and some said the company caused additional damage to their properties.
The judgments include violations of the state’s racketeering statutes related to claims of insurance fraud and unfair trade practices.
Property owners hired Disaster America because it had identified JCG & Associates, Inc., which held a valid North Carolina general contractor’s license, as a partner on the projects. JCG, however, had never heard of Disaster America.
Evidence showed that by 2018, Disaster America of North Carolina had let its contractor’s license in this state lapse. As Florence approached the coast, company officers obtained a copy of JCG’s license from a middleman in New Orleans and used the name and license number on contracts they printed and carried to North Carolina. Disaster America targeted Bald Head Island, which had suffered major damage and includes some of the most expensive homes in the state.
In January, a North Carolina Business Court judge sanctioned the defendants for refusing to participate in pre-trial proceedings and entered judgment in favor of three homeowners and JCG totaling more than $17.2 million, including $5.3 million in profits awarded to JCG for service mark infringement. Superior Court judges in New Hanover and Brunswick counties had previously entered five judgments totaling approximately $12.8 million in favor of another 10 property owners.
“Disaster-stricken homeowners can become targets for unscrupulous contractors when they’re most vulnerable,” said W. Cory Reiss, attorney for the plaintiffs. “This was an especially brazen scheme by out-of-state players. But every day, North Carolina owners are being plagued by home-grown unlicensed, under-licensed, unqualified, and under-capitalized contractors. The state needs to clamp down hard.”
Impersonating a licensed contractor is a criminal offence, but neither the North Carolina Attorney General’s Office nor the North Carolina Licensing Board for General Contractors enforced existing laws against Disaster America after complaints from JCG.
Reiss said his firm continues to pursue Disaster America in its home state of Texas in association with Scott H. Palmer, P.C., a firm near Dallas.
FEDERAL COURT NIXES DO-OVER SUIT
February 3, 2023—A federal judge dismissed a lawsuit filed by a former restaurant employee today because he should have pursued his claims during prior litigation tried to a jury verdict in 2022.
Edgar Santos Cardenas was one of three former employees of Eternal Sunshine Café in Wilmington whom the restaurant had sued in state court for stealing its recipes. A jury held the trio liable in October 2022 for computer trespass, misappropriation of trade secrets, and other claims, hitting them with compensatory and punitive damages.
Reiss & Nutt represented the restaurant at trial, but then Cardenas filed a separate action in U.S. District Court for the Eastern District of North Carolina alleging he wasn't paid for all his time in violation of federal and state labor laws. Cardenas had denied at the previous trial spending any time inventing recipes for Eternal Sunshine, but the jury disagreed. In the new lawsuit, Cardenas claimed he should have been paid overtime for work he previously denied performing.
The federal court decided the new claims were so related to the previous case that the jury's judgment was final as to all of them and dismissed the suit.
"Our courts don't like it when parties to litigation file lawsuits that contradict a verdict already rendered," said W. Cory Reiss, counsel for Eternal Sunshine. "It's a waste of everyone's time and resources."