Rental Company Sues Kentucky County for Unpaid Bills from 2012 Tornado Recovery

May 28, 2015

An eastern Kentucky county ravaged by a 2012 tornado is being sued for nearly $1 million by a Lexington company that provided rented trailers, generators, all-terrain vehicles and other equipment after the deadly twister hit.

Morgan County officials agree they owe something to the company, Emergency Disaster Services, for the rental equipment.

But they say the bill should be less than the $954,935 EDS is demanding, based on competitive market rates and how long the county actually used the equipment, the Lexington Herald-Leader reported.

The company is owned by Jerry Lundergan, a past state Democratic Party chairman and father of Secretary of State Alison Lundergan Grimes.

Lundergan said his company provided the help that Tim Conley, the county’s judge-executive at the time, requested when West Liberty was in ruins and now it deserves to be paid. EDS’ lawsuit is proceeding in Morgan County Circuit Court.

“We built them a temporary courthouse on the edge of town that housed the sheriff, the PVA and the county clerk for over six months, and we cleared that site and hooked it up with water, sewer, electricity – everything,” Lundergan said.

“To be fair,” Lundergan added, “I don’t think the people currently in office, like their current judge-executive, even really knows what went on.”

Conley awarded EDS two projects in Morgan County, the newspaper reported. For the first, the county paid $381,267 for tornado debris removal.

EDS itself was sued for nonpayment of $297,414 last year by its subcontractor on the debris removal, Phillips & Jordan Inc. of Knoxville. EDS settled that suit in January.

The second project – rental equipment – is the source of the current controversy.

The county says Lundergan entered into a questionable deal with Conley, who was sentenced to prison for an unrelated bribery scheme. Records related to the EDS deal were seized by FBI agents and are being held as evidence in their investigation of Conley’s tenure, the county says in court filings.

The March 2012 tornado leveled downtown West Liberty, the county seat, and killed a half-dozen people.

Now, Morgan County officials accuse EDS of price-gouging.

“We don’t think that one Port-A-Potty is worth $32,000,” said Morgan County Attorney Myles Holbrook.

“Unfortunately, when this was originally done, there was no contract. There was only an oral agreement between Tim Conley and EDS, and nobody here really knows what it was,” Holbrook said. “The only guy on our end of this handshake deal is in a federal pen. And he’s not talking to us. His lawyers won’t let him.”

The storm badly damaged or destroyed local government offices in West Liberty. There was no place for officials to plan the recovery.

So Conley told EDS to build an “Emergency Operational Command,” to be used until the government offices could reopen several months later, according to insurance claims, correspondence and other court filings. For additional temporary office space, Conley spent $1.65 million to buy the vacant headquarters of Rifle Coal Co. just outside of town, which had been assessed for tax purposes at $315,000.

EDS trucked in and set up an assortment of trailers, portable bathrooms, storage units, light towers, four-wheel ATVs, electrical generators, tables and chairs.

Then it started submitting bills in the tens of thousands of dollars, and then the hundreds of thousands of dollars.

Morgan County’s insurance company – Underwriters Safety & Claims of Louisville – disputed the costs. After Conley’s initial hope that the Federal Emergency Management Agency would pay EDS fell through, the county forwarded the equipment rental bills to its insurer.

“A number of questions remain regarding these charges,” Underwriters claims manager Lee Money wrote to EDS on May 8, 2012.

In separate letters to Conley, Money called some of EDS’ charges “exorbitant” and said he found far cheaper prices at other central Kentucky rental companies.

Lundergan defended his company’s prices. EDS delivers any equipment a client needs at any hour of the day or night, operating in chaotic disaster zones, he said.

“It’s not like you’re renting something on normal business terms,” Lundergan said

Topics Lawsuits Catastrophe Natural Disasters Windstorm Kentucky

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