I’ve written dozens of editorials for this newspaper warning that we all pay dearly when governments conduct the public’s business in private, and that restrictions on access to government records invariably protect wrongdoers and put law-abiding citizens at risk.
I now have personal experience beyond my work in journalism to validate that perspective. This time, regulatory secrecy has socked me in the wallet — and state lawmakers have the remedy right in front of them.
A little less than three years ago — during far better times than these — my wife and I made a small investment in a friend’s new company. We’re not venture capitalists, but we thought Bruce Sulzberg’s dreams were worth supporting and sharing. Lots of other working folks and larger investors did as well, and last year Sulzberg’s hard work and vision began to take shape. Construction on his company’s first restaurant broke ground.
Calvert Construction Inc. was hired as the general contractor in the summer of 2008 on the strength of a referral, Sulzberg said. At that time, the Nevada State Contractors Board showed no outstanding complaints or investigations and no disciplinary actions against Calvert Construction.
But that was because state law prohibits the public disclosure of unresolved complaints and active investigations against contractors. Sulzberg and Michael Williams, the principals of Five Senses Management, had no way of finding out through traditional channels that serious allegations had been filed with the contractors board against Calvert Construction in the months before they were introduced to its president, Daniel L. Calvert.
Those complaints involved a recently completed Calvert Construction project, the Grand Montecito Animal Hospital in northwest Las Vegas. According to contractors board documents, between February and May 2008, five subcontractors filed liens against the animal hospital totaling more than $180,000 for nonpayment of work performed. Additional complaints by the hospital’s cabinet and steel subcontractors alleged they were not paid in full by Calvert.
While these disputes were playing out, Sulzberg and Williams said they were working in good faith with Calvert Construction toward a late 2008 or early 2009 opening for their West Charleston Boulevard restaurant, Muse. According to the complaint they filed with the contractors board, Five Senses Management requested lien releases from Calvert before providing him with additional payments. The releases would prove Calvert was paying subcontractors for work performed and provide the restaurant project with protection against potential claims of nonpayment — which is what happened to the animal hospital.
But Calvert never provided them, the complaint said, even after a face-to-face meeting where Calvert assured Sulzberg and Williams the releases were at his office.
Suddenly, the red flags were flying in front of Sulzberg and Williams. They contacted all the project’s subcontractors themselves and learned that “of the $110,469.94 paid to Calvert Construction Inc., only $5,443.95 was actually paid to a couple of subcontractors,” according to their complaint.
With work at the restaurant near a standstill in the fall of 2008, Sulzberg and Williams finally learned they weren’t the only people having problems with Calvert. On Sept. 23, 2008, the contractors board provided notice of a hearing on complaints against Calvert Construction, about three months too late to prevent Calvert from lining up new business — and a new round of complaints.
“We were taken advantage of,” Williams said. “We never would have hired him if we had known about those complaints.”
The contractors board and its staff aren’t the bad guys here. The board used to provide information on current complaints and pending investigations, as well as five-year histories of complaints and resolutions, public information officer Art Nadler said. But the 2007 Legislature ended that practice and effectively made the board keepers, not releasers, of records. So the board has requested legislation that would restore its ability to inform the public about contractor complaints.
Senate Bill 50 would make available upon written request “complaints of which the board has initiated investigations; containing allegations of violations which a member of the Investigations Office of the Board has probable cause to believe have occurred; … which relate to allegations of violations that, if proven, would be grounds for disciplinary action against or criminal prosecution of the licensee.”
In other words, the kinds of complaints lodged against Calvert before he contracted with Five Senses Management.
During a Feb. 16 hearing on the bill before the Senate Commerce Committee, predictable arguments were made that frivolous complaints filed against honest contractors would be made public and hurt their ability to find new business.
“There’s a certain percentage of people who will never be happy,” Sen. Mike Schneider, D-Las Vegas, said during the hearing. “You could move them into the White House and they wouldn’t be happy. Those people don’t file one complaint — they file multiple complaints, and they would be released to the whole world.”
But the contractors board would identify those complaints as unfounded in responses to public information requests. “The primary purpose of this bill is to help the public help themselves,” said contractors board Executive Officer Margi Grein.
“These things can get out of control so quickly,” Keith Lee, a lobbyist for the contractors board, said of major wrongdoing and fraud by contractors. “We can foil that by making public all of the complaints.”
According to a Jan. 29 settlement agreement with the State Contractors Board, Calvert Construction’s license has been suspended. Calvert, who admitted to all but one of investigators’ findings, has six months to pay all the claims from the animal hospital subcontractors. If he makes good, he can reapply for his license. If he can’t, it will be revoked.
In a Feb. 3 letter to Williams, the board said it would take no further action against Calvert related to allegations regarding the Muse restaurant project. Williams and Sulzberg must hope Calvert pays his previous subcontractors to have their own chance at restitution.
As for Calvert’s side of the story, I couldn’t find him. His business phone number is dead, and the voice mailbox at a home number listed as his is full.
In this economy, contractor problems and major project delays could kill any number of fledgling businesses. Sulzberg and Williams have stayed the course, for themselves and their many investors. The restaurant has a new general contractor and plans for a summer opening.
All are left to wonder why the Legislature changed state law just in time to hurt them, and whether lawmakers will learn from this debacle and pass Senate Bill 50. Especially today, Nevada can’t afford to keep contractor complaints secret.
Glenn Cook (email@example.com) is a Review-Journal editorial writer.