Generator supplier sues state

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By Joe Gyan Jr.

A Texas-based generator dealer with a Baton Rouge office is accusing Louisiana of a “blatant’’ breach of a contract the firm had to provide portable generators to the state immediately after Hurricane Gustav in 2008.

Generator Supercenter claims the state refused to pay nearly $3.2 million for 68 generators ordered from the firm — and delivered — because the state bought generators from another company that “brazenly’’ subverted and undermined Generator Supercenter’s contract with the state Department of Natural Resources.

When Generator Supercenter complained to the state Division of Administration, DOA denied the company any relief, the lawsuit filed in Baton Rouge state court says.

Baton Rouge lawyer Stephen Babcock, who represents Generator Supercenter, said Friday that allowing one state agency to decide — in a budget shortfall year — whether another state agency breached a multimillion-dollar contract is like “letting the fox guard the hen house.’’

“We believe that (state District) Judge (Wilson) Fields will see the case for what it is and relieve Generator Supercenter of the $3.2 million bag it has been left holding by the state,’’ he said.

Jennifer Roche, a spokeswoman for the state Attorney General’s Office, said Friday the office had no comment.

Babcock said Generator Supercenter was able to sell or rent some of the generators, but the rest are sitting in a warehouse and the company is paying storage fees.

The suit that was filed Tuesday lays out the following scenario:

The state initiated an emergency program on Sept. 3, 2008, — two days after Gustav made landfall in Louisiana — to buy 400 portable generators and distribute them to essential service providers such as gas stations, pharmacies and grocery stores.

The state issued an order to buy 68 generators from Generator Supercenter, which contacted industrial equipment supplier Multiquip Inc. to negotiate the acquisition of the equipment. Generator Supercenter was one of five vendors awarded contracts under the state program.

Seeing that a “sizable profit’’ could be made, Multiquip decided to “muscle’’ Generator Supercenter out of the deal by directly contacting state officials and wrongly informing them that Generator Supercenter would not be able to fulfill the purchase order.

Misled, the state “hastily’’ ordered generators from Multiquip.

After discovering that Multiquip was attempting to “brazenly subvert and undermine’’ Generator Supercenter’s contract with the state, Generator Supercenter obtained financing from an independent investor and purchased equipment from another supplier.

The state was “shocked’’ when trucks carrying Generator Supercenter shipments arrived on time at the delivery point in Carville on Sept. 8, 2008.

The state then concocted a “series of excuses’’ why it did not have to pay for the equipment, including alleging that Generator Supercenter was late in delivering the generators.

“When Generator Supercenter did in fact provide the generators, the state started some world-class backpedaling that continues today,’’ Babcock said.

A Multiquip official who handles media inquiries could not be reached for comment Friday afternoon.

Generator Supercenter is alleging breach of contract as well as “detrimental reliance’’ — meaning the company took significant actions and made significant expenditures to its detriment as a result of the state’s representations.

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