Arkansas senator's firm told to pay up in 2 suits

In 3rd, Files sued over unpaid bill

Sen. Jake Files, R-Fort Smith, is shown in this 2013 file photo.
Sen. Jake Files, R-Fort Smith, is shown in this 2013 file photo.

FORT SMITH -- Fort Smith's cancellation last week of its contract with Jake Files' development firm for construction of a softball complex is just the latest financial difficulty for the state senator.

A Sebastian County Circuit Court judge ordered Files' construction company to pay a $455,371 judgment in December, and he was sued last month for nearly $70,000 over a debt regarding construction materials, according to court documents.

A Franklin County Circuit Court judge in Ozark also entered a default judgment in June 2016 after Files' company, Foster Files Harris Construction LLC., failed to respond to a lawsuit, for which the judge awarded $134,330.

Files, R-Fort Smith, who represents Senate District 8 and is chairman of the Senate Revenue and Taxation Committee, lost a contract with Fort Smith when city directors voted Feb. 7 to stop him and Lee Webb, a former Sebastian County Quorum Court member and county election commissioner, from trying to develop a tournament-quality softball complex on city property in the Chaffee Crossing area.

The two had repeatedly missed deadlines since 2015 to complete the eight-field River Valley Sports Complex, and questions were raised by city officials about the use of General Improvement Fund money to help finance the project.

The city invested just more than $1 million into the project, with Files and Webb promising to finish construction with donated materials and labor. City officials are assessing what work has been completed at the fields, what needs to be done and what the cost would be before city directors consider whether to finish the complex.

Files also had a run-in with the Internal Revenue Service in 2015 when the agency filed a federal tax lien against his company for $111,000 in unpaid payroll and unemployment taxes in 2014 and 2015. Files told the Arkansas Democrat-Gazette last June that he was paying down the debt.

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In an email Tuesday, Files declined to discuss the ongoing litigation in Fort Smith and Ozark, saying, "There are more facts that have yet to be brought out in these cases."

"There is no doubt this has been a difficult time on my business in the construction industry, but we are working through it and looking forward to some resolution," Files said in the email.

"Often times, contractors end up in precarious situations when a deal they were counting on falls through or gets delayed and I am not referencing the deal with the ball fields. That was strictly a volunteer effort and neither me nor my company ever benefited from it at all."

On Dec. 13, Sebastian County Circuit Court Judge James Cox granted a summary judgment in favor of Baldor Executive Vice President Ed Ralston and his wife, Stacy, in a lawsuit they filed against FFH Construction in 2014.

In the summary judgment motion, Ralston's attorney, John Everett of Fayetteville, argued he had sent a request for admissions to FFH Construction on June 27 as part of the process of litigating the Ralstons' complaint. According to the Arkansas Rules of Civil Procedure, FFH Construction had 30 days to respond or admissions the Ralstons sought would be "deemed admitted," the motion said.

Files filed a response through his attorney, Jay Bequette of Little Rock, on Sept 13. Files wrote in an affidavit filed in the case that he never received the paperwork in the mail and was unaware the request for admissions had been filed.

Cox ruled that FFH Construction failed to respond to the Ralstons' request for admissions in the time given and that the allegations in the lawsuit were deemed admitted.

Court records said the Ralstons hired FFH Construction in 2012 to build a home. The couple agreed to pay FFH Construction $185,000 as a contractor's fee. Its job was to order materials and hire labor, for which the company would bill the Ralstons each month as work progressed.

In the complaint, the Ralstons said FFH Construction concealed that it was charging for labor, materials and equipment that FFH Construction used on other construction projects or that it never used on the Ralstons' project.

Initially Files was named as a defendant in the lawsuit but was dismissed because his attorney at the time, Jerry Canfield of Fort Smith, successfully argued that members or managers of limited liability corporations cannot be sued as individuals. Canfield, Fort Smith's longtime city attorney, withdrew from representing Files in May.

The Ralstons made specific complaints about unfair charges for fuel, masonry, rentals, a stone wall, concrete, electrical work, lumber, drywall installation, framing labor and the roof, among other things.

FFH Construction denied those and other allegations in the response to the Ralstons' request for admissions.

On June 23, Franklin County Circuit Circuit Judge William Pearson entered a default judgment against FFH Construction for failing to answer a lawsuit filed Feb. 9, 2016, by Harris Company of Fort Smith Inc. The company had complained that FFH Construction failed to pay all of the money it agreed to pay Harris Company as a subcontractor to build part of a concrete access driveway at a manufacturing plant owned by SGL Carbon LLC.

The agreed upon amount for the job was $390,830, of which FFH Construction paid only $120,000, according to court documents.

After failing to respond to the lawsuit within the 30-day deadline, Harris Company filed for and received the default judgment. The $134,330 judgment included pre-judgment and post-judgment interest.

On Jan. 23, American Builders and Contractors Supply Co. of Fort Smith sold construction materials to FFH Construction and Files, who executed a personal guarantee for payment, for $70,109 from July 1, 2016, to Aug. 18, 2016. As of the date of the lawsuit's filing, FFH Construction still has a debt of $69,903.

A Section on 02/15/2017

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