It was supposed to be just a routine roofing job. But it almost did in Quaker Housing, a nonprofit group that provides housing for low-income seniors and the disabled in south Madison.
In October 2006, Quaker Housing hired Ganser Company to replace the roofing on its two buildings at 2110 Fisher St., just off of Park Street. Ganser offered to do the job for $74,155. The contract included "Ganser Company's five-year workmanship warranty. (Based on 67 years of application experience.)"
Three years later, the costs to Quaker - both financial and emotional - were much higher. There were several problems with Ganser's work, court documents show. Portions of one roof were left completely exposed for a month. A subsequent snowstorm and melt caused one of the roofs to collapse.
Quaker ended up owing close $100,000 for the job, because it upgraded to a higher-quality shingle. But because of the problems with the work, Quaker balked at paying the final $13,500 of its bill.
That turned out to be a huge mistake. Ganser sued and won the remaining money owed for the job plus a staggering $56,000 in attorneys' fees - a total of about $70,000. With its own attorneys' fees added in, Quaker ended up paying close to $200,000.
The situation has left Quaker Housing in a precarious spot.
"Of the $70,000 that we paid [in the settlement], $65,000 came from our project reserves," says Dwight Fenderson, Quaker's executive director. Another $5,000 came from a private loan. Fenderson says the U.S. Department of Housing and Urban Development wants housing nonprofits like Quaker to have a reserve fund of $1,000 per unit - which for Quaker's 72-unit complex comes to $72,000.
"We pretty much wiped our reserves out completely," says Fenderson. "We are in serious trouble if anything happens in the next year or so. We can pay the bills and keep going, provided nothing bad happens to us."
Ganser's attorney, Anthony Varda, says the case "troubles him a great deal," but for different reasons.
"At first blush it looks bad. You've got this group doing good work for the public that gets this huge judgment against them," he says. "But when you get into it, you find that they just wouldn't agree to pay the bill and let the warranty work be done. I feel sorry for them, but it was a self-inflicted wound."
Subcontractors hired by Ganser began working on the project on Jan. 11, 2007, according to court records. Quaker Housing officials spoke only about the financial difficulty the case has left them in, not details of the job or lawsuit. But court records provide plenty of details.
On March 13, 2007, Quaker's then executive Tom Heine wrote a letter to Travis Ganser, outlining the early problems:
"The first crew stripped off all our roofing on six wings of two buildings over a period of six weeks, replacing only about 30% of the roof. They left exposed wood on at least three roofs. They took off apartment vents on one roof and didn't replace them; rather they rolled the sub-roofing material over the vents and sealed them off."
Two of the covered-up vents began leaking after a snowstorm, Heine wrote. The first crew stopped showing up for work after Feb. 19, and the debris wasn't cleaned up each night, as stipulated in the contract.
Things went from bad to worse, as a follow-up letter relates. The roofing and caulking around pipes on one roof were removed and left uncovered for a month. When a snowstorm struck, the unprotected portions leaked, causing the roof of one apartment to collapse on March 22, 2007.
"The tenant's bedroom was completely filled with wet drywall and hundreds of pounds of wet insulation," Heine wrote. "The sky could be seen coming through the roof."
Heine's letter alleged that "poor workmanship" had allowed moisture to build up in the deck boards, insulation and ceiling drywall, which could have long-term effects. He called Ganser's invoice "premature." But Quaker paid most of the bill, except for $13,500, while asking that the work be fixed and fees lowered. From then on, the lawyers took over.
One of the key points in the case that came before Dane County Judge Sarah O'Brien in December 2007 revolved around what kind of warranty Ganser offered Quaker. Quaker's first attorney, Walter Urback, argued that Ganser failed to complete the job in a "workman-like fashion."
In November 2008, Ganser attorney Varda stated in a filing with the court: "There is no warranty, expressed or implied, that Ganser's work will be done in a workmanlike fashion, that it will be free from defect or that it will meet any other specific standard."
Varda, who wrote Ganser's contract, says he was arguing that Ganser had a different kind of warranty that "guarantees it will fix anything that isn't done properly. It doesn't guarantee there won't be a mistake."
Many of the problems, Varda says, were caused by the company that put on the previous roof. He adds that where Ganser was at fault, as when the roof collapsed, it repaired the damage.
"It was a very unfortunate case all around," he says. "There was no reason to do the litigation."
Ganser and Quaker agreed to a settlement in August. Last month Quaker paid the remaining $13,500 it owed, along with the lawyer fees. In the end, Quaker could have gotten two roofs for what it spent.
Fenderson, who took over as executive director last year, says he would have handled the matter differently: "We should have just paid the $13,500 and duked it out over the warranty."
Fenderson believes Quaker can ride out this rough patch, but the case has left them in a risky position. It's forced cutbacks in maintenance and delays in building improvements, like new carpets or windows.
"Now we'll just have to keep patching the windows up," says Fenderson. "If something big like a boiler goes, we'll have a problem. We'll be okay as long as nothing bad happens. [The lawsuit] was about as big a blow as we could take."