Officials warn residents: Do your homework, get a written estimate.
Thirty minutes after the tornado roared across north Minneapolis on May 22, contractors began swarming through the beleaguered neighborhood, eager for the business of fixing some of the 3,700 damaged properties.
Even some builders were taken aback by the feeding frenzy. "There were so many contractors I'd never seen before, I kind of pulled my guys out of there," said Garry Holmberg of Holmberg Improvements of Blaine. Still, Holmberg said he picked up "10 or 12 jobs" while he was drumming up customers.
Holmberg may have his own problems. He is using the contractor's license registered to his son, a practice that the state's top contractor licensing official says is prohibited by law.
Last week, several watchdog agencies warned homeowners to be careful and do their homework before hiring contractors to repair their storm-damaged houses. Whistleblower looked into Holmberg Improvements and three other local contractors who left business cards with a North Side homeowner.
A review of court and state records shows:
•Enerjac Construction Inc. was fined $2,000 last November and had its license temporarily revoked, although it is now allowed to operate.
•Nystrom Contracting Corp. owes $29,433 to a supplier, who won a judgment in Hennepin County District Court two weeks ago.
•An owner of 1st Choice Construction faces a possible trial in August after a former employee of his previous construction company accused him in a lawsuit of billing insurance companies for nonexistent charges.
Get a written estimate
Representatives of the state Department of Labor and Industry and the Better Business Bureau (BBB) say homeowners should get a written estimate first and check the background of a contractor before hiring one.
Yet even those background checks don't tell the whole story. The BBB and the state took action after being told by Whistleblower about two of the four contractors.
When contractors first approach, "do not sign anything," advises Charlie Durenberger, the Department of Labor and Industry's contractor enforcement manager. Durenberger said that many salespeople working for building contractors will "not be completely honest" about what they're asking homeowners to sign. They might say it's an authorization form for speaking with the homeowner's insurance company, he said.
"But what it really is is a contract for the performance, the scope of repairs that the homeowner's insurance company agrees to cover, and the cost of the contract will be the amount of the insurance offered by the homeowner," Durenberger said.
Business cards for roofers and home repair contractors are raining down on the North Side as contractors go door to door and approach people in their yards.
Brandon Midthun, an owner of 1st Choice Construction, said his company has signed up at least eight homeowners since the storm. "It's not an actual contract to do the work," he said, but an agreement "to work with the insurance company. ... I think it is beneficial for both parties."
A co-owner, Erik Laine, was sued last September by a former employee of Laine's other construction company, LP Design. The suit alleges that Laine and another owner of LP Design were billing insurance companies for nonexistent damages on properties.
In an interview, Laine said he had no knowledge of the allegations and then blamed the other owner, Jon Cooper. Cooper said the lawsuit's allegations are false, but accused Laine of failing to complete contracting jobs. Laine denies it.
Midthun said he was unaware of the allegations in the lawsuit. "We are a 100 percent legitimate contractor," he said.
Tom Christianson, owner of Enerjac Construction, said his company was handing out cards on the North Side. "If we see people in need and no else has a sign in the yard, we can help them," he said.
Last November, the state Department of Labor and Industry revoked Enerjac's license for failing to pay a judgment obtained against it by a subcontractor. Enerjac "demonstrated financial irresponsibility" in violation of state law, the state agency said. Enerjac was fined $7,000, with $5,000 stayed if it complied with a repayment schedule. The company has fulfilled the state requirements and the license revocation has been vacated.
"We've been around in the design and remodeling business for the past 30 years," Christianson said. "I have a whole list of clients who would give us excellent marks for integrity and honesty and total customer service."
Richard Nystrom of Nystrom Contracting Corp. has also signed up clients in north Minneapolis.
Nystrom blames the recent $29,433 court judgment against his company by ABC Supply Co. on an employee who he says stole money from him.
"I don't consider it a very large judgment," Nystrom said. "When you come off the winter I don't have the money to pay it right away. ... It is not like I have a bad reputation. I haven't swindled anybody. I'm just behind on my bills."
Holmberg of Holmberg Improvements said he had a license through the state, but the license number he provided is for his son's company, DNH Construction LLC, which he said he was allowed to do.
Not according to Durenberger, the state's contractor enforcement manager. "It sounds like Garry Holmberg is operating under his son's company's license, and he can't do that, that's illegal," he said.
Holmberg also has a judgment against him in Anoka District Court for $129,981 from 2009. Holmberg said "that's a personal deal" and had nothing to do with Holmberg Improvements or his son's business.
All four businesses had ratings of A- or higher with the BBB. Durenberger cautioned that "I wouldn't be comforted by an A rating."
Dan Hendrickson, spokesman for the BBB of Minnesota and North Dakota, said the bureau doesn't always have access to the information that Durenberger has. "Our ratings are based on the information we have in our files," he said.
After learning more about Enerjac from Whistleblower, the bureau dropped its rating from A+ to B+. The BBB also pulled Holmberg's A- rating while it conducts a review.
Randy Furst • 612-673-7382