Stinger, Lincoln County Face Off in Lawsuit Following CEO’s Death

By Beacon Staff

Two years ago, Paul Rumelhart, with the Kootenai River Development Council, was an eager supporter of Stinger Welding, Inc. Today, when you ask about the relationship between the company and Lincoln County, Rumelhart will refer you to a lawyer.

In the weeks following the death of Stinger Welding owner and CEO Carl Douglas, a legal dispute between the Lincoln County Port Authority and the Arizona-based company has spilled out into public view. The lawsuit, filed in October 2012, says Stinger failed to comply with a 2009 development agreement that would have brought more than 200 jobs to the area. The disagreement came to the forefront last week when Steve Patrick, vice president of Stinger’s northwest operations, wrote an editorial in the Kootenai Valley Record stating that Lincoln County failed to support the company since the beginning.

On the night of Dec. 18, 2012, Stinger Welding CEO Carl Douglas was flying from Coolidge, Az. to Libby, when the small plane he was piloting crashed just miles from its destination. Douglas and Stinger employee John Smith both died in the crash on Swede Mountain. The cause of the accident is currently under investigation by the National Transportation Safety Board.

In the weeks following Douglas’ death, the company changed hands to his widow, Stephanie Jordan. On Jan. 15, the company was voluntarily put into receivership, where a court-appointed receiver manages the company until the ownership situation is resolved.

As of early January, Stinger had 69 employees, far short of what the company said it would employ when it first arrived in 2009. That year, the company was working closely with the Lincoln County Port Authority and the Kootenai River Development Council, headed up by Rumelhart, to develop the former Stimson Lumber Co. site in Libby. On June 26 of that year, Lincoln County and Stinger Welding signed a 24-page development agreement to bring a bridge-building facility to Lincoln County. At the time, it was hailed as a fresh start for one of the most economically depressed areas in the state.

But according to court documents filed by Lincoln County, problems arose almost immediately. Part of the development agreement stated that Stinger would construct a large welding facility on the Stimson site and, once complete, the port authority would purchase it at the cost of construction and lease it back.

According to court documents, Stinger failed to obtain funding for the facility’s construction and in July 2009 the county provided a $3.4 million grant to the company to start the project. Attorney Allan Payne said at that point the port authority still planned on purchasing the facility from Stinger, minus the $3.4 million.

“They certainly didn’t just give that money to Stinger,” Payne said. “We say the port owns it and they say Stinger owns it and that’s what we’re trying to sort out.”

Stinger completed the building in May 2011. In hopes of repaying loans, Stinger sought funding through the New Market Tax Credits program. During that process, according to the lawsuit, Stinger allegedly misled the port authority by claiming it needed the title to the property it occupied. On July 18, 2011, the port authority conveyed the title to Stinger for $186,000.

Payne said Stinger also failed to bring the high-paying jobs to Libby that it promised in the 2009 development agreement.

“Stinger didn’t fulfill its obligation,” Payne said. “There was a commitment to bring (more than 200) well-paying jobs to Lincoln County and that never happened.”

On Nov. 1, Stinger filed a counter lawsuit against the Lincoln County Port Authority, denying most of the initial allegations and accusing the agency of fraud, slander and deceit, among other things.

Less than two months later, Patrick wrote a letter to the editor in the Jan. 22 edition of the Kootenai Valley Record, demanding the county drop its “bizarre lawsuit.” In the letter, Patrick wrote that Lincoln County failed to gather the funds and grants to purchase the building and that Douglas felt betrayed before his death.

“Is Stinger Welding going to survive and continue to pump a multi-million dollar payroll into the community?” Patrick wrote. “These answers largely reside in whether Lincoln County drops its lawsuit against Carl Douglas and Stinger Welding. Carl is dead and Stinger is operating in receivership … spending scarce dollars defending against an admittedly bizarre lawsuit is the last thing Stinger needs in its quest to continue operations and provide jobs in Lincoln County.”

Payne balked at the idea of Lincoln County dropping its lawsuit, adding if Stinger believes it’s in the right, the company should welcome it.

“If they were in a position of strength, they wouldn’t be demanding the county drop this,” he said.

Patrick disagrees, though, saying the county is not being truthful with its people or Stinger. In his editorial, Patrick said the lawsuit would only hurt the people employed by the welding company.

“This is not economic development on the county’s part, it is economic strangulation,” Patrick wrote.

Payne expects the case to go to trial sometime in 2014.

CORRECTION: This story has been changed. The price of the building’s lease was originally reported as $1 annually, which is incorrect. It also should have said Stinger planned to create 202 jobs, not 250.

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