When Harry W. Seabold, co-founder and CEO of Seabold Construction, died unexpectedly in January 2023 at age 69, the Beaverton, Ore.-based general contractor, which had been in business since 1984, continued to a year for two adjacent apartment projects in North Portland.
But the projects were not going well, and Seabold stopped working in November. The cause of the company’s demise is a dispute with the developer of the two projects, say family members who operated the company after Seabold’s death.
As a result of the dispute and Seabold’s shutdown, projects have stalled and several subcontractors have filed liens claiming they are owed hundreds of thousands of dollars, according to a February story on the local website Willamette Week.
The dispute has a particularly bitter tone. The developer, Solterra Strata, also known as Vibrant Cities, filed a breach of contract and unjust enrichment lawsuit in federal court in Portland against Seabold Construction and Harry Seabold’s daughter and son-in-law, Hailey and Kevin Owens. They inherited 10% of the contractor’s stock and operated the company in the year since Harry Seabold died.
Unlike most wage disputes between developers and contractors, Solterra Strata claims that Hailey and Kevin Owens “misappropriated” money from the project and is now seeking to recover some of their $17 million from their personal assets.
Seabold terminated its contracts with Solterra in November, and the developer responded with its own termination notice three weeks later. Solterra says Seabold in its contract indemnified Solterra for any money owed to subcontractors.
The two projects are apartment buildings together. Construction on the first, the 251-unit Zeal, began in 2021, and construction on the second, the 100-unit Fargo with ground-floor retail, began in early 2022. Solterra says that for completing the Zeal and Fargo projects requires another $7.3 million and $7.7 million, respectively.
The developer also claims that the $2.5 million it paid Seabold was for amounts owed to subcontractors and suppliers and that “Seabold misappropriated” the funds, defrauding not only subcontractors and suppliers, but depriving Seabold of the funds that subcontractors seek in Solterra.
Solterra says Seabold failed to provide timely notice before terminating the contracts.
Seabold’s corporate enterprise protection should be disregarded and Hailey Owens and Kevin Owens should be held personally liable to Solterra for about $8.8 million in each of the two projects, the developer claimed.
Hailey Owens had been the company’s finance manager, and Kevin Owens, who recently joined contractor Kirby Nagelhout Construction Co. as a project executive, he had worked at Seabold for 23 years and had served as chairman after Harry Seabold’s death. He started the company with his father, who died shortly after starting the company, and a brother, who retired in 2015.
Owens, in an interview, says that “the real situation was that there were design issues and delays” that were beyond Seabold’s control on the project, and “the developer didn’t want to keep paying Seabold’s general terms” to finish the project . “When I terminated the contract with the owner, the owner continued to hire former employees to finish the project,” says Owens.
Solterra could not immediately be reached to confirm the hires.
Owens says he and his wife did not steal any money and that since his father-in-law’s sudden death last year, the couple has been operating the business “under legal guidance.”
Since its founding in 2008, Solterra was known for developing sustainable apartment projects in Portland and Seattle. In 2017, its founding partners split the company into two separate businesses, one retaining the apartment development company now operating under the Vibrant Cities name.
The unjust enrichment claims and attempts to collect from the Owens’ personal assets are a means of deflecting attention from the developer’s own mistakes, the couple told a federal judge in a motion to dismiss their claims.
“In reality, the snakebitten construction projects to which this lawsuit relates arise from two sources: design errors and permitting delays that were the sole responsibility of the plaintiffs,” the motion states.
