News for those who live, work and play in the Santiam Canyon

Reservoir contractor sued for $15M

Reporter for The Canyon Weekly

An Aumsville construction company who submitted a bid to rebuild a reservoir at Detroit Lake State Park has been sued by its former CEO for $15 million, claiming he was forced out while investigating racial discrimination.

Roger Silbernagel filed suit June 28 in Marion County Circuit Court against HP Civil Inc. (HPC), President Larry Gescher and Vice-President Josh Smith after Silbernagel was fired May 31 and subjected to a forced buyout.

Silbernagel claimed this was retaliation for his investigation of racial bias directed at his son, Zach Silbernagel, who identifies as Black and was an HPC employee at the time of the allegations.

HPC has denied wrongdoing and, in a statement to Our Town/The Canyon Weekly, Gescher said they “strongly disagree” with Roger’s claims.

“The company has always prided itself on operating with the highest degree of ethics and treating all of our stakeholders with respect and dignity,” said Gescher. “We intend to vigorously defend ourselves in the lawsuit and look forward to our day in court.”

The defendants have until July 31 to formally answer the suit. Roger is represented by Portland firm Chenoweth Law Group, while the case has been assigned to Judge Lindsay Partridge.

Outward success, inward friction

Roger, Gescher and Smith founded the company in 2013 to specialize in heavy construction projects such as highways and bridges, particularly those too complex for other contractors. HPC has grown significantly, and in 2021 built a 17,000 square-foot office/warehouse just outside Aumsville.

They are currently awarded, or bidding on, numerous contracts with the Oregon Department of Transportation and other municipalities for projects throughout Oregon. 

This included a bid last year to construct a 175,000 gallon reservoir at Detroit Lake State Park after the previous reservoir was damaged during the 2020 wildfires. 

Though HPC submitted the lowest bid, the contract was ultimately awarded to MJ Hughes Construction, of Vancouver, Wash.

When asked if the suit may impact open contracts with HPC, ODOT spokesperson Katherine Benenati said it is the department’s policy to not comment on pending litigation.

According to the suit, friction between Roger and his co-founders began early in the company’s history, including incidents where they hired employees over Roger’s objections who then later took action harmful
to HPC. 

In one such incident, a new employee crashed a company vehicle while intoxicated, another crashed his personal vehicle while intoxicated on his way to work, and a third physically assaulted two women at a company function, though these individuals were unnamed in the suit.

Roger also objected to Gescher and Smith offering part ownership to a new employee despite what Roger saw as a lack of qualifications, and an existing agreement to retain ownership between the three original founders. 

After the new employee had been on the job for five years, said the lawsuit, Gescher sold him a portion of his stake in March of 2022 over Roger’s continued objections, both due to the founder’s agreement and because such a decision allegedly required unanimous approval of the owners.

Alleged racial bias

The central allegations in the suit revolved around Gescher’s nephew, Jake Gescher, also an employee, who allegedly used racial slurs regularly such as telling Zach they would have to “n***** rig” a piece of equipment. 

Zach filed a complaint against Jake in 2021, however Larry Gescher allegedly failed to properly follow up on the matter and instead informed his nephew of the complaint, leading to Jake confronting Zach.

“In the end, Larry Gescher did not discipline Jake Gescher and the company did not provide employees with additional training to prevent racist and racially insensitive language at HPC,” said the lawsuit.

Following the complaint, Zach was allegedly harassed on the job by Smith, whom the suit described as a personal friend of Jake. Smith allegedly blamed Zach for problems on jobs whether or not they were his fault, while allegedly overlooking the mistakes of white employees.

This behavior caught the attention of a co-worker, who asked Roger on multiple occasions why Smith seemed to have a problem with Zach. 

After months of alleged harassment, Roger initiated a formal investigation in April of 2022 and questioned Smith about his behavior.

“Plaintiff asked Smith whether his treatment of Zach Silbernagel was because he was black,” said the lawsuit. “Smith became very angry.”

Co-founder ousted

The suit did not describe the outcome of Roger’s investigation, but did claim Larry Gescher and Smith began actively excluding him from critical business decisions and regular meetings. 

This culminated in an incident May 31 when Larry and Smith allegedly informed Roger he would no longer be a partner and would be forced to sell his stake in the company for book value, which is a measure of current assets and is typically less than market value, which also accounts for profitability and future growth.

The lawsuit claims Roger was told he had a few days to think things over, but later that day Larry Gescher allegedly handed Roger his last paycheck, told the former CEO he should start a new business with his son, then locked Roger’s access to the company’s system and files. 

Roger is seeking $2 million in punitive damages for retaliation, wrongful termination, and failure to act in the best interests of a business partner. He has also asked the court to reinstate him as CEO and a co-owner, while removing Larry Gescher and Smith from the board of directors, or alternatively compelling Larry and Smith to pay fair market rate for Roger’s shares for damages of up to $15 million.

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