Philly developer Post Brothers faces contractor lawsuits and a union pressure campaign

More than a dozen Philadelphia-area contractors have sued apartment developer Post Brothers, alleging the company failed to fully pay for all the work they did.

In state and federal courts, the building and professional-services contractors, most of them affiliated with the city’s carpenters union, allege Post Brothers owes more than $9 million for work at the 630-unit One Thousand One apartment complex at Broad Street and Washington Avenue in South Philadelphia.

“The Post Brothers want to take a Donald Trump business model where they don’t want to pay their contractors,” said James Hocker, assistant executive secretary-treasurer of the Eastern Atlantic States Regional Council of Carpenters.

One of the contractors, Healy Long & Jevin, a concrete construction company based in Wilmington, alleges the Post Brothers mismanaged the project at Broad and Washington and should pay an additional $14 million.

Post Brothers alleges it’s Healy that should pay them a larger sum — for poor performance. Healy’s lawyers did not respond to a request for comment.

Doylestown-based Apollo Contractors and other smaller contractors filed the next-largest claim, for $5.8 million.

According to Apollo’s complaint, the developer “doesn’t have adequate funds because the owners” used company funds “for their own personal benefit and expenses.” Healy has made similar claims.

Post Brothers in court papers called the union contractors’ lawsuits “without merit.” The development company argues that the conflict is about who should bear the costs of inflation.

“Subcontractors who agreed to a price in 2022 experienced 30% inflation probably throughout the course of the project,” which is wrapping up this year, said Michael Pestronk, CEO of the Post Brothers, who runs the company with his brother Matthew.

But “the way that contracts work, our financing works, we pay lump sums for agreed scopes of work,” Pestronk said. “It’s up to the subcontractors to fix their costs and allow for that.”

He also says the fraud allegations are baseless and just an example of contractors “throwing [stuff] at the wall” to see what sticks.

The carpenters have launched a pressure campaign against Post Brothers, including nine billboards denouncing the company along Philadelphia’s highways. They say contractors at the Broad and Washington site had to pay union members and contribute to health and pension funds, despite not being fully remunerated for the Broad and Washington project.

“That’s why they’re fighting hard to get what is owed to them because they have a lot of money on the street, and it’s jeopardizing their business,” Hocker said. “But they made their employees whole.”

Post Brothers has made a counterclaim against Healy, accusing the concrete contractor of “false billing” and other violations. A judge rejected a motion from union-aligned Healy to dismiss the developer’s counterclaim.

Pestronk says the legal saga is a manifestation of high interest rates and inflation in the construction market. Multifamily residential construction outside the city’s wealthiest neighborhoods has slowed dramatically. Office construction has ceased, and industrial sites do not require as many building trades.

“Subcontractors and general contractors are feeling much more hungry today than two years ago,” Pestronk said. “Their pipelines are totally dry.”

One of the largest dollar-value claims against Post Brothers is a joint demand for $5.8 million from a group of businesses, led by Apollo Contractors, a carpentry, drywall and finishing firm, and Fluid Works, a plumbing contractor, based at the same Doylestown address.

Apollo and Fluid are owned by members of the Sharpan family, who are also partners with the Pestronks in another business, Mega Supply in Bensalem. The Sharpans are separately suing the Pestronks over money they say the Pestronks owe Mega Supply.

The Apollo-Fluid Works complaint, filed in Philadelphia Common Pleas Court last August, was the first to include fraud allegations.

Apollo says that the Pestronks paid Apollo to improve “their respective private residences” even as they owed millions to the contractors for work in Philadelphia, according to Apollo’s complaint. Attached to the suit are invoices for more than $200,000 worth of carpentry, painting, tile and drywall work that Post Brothers paid Apollo to perform at Michael Pestronk’s Eagle Farm in Villanova in 2021 and 2022.

The groundbreaking for the Broad and Washington project was in December 2021.

The Apollo complaint alleges that Post Brothers knew they didn’t have enough money to pay for the work but didn’t tell the contractors until the work was done.

Early in July, Healy amended its federal complaint, pending before Judge Michael Baylson, to add similar claims. The Post Brothers denies those allegations and says the contractors have not offered detailed support for the allegations.

“They are preposterous,” Pestronk said.

Healy also demanded Post pay an additional $14 million for “mismanagement” at the Broad and Washington site that made the work difficult to complete and unprofitable. Post filed a counterclaim blaming Healy for “defective performance” that cost the developer $17 million. Each has asked the judge to dismiss the other’s allegations beyond the original complaint.

Other lawsuits asked sums well under $1 million. Some have been in settlement talks; others are slated for trial.

In addition to the nine billboards condemning the Post Brothers, the carpenters union has an electronic messaging truck attacking the company rolling around the city.

The clash is the latest conflict between building trades unions and the company, which has always used an “open shop” mix of union-and-unorganized workers on their job sites.

In 2012, the Pestronks sought to redevelop a former textile mill at 12th and Wood Streets into a 164-unit apartment complex called the Goldtex building, using an open shop model.

The Philadelphia Building Trades Council, an umbrella group that covers many of the construction unions, fought for 100% union representation on the site.

Union workers blocked access to the site — sometimes bringing construction to a standstill — and the Philadelphia sheriff’s office had to enforce a court order that protests stay back from the building.

Relationships between the Post Brothers and the building trades have never been that contentious since, although they’ve never been tension-free either. The company still uses a mix of organized and nonunion labor.

“We worked very hard to develop a relationship with Post Brothers over the last 10 to 15 years,” said Hocker of the Eastern Atlantic States Regional Council of Carpenters. “There was some bad blood [but] ... We were able to secure some work on some of the Post Brothers’ work, specifically around concrete.”

According to both the carpenters and the Post Brothers, the project at Broad and Washington employed greater numbers of union workers than some of their other major projects recently, such as Piazza Alta in Northern Liberties.

“We were trying to play nice with the unions, and we made a commitment to hire these contractors at frankly greater expense than we otherwise would have incurred to try to foster relationships,” Michael Pestronk said. “And it turned out not to have gone well.”

Besides the billboards and messaging truck, there have been periodic pickets at Broad and Washington, but according to Pestronk, nothing remotely comparable to the protests over the Goldtex building years ago.

The carpenters are not a part of the Philadelphia Building Trades Council or the Philadelphia AFL-CIO. Other unions have not joined the campaign against Post Brothers, although the carpenters say they have invited them to partake.

The union also has released a larger campaign, Build Fair Philly, meant to highlight what they consider unscrupulous development in the city. The billboards critical of Post Brothers bear the larger effort’s emblem. They also are trying to build alliances with neighborhood groups.

“Post’s practices ultimately affect the whole market, and we welcome anyone who wants to be part of holding developers accountable,” Hocker said.

Pestronk shrugs off the conflict. He notes that the Post Brothers continue to build in Philadelphia and says the current conflict does not compare to his company’s earlier struggles with the trades.

“When that was going on, that was something I spent a lot of time thinking about and figuring out what to do every day,” Pestronk said. “This is less than 1% of that. These are just some [nonsense] lawsuits that just go on in the normal course of business.”