Roads To Success 9

Ron and Cristy Varela (continued)

Landslide

Ron & Cristy had built a successful business, and in spite of marrying at an early age their relationship had endured a number of challenges and even thrived.  But a hidden problem had slowly been creeping up on the young couple unnoticed, growing larger and stronger with time.  “We got to where we thought we were invincible,” Ron explained.  “I was staying out entertaining customers and drinking with my friends, and having too much fun.”

Ron would start the day early and come home late.  Cristy, reasonably so, was not happy with the situation.  She stayed at home with the children, often with dinner waiting for Ron.  And just as often, Ron would not return home until after midnight.  Not surprisingly, there were numerous fights between them during this troubled season in their lives.

“I hated his drinking,” Cristy recalled.  “I hated the change I saw in him, or how he’d be when he was drinking.”

Ron and Cristy’s children have lucid memories of that period in their family’s life.  Jennifer recalled that her father was frequently on edge and not particularly friendly.  She also noted that, as much as Ron loved Cristy, he wasn’t very respectful to her when drinking.

Jason Varela, now Vice President and General Manager of Diamond R, LLC, the Varela development company, graduated from college and began working for his father in 1992.  He looked back on his father’s drinking with this observation, “He was, to me, tough to work with but mainly tough to deal with outside of work.  He was a very functional alcoholic; a very functional drinker and most people I think looking back would say, yeah, he’s a fun guy but not necessarily an alcoholic.”

Ron’s drinking made family life difficult enough, but even greater trouble was looming in a large grading and excavating job.  The project was in Chino Hills, California, on a three-mile stretch of Highway 71.  The problems began with a landslide that dumped approximately 300,000 cubic yards of dirt onto the freeway.  The landslide brought work to an immediate halt while the state began a lengthy process to determine what should be done to resolve the problem.

“Working with government agencies really took us down,” recalled Jason Varela.  “At the time I think one of the projects was $700 million.  Well, that was huge to us.  To them it was nothing.  We were just another change order, just another contract on a billion dollar project, or whatever it might have been.  And they [the state government] don’t take into account that every time they don’t sign one of our change orders that somebody’s not going to get paid or a trucker’s not going to get his money to feed his family and pay his bills.  So, it really was a cash flow issue and a lack of accountability with the government agencies.”

Ron had little choice but to take his battle with the State of California to court.  Nothing about the experience was easy.  “It just seemed like almost every day there was a new issue that was not good, something to deal with,” Cristy explained.  “And so he would come home sometimes and just wonder how much more could he take.  Is it all worth it?”

After months of costly litigation the court determined that since the primary contractor had hired Ron’s company, it was the contractor and not the state that was liable.  Ron would have to begin again by filing a new lawsuit.  But by this time, beginning again was not an option.

“I saw that his fuse had gone out,” Jennifer said of her father.  “He was tired of fighting.”

Ron decided to settle out of court with the primary contractor and move forward if at all possible.  At the time it was really the only logical option, especially if the Varelas were to avoid the huge cost and relentless stress generated by additional litigation.  But it was also a costly decision.

“It just took a large, large amount of money out of our net worth,” Ron explained.  “To the scale we had been it closed down our construction company after twenty-seven years.”

The company dwindled from one-hundred-fifty employees down to eight.  It was also compelled to sell its trucks and other heavy equipment at a discount in order to repay bank debts incurred during the lengthy litigation.  For Ron and Cristy it was a deeply humbling experience.

If the demise of his company wasn’t enough there was even more disappointment, and more loss, heading Ron’s way.  The sandbag company Ron had started with a partner was doing well, generating approximately $2 million annually.  While Ron was distracted by the lengthy legal proceedings with the State of California his business partner disappeared with a large amount of company money, resulting in the end of the sandbag business.

“When that fell apart I think it was pretty devastating because it was a company based on trust between dad and his partner,” recalled Jason Varela.

Both Jason and Jennifer remembered that the betrayal their father experienced from the sandbag company incident disappointed him greatly.  There was a time he could do business on a handshake but those days were gone for good.

To Ron’s family and friends, it appeared that everything important in his world was falling apart.  Unfortunately, there were still greater challenges heading towards both Ron and Cristy.

© 2011 Philip Kassel