RS Guitarworks constructed the building in late 2007, after growing from a basement operation on Forest Avenue to a internationally noted guitar manufacturer and customizing business.
With services ranging from artificial aging to a full guitar line, the company has drawn the attention of an extensive celebrity clientele that includes country star Brad Paisley, blues master Buddy Guy and rocker Rick Derringer among its ranks.
A small flood occurred on the property in August 2007 while the shop was under construction. Water from a heavy rain failed to properly flow through a city drain near the building.
The business' attorney, Brian Thomas, said RS Guitarworks alerted officials and granted the city a new easement for the drain. The business also followed a recommendation from officials to raise the floor, he said, exceeding the prescribed height out of an abundance of caution.
When heavy rain fell again in April 2008, the building was flooded in about a foot of muddy water, the owners said, damaging computers, office furniture, and equipment along with high-priced guitars and components.
"When you look down and you see a bass guitar body floating down the tech room that belongs to the bass player of Cheap Trick, it makes you nauseous," said Leedy.
Bowen said the company, which primarily operates online, could not afford to have dissatisfied customers complaining online. RS Guitarworks exhausted its reserve funds reimbursing customers for damage and replacing equipment, he said.
Over a two week cleaning period, the owners estimate that $18,000 was spent on cleaning supplies alone.
Leedy and Bowen said they have fought with city officials for more than a year on their claim and have met with resistance and insincerity from officials. The city also delayed fixing the problem, the owners said.
In the end, CSX Transportation, which owns adjacent property and a portion of the drain, rebuilt the entire structure, including the city's portion, in response to RS Guitarworks' concerns, they said.
Thomas said CSX determined that a portion of the original pipe were crushed and angled uphill, which prevented water from properly flowing.
"They have suffered over $150,000 of damage, and that doesn't even include all the lost labor," he said. "They just want to get paid so they can keep on with their business, and they can continue to work here and they don't have to close their doors."
RS Guitarworks filed a formal legal claim against the city last month.
City Attorney Bill Dykeman said adjusters for the city's insurance carrier, the Kentucky League of Cities, were delayed in receiving information from RS Guitarworks and still may not have all the information they requested.
Dykeman said mulch from nearby property may have clogged the drain. Lawyers for the insurance company are attempting to establish if liability falls on the city, CSX or owners of the mulch.
"From a taxpayer standpoint, we pay our insurance premiums to our insurance carrier out of public money," Dykeman said. "We are sensitive to RS Guitarworks and their claim of loss."
But, he added, "We pay for the coverage. We are not inclined to just roll over and take more money out of treasury and out of the general fund."
Dykeman said the Winchester Board of Commissioners thinks the city should accept any liability that is established, but also owes an obligation to taxpayers to defend against the suit if the city is not liable.
In the interim, Dykeman said the city has done everything it can to expedite the process.
"It is true that we are sensitive to who they are and what they bring to the community, and we've tried very hard to get our insurance carrier … to review the claim and find their way to making some kind of deal," he said.
Now that a lawsuit has been filed, the matter is out of city hands, said Dykeman. Instead, the insurance company has referred the case to its defense council.
Bowen said if the matter goes to trial, he believes RS Guitarworks is likely to win. Still, he is concerned that the business may not even exist by the time the issue is settled.
"We are not going to give up what they owe us, and I think we are going to win in the end in court," he said. "But unfortunately it's almost been two years, and it looks like if it's going to get resolved it's going to take a judge."
Contact Mike Wynn at mwynn@winchestersun.com.
