Builders Asphalt Lawsuit: IDOT Freeze, Dismissal, Settlement

Builders Paving’s lawsuit against the Illinois Department of Transportation ended without a courtroom victory for the Hillside contractor but still got the company back to work. A Cook County judge dismissed the suit in January 2026, and by late March 2026 the two sides had settled, with IDOT lifting its freeze on state road contracts and imposing no new debarment.

Why IDOT Froze the Contracts

The freeze grew out of a 1999 federal case. Sebastian “Sam” Palumbo, his brother Joseph, and their father Peter pleaded guilty to a scheme that shortchanged union benefit plans and overbilled taxpayers on road projects through Palumbo Brothers, Inc. and Monarch Asphalt Company.¹ As part of the plea, the three men and their companies were permanently barred from state and federal road construction, and the ban expressly reached “all existing or later created affiliates and successors.”²

Builders Paving LLC, Builders Asphalt LLC, and Builders Concrete Services LLC operate out of the same Hillside construction complex once used by Palumbo’s banned enterprises and are run by Palumbo’s daughter Kaitlyn Palumbo Gandy and her husband Ryan Gandy. The Hillside property itself is owned by Palumbo’s five daughters through Five Sisters Management LLC, which incorporation records had also identified as the manager of Orange Crush LLC, one of Sam Palumbo’s debarred companies.³ Builders Paving had shared more than $80 million in IDOT contracts in the five years leading up to December 2024.²

In late 2024, IDOT opened an internal investigation into whether Sam Palumbo was secretly involved in the Builders Companies’ day-to-day operations, which would have violated the lifetime debarment. In court filings, IDOT said it had “received reports that Palumbo is involved in the day-to-day operation” of the business and alleged he had held “an ownership interest” in at least one business associated with Builders Paving until mid-2022.¹ While the investigation ran, IDOT let Builders keep bidding but refused to finalize any new contracts. By October 2025 the freeze had stalled about 20 road projects worth over $50 million.⁴

The family’s attorney, William Dwyer Jr., maintained that the Builders Companies were “wholly independent” of Sebastian Palumbo, who he said had “never owned any interest, direct or indirect, or invested in either of the Builders Companies” and had never served as an officer, director, or employee.⁵

What Builders Paving Sued Over

Builders Paving filed suit in Cook County Circuit Court in May 2025, asking the court to stop IDOT from awarding the disputed road contracts to other companies and to compel the agency to give the work to Builders as the low bidder. The company argued it had a “clear legal right” to the contracts. IDOT countered that it had discretion to withhold or cancel contracts in the state’s “best interests” and denied any “ministerial obligation” to award work solely on the basis of low bids.⁶

The January 2026 Dismissal

On January 8, 2026, Cook County Circuit Judge Joel Chupack ruled for IDOT and dismissed the suit. He found that no bidder has a legal right to a state contract until the contract is formally executed. “Builders Paving does not cite any case law indicating that the provisions of Part 6 it relies upon impose a mandatory duty for IDOT to award the contracts to the lowest responsible and responsive bidder,” Chupack wrote, concluding that the agency retains authority to reject bids or cancel solicitations in the state’s best interest.⁶

Builders Paving signaled it would appeal.⁷

The March 2026 Settlement

Instead of pursuing that appeal, Builders and IDOT reached a settlement in late March 2026. Both sides dismissed the pending appeal and waived other claims. IDOT agreed to lift the contract freeze and allow the Builders Companies to resume state work, subject to “specific guidance for future participation.”⁸

IDOT’s stated rationale was practical. The agency concluded there was “insufficient evidence at this time to support the conclusion that the Builders Companies were not responsible bidders” under the Illinois Procurement Code, and said the settlement was meant to “avoid the delay, uncertainty, inconvenience, and expense of further litigation.” No new debarment period was imposed.³

What the Settlement Disclosed

Even without a new debarment, the settlement papers put previously unpublicized facts on the record. IDOT asserted that the Builders Companies “did not fully or accurately disclose their relationship with Sebastian Palumbo” in their prequalification applications.³

Among the newly public documents was a 2019 “borrowed employee agreement” between Builders Asphalt, Builders Paving, Builders Concrete, and Orange Crush. That agreement expressly stated that the Builders Companies had been set up as part of Palumbo’s “intention and plan to transfer his assets, including the assets and operations of the Crush Companies, over time to his children.” It also provided that Orange Crush would “in no instance” loan employees to the other companies for federally funded or IDOT-funded projects.⁹

The settlement also confirmed that Sebastian Palumbo had overseen Builders Concrete until 2022 and managed Orange Crush until it shut down at the end of 2024 during the IDOT investigation. The Builders Companies are now described as “beneficially owned and controlled” by Kaitlyn Palumbo Gandy and her four sisters.³

Where Things Stand

By June 2026, IDOT had awarded and executed nine contracts to the Builders Companies. Identified projects included a roughly $2.6 million pavement patching and resurfacing job on Illinois Route 47 near Huntley and a project on Busse Road in Bensenville valued at just over $2 million, with other work in or near Bloomingdale, Des Plaines, Lockport, Park Ridge, Riverwoods, Rosemont, Skokie, and Sugar Grove. IDOT confirmed there had been “no change to the bid price” for these projects despite the lengthy delays.⁹

Builders Paving had been the apparent low bidder on roughly two dozen projects totaling more than $50 million since 2024. The nine executed contracts represent a fraction of that total, and as of late March 2026 the company was reported to be reviewing subcontractor pricing, labor plans, and material availability for up to 24 pending IDOT contracts.⁸

1
Chicago Sun-Times. Palumbo Road Construction Orange Crush Builders Paving IDOT Contracts
2
Chicago Sun-Times. Road Construction Builders Paving Asphalt Sam Palumbo Brothers Debarred Illinois
3
Chicago Sun-Times. Sebastian Sam Palumbo Builders Orange Crush Hillside Contract Debarment Gandy
4
Chicago Sun-Times. IDOT Road Construction Pritzker Palumbo Builders Paving
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Chicago Sun-Times. Sebastian Sam Palumbo Builders Paving Road Construction IDOT
6
Chicago Sun-Times. Cook County Judge Sebastian Sam Palumbo Gandy Builders Paving IDOT
7
Chicago Sun-Times. Illinois Road Construction Season Approaching Palumbo Family Builders Paving IDOT
8
Hoodline. Hillside Paver Back on the Road as IDOT Lifts Contract Freeze
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Chicago Sun-Times. Builders Companies Palumbo IDOT JB Pritzker Gandy