Banta Tile & Marble closed this week after the bricklayers union won a $2.9 million judgment against it.
The small Loop Road firm laid off its 25 workers Tuesday and filed for bankruptcy liquidation Wednesday.
"It's obviously devastating to all of our employees and their families, and to our customers," said Banta president Ken Morris.
Banta installed luxurious tile and stone surfaces at thousands of homes and companies across the region during its 80 years in operation.
But it was forced to close after U.S. District Judge John Jones III in Harrisburg agreed with earlier rulings in a case that started in July 2007.
The judge ruled Dec. 15 that Banta owes $2.9 million in interest, damages and back contributions to the union's pension and health-and-welfare funds.
Jones signed a writ of execution the same day, entitling the union to that sum, which was far more than what Banta had in the bank.
Bankruptcy was the result.
"When they filed that writ of execution, at that point we were instantly done," said Morris.
"Eighty years of serving the Lancaster community with the finest craftsmanship and service, and it's done, just like that."
According to Morris, the legal issue dates to the 1990s when Banta did a job in which it paid union wages and benefits.
The job, installing tile at Philadelphia Electric Co. headquarters, had a contract with an "evergreen" clause.
That meant those union wages and benefits would apply to future jobs in the Philadelphia area.
Later, Banta had another union-scale job with a contract containing a "traveling contractors" clause.
That meant the contract's requirements would apply to future jobs in other areas.
Morris said Banta cut ties to the union in 2006, severing its obligations to pay into the funds — or so it thought.
But Local 5 of the Bricklayers & Allied Craftworkers challenged that notion, taking Banta to arbitration, then to federal court.
Harrisburg-based Local 5 argued those clauses meant Banta still was obligated to contribute to the union funds based on the number of hours its employees worked.
Banta was unable to negotiate a settlement with Local 5, said Morris, because such a deal would have required the firm to resume paying union wages and benefits.
"That wasn't a viable business decision. With that cost structure, we wouldn't have been able to compete," he said.
Local 5's attorney, Chuck Johnston of Camp Hill, could not be reached for comment late Wednesday.
Banta was founded in 1929 by George Banta as Craftsman Art-Tile & Marble Co.
Focused on residential work for its first three decades, the firm expanded into commercial and industrial markets in the 1960s.
The firm sold and installed countertops, vanities, tub and whirlpool decks, floors, walls, showers, tabletops and islands, fireplace surrounds and hearths, and sinks.
Morris, of Landisville, became president and an owner in 2003. He had spent the prior 15 years there, rising to vice president of operations.
The Ohio State University graduate took over a firm that had 50 employees and annual sales of about $5 million, according to newspaper files.
But with the recession slashing its business, Banta's work force had been cut in half. Annual sales recently were in the range of $2.5 million to $3 million, said Morris.