Judge dismisses lawsuit filed by Agassiz Energy

By Bryan Sims | November 03, 2008
Web exclusive posted Nov. 13, 2008 at 2:37 p.m. CST

A North Dakota federal judge has dismissed a lawsuit filed in July by Crookston, Minn.-based Agassiz Energy LLC, which intended to build an ethanol plant in the state. The case was dismissed because it didn't meet a federal requirement that all involved parties had to be located in different states.

The lawsuit, filed in Fargo's federal court by Agassiz Energy accused Fargo-based Wanzek Construction, Teton Industrial Group, Utility Engineering Corp. and Vogelbusch USA of misrepresenting themselves collectively as Bio-Renewable Group. The combined entity said it was a unified corporation with experience in designing and building ethanol plants.

U.S. District Judge Rodney Webb dismissed the case on the grounds of it lacking "diversity jurisdiction," meaning that none of the members of Agassiz Energy could be from the same state as any of the defendants. Some of Agassiz Energy's members were from North Dakota, which is where Wanzek Construction is headquartered.

Agassiz is now likely to pursue its lawsuit through Minnesota state courts; however, at press time Agassiz Energy had not returned Ethanol Producer Magazine's calls to confirm this.

In 2005, Agassiz Energy hired the four companies to conduct project development and permitting work for the Erskine, Minn., plant. After engaging Bio-Renewable Group in March 2006, Agassiz Energy paid the combined entity $829,500 as part of a general service arrangement to begin initial design work and then move forward in constructing the plant, which was worth an estimated $110 million at the time, increased to an estimated $204 million the following year while the four companies promised the figure to be within 10 percent accuracy.

Agassiz Energy then sent a letter to the defendants to terminate the contract "based on the dissolution of the Bio-Renewable Group in December 2006" and requested reimbursement of the $829,500 general service agreement fee.

Bio-Renewable Group later refused to refund the money to Agassiz Energy, citing that the group fulfilled its contractual obligations and if Agassiz Energy chose to terminate its agreement with the group it would pursue an $85,000 termination charge. The defendants also refuted the allegation of being an entity or corporation named Bio-Renewable Group.

Since 2004, Agassiz Energy has proposed to build a 50 MMgy ethanol plant near Erskine, Minn., but the company has announced that it suspended work on the project due to "unfavorable market conditions."