A renewable energy firm has filed a lawsuit against a German company in a dispute over the formation of a Texas-based partnership. Forestech Energy claims that German Pellets breached a contract to create a company that would export wood pellets to Europe as a renewable bio fuel. The lawsuit was filed in Jefferson County District Court on May 24.
The suit claims that Forestech invested a significant amount of time and money in selecting a Woodville-Beaumont location for the project, and believed that German Pellets, an established European manufacturer of wood pellets, would be its partner.
Forestech had planned for the project to include a mill in Woodville and a Beaumont shipping site. The company claims that German Pellets expressed a desire to create a partnership, and represented that it could help with the financing of the enterprise. According to the lawsuit, German Pellets was in a better position to secure financing due to the size of the company and its greater equity.
The lawsuit alleges that German Pellets issued a letter of intent to Forestech proposing the formation of Texas German Pellets, a limited liability company. Forestech would receive an equity interest and a management fee. The suit claims that Forestech and German Pellets met several times to move the project forward and that the two companies proceeded as if a partnership had been formed.
The suit claims that Forestech developed a financial model, obtained permits for a plant site, researched sources of wood, and obtained shipping rights and a contract for natural gas. Meanwhile, according to the complaint, German Pellets engineered the facility for wood pellet manufacturing, purchased the property for the site, and paid for equipment, engineering, and demolition.
Forestech claims that German Pellets has not recorded Forestech’s interest in the new firm and has not paid the required management fee. In addition, the suit claims that the German company has not finished construction or begun operations, preventing Forestech from proceeding with the project.
German Pellets is Europe’s largest manufacturer of wood pellets, with 14 plants across the continent. According to Forestech Energy, the joint project would have produced 500,000 tons per year of white wood pellets.
The lawsuit claims breach of contract, misappropriation of trade secrets, fraud, and unjust enrichment. Forestech is seeking money damages, attorneys’ fees, and other relief. The case was filed in 60th District Court and will be heard by Judge Gary Sanderson.