German Pellets being sued for breach of contract after allegedly failing to acknowledge ForesTech Energy's interest in a partnership proposing a 500,000 tonnes/year wood pellet manufacturing plant in Woodville, Texas

Audrey Dixon

LOS ANGELES , June 12, 2012 (Industry Intelligence) –

ForesTech Energy LLC has filed suit against German Pellets GmbH of Wismar, Germany, for failing to record ForesTech’s interest in a wood pellet manufacturing plant project in Woodville, Texas, The Southeast Texas Record reported.

In the lawsuit filed May 24 in Jefferson County District Court in Texas, ForesTech alleges that German Pellets issued a letter of intent indicating it would form a U.S. company called Texas German Pellets LLC, with ForesTech, which is based in Lincoln, Massachusetts.

ForesTech said it was to have an equity interest and receive a management fee for its part in the venture but has received neither. It needed a partner in Europe to make the plant’s output competitively priced for sale in Europe, reported The Southeast Texas Record.

German Pellets treated ForesTech as a partner as the two companies attended meetings together to meet various requirements for the project, according to ForesTech. Plans call for the plant to produce 500,000 tonnes per year of wood pellets, according to ForesTech’s website.

ForesTech said it had begun planning the plant and secured a shipping site in Beaumont before it started talking to German Pellets, which as “one of Europe’s leaders in wood pellet manufacturing” said it could help finance the project, The Southeast Texas Record reported.

ForesTech alleges breach of contract, common law fraud, constructive fraud, unjust enrichment, misappropriation of trade secrets, and disgorgement; and it seeks unspecified damages, plus legal fees and other relief as determined by the court.

The company said in its complaint that it spent a lot of money to plan the project, including obtaining rights to a plant site and securing the permits, reviewing and procuring wood resources, and negotiating state and federal incentives, among other expenses, reported The Southeast Texas Record.

German Pellets bought the site and paid for engineering, equipment and demolition, in addition to engineering a wood pellet facility and selecting a contractor, according to the suit, which notes that construction is not yet completed.

ForesTech said it has not been able to proceed with the project as planned because of German Pellets’ alleged failure to fulfill its promises to form a partnership, causing ForesTech a significant cash loss, according to the suit, The Southeast Texas Record reported.

The primary source of this article is The Southeast Texas Record, Beaumont, Texas, on June 11, 2012.

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