David Yates Nov. 8, 2012, 11:27am

German Pellets GmbH is seeking to transfer a suit brought by Forestech Energy, who wanted to start a company that would sell wood pellets to Europe as a source of renewable bio fuel.

In June, Forestech, a renewable energy company, filed suit against the German company in Jefferson County District Court, claiming it has lost significant amounts of money after the German business failed to fulfill its promises to form a partnership.

“After a significant investment of time and money, Plaintiff determined that a Woodville-Beaumont area facility would be selected for such a project,” the suit states.

Court records show that on Nov. 5, German Pellets GmbH answered the suit and requested the litigation be transferred to Tyler County, because the outcome of the litigation will affect an ownership interest in land located within that county.

After planning a wood pellet project with a mill in Woodville and obtaining a shipping site in Beaumont, Forestech began meeting with German Pellets, which represented a desire to become partners with Forestech, the complaint says.

German Pellets told Forestech that because of its equity, it could help finance the project. The suit states it issued a letter of intent to Forestech representing that the two could form a U.S. limited liability company called Texas German Pellets, Forestech alleges. For its part in the company, Forestech would have an equity interest and receive a management fee, according to the complaint.

German Pellets and Forestech proceeded to attend meetings together to secure different necessities for the project. At these meetings, German Pellets treated Forestech as a partner, the suit states.

While trying to get the project off the ground, Forestech spent significant money when it developed a financial model, obtained rights to a plant site and required permits, reviewed the wood resources available to it, procured a source of wood, negotiated different state and federal incentives, negotiated a natural gas contract and obtained rights for shipping at the Port Arthur Port Facility, the complaint says.

The suit says German Pellets, meanwhile, engineered a wood pellet facility, selected a contractor, purchased the site and paid for engineering, equipment and demolition.

Despite all of Forestech’s work in helping to get the facility running, German Pellets has failed to issue a record of Forestech’s interest in the newly formed U.S. company. In addition, it has failed to pay Forestech a management fee, according to the complaint.

German Pellets, in fact, has not yet completed construction of the project or to begin operations, the suit states. Therefore, Forestech has not been able to proceed with the project as it had planned, the complaint says.

Forestech alleges breach of contract, unjust enrichment, misappropriation of trade secrets, common law fraud, constructive fraud and disgorgement.

It is seeking unspecified damages, plus attorneys’ fees and other relief the court deems just.

Gary Neale Reger and David J. Fisher of Orgain, Bell and Tucker in Beaumont are representing Forestech.

T. Lynn Walden of Walden Reynard PLLC in Beaumont represents German Pellets.

The case is assigned to Judge Gary Sanderson, 60th District Court.

Case No. B192-498

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