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M & G Services, Inc. v. Buffalo Lake Advanced Biofuels, LLC

Court of Appeals of Minnesota

April 17, 2017

M & G Services, Inc., et al., Respondents,
v.
Buffalo Lake Advanced Biofuels, LLC, et al., Appellants, Minnesota Energy, Respondent, K & S Millwrights, Inc., Respondent, Beaver Creek Transport, Inc., Respondent.

         Renville County District Court File No. 65-CV-13-279

          Karl J. Yeager, Kathleen M. Ghreichi, Joseph P. Bottrell, Meagher & Geer, P.L.L.P., Minneapolis, Minnesota (for respondents M & G Services, Inc., et al.)

          Katherine M. Melander, Brian W.Varland, Heley, Duncan & Melander, PLLP, Minneapolis, Minnesota (for appellants)

          Mark J. Hanson, W. Teague Orgeman, Stoel Rives LLP, Minneapolis, Minnesota (for respondent Minnesota Energy)

          K & S Millwrights, Inc., Buffalo Lake, Minnesota (respondent)

          Kurt M. Anderson, Minneapolis, Minnesota (for respondent Beaver Creek Transport, Inc.)

          Considered and decided by Schellhas, Presiding Judge; Kirk, Judge; and Bratvold, Judge.

         SYLLABUS

         The ongoing removal and distribution of a byproduct of an ethanol production process does not contribute to the improvement of real estate by performing labor, or furnishing skill, material, or machinery for the erection, alteration, repair, or removal of any building under Minn. Stat. § 514.01 (2016).

          OPINION

          KIRK, Judge

         After a bench trial in this mechanic's lien foreclosure action, appellants plant owner and mortgagee argue that the district court erred in determining that the ongoing removal and distribution of thin stillage, a byproduct of an ethanol production process, was a lienable contribution to an improvement to real property. Because the continual removal and distribution of excess thin stillage from an operating ethanol plant does not contribute to an improvement to real property under the mechanic's lien statute, we reverse.

         FACTS

         In January 2012, appellant-mortgagee West Ventures Platinum Partners and plant-owner Purified Renewable Energy LLC (PRE) wrote a letter of intent and paid a down payment to purchase a mothballed ethanol plant from Minnesota Energy in Renville, Minnesota. The ethanol plant had an operational capacity of producing 18 million gallons of ethanol annually. PRE hired several contractors, including respondent M & G Services Inc. (M&G), an industrial construction company, to assist with the clean-up and repair of the plant.

         From the outset, the plant's structural and mechanical problems dramatically hindered its ability to produce ethanol. The plant's evaporators and cooling tower were in disrepair. In the fall of 2012, two fires damaged the plant's dryer. Collectively, these problems caused the plant to generate significant quantities of a byproduct called thin stillage. Thin stillage is a watery mixture composed of approximately three to five percent uncondensed corn-distiller solubles. Under ideal fermentation conditions, ethanol production will create ethanol, corn syrup, dry ...


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