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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