Could a BigWind lease put your family at risk for a lawsuit?

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Since BigWind slithers into an area, before it is announced to the public, you should educate your neighbors, now, about the risks of signing BigWind leases. Could you/they be at risk for future lawsuits? Maybe. We have blogged about this scenario in Indiana, once before. Will it become more common? Would it cause stress to the property owners? Absolutely! Leases should be scrutinized by a professional with experience…..

Receipt of a mechanic’s lien against their property in the amount of $68,995.75 has caused some property owners in Arkwright a fair amount of confusion and, at least initially, a significant amount of stress.

On March 15, Harter Secrest & Emery LLP, the law firm representing Specialties Company, LLC of Indianapolis, Indiana, filed mechanic’s liens against real properties in Arkwright under lease agreements with wind company EDP Renewables. According to lien documents, Akrwight Summit Wind Farm, with consent from the property owners, engaged the services of subcontractor White Construction, Inc., also of Indiana.

White Construction “was engaged to furnish labor and materials for earthwork, excavation and backfill of soil, and soil stabilization and modification, for the improvement of the Premises.”

Although the work has been completed, the mechanic’s lien says that White Construction has not been paid in full. “The total agreed price and value of labor and materials furnished under contract with White Construction, Inc., 3900 East White Avenue, Clinton, IN 47842 was $6,109,037.28 of which $3,548,568.30 remains unpaid and the total amount allocable to the Premises and which this lien filed is $68,995.75.”...

After speaking with the wind company, Norton contacted the OBSERVER by phone later on Wednesday. “I spoke to one of the vice presidents of EDPR. It’s a dispute between contractors, but beyond that they couldn’t talk about it. They are aware of the situation. It’s a legal matter,” Norton said.

In recent years, mechanic’s liens have been filed against other property owners with wind company lease agreements. In a similar 2016 case, AUI Construction Group v. Louis J. Vaessen, a subcontractor on the wind project, AUI, was responsible for the construction of the foundation and the tower on Vaessen’s property. In AUI’s subcontractor’s agreement, wind company GSG 7 was listed as the owner for the wind turbine. At the end of the project, AUI claimed it was owed $5.9 million from another subcontractor involved. AUI received partial payment, but was owed a remaining balance of $3.18 million. Although AUI received a partial award to settle the dispute, the subcontractor soon filed bankruptcy, leaving approximately $1 million unpaid. AUI attempted to collect the unpaid amount from the Vaessens in the form of a mechanic’s lien.

In a landmark decision, the Illinois appellate court ruled in favor of the property owners, whose lease agreement allowed an easement for a structure on their property. Further, the court determined that the property owners did not receive a direct benefit from the turbine — only from the lease money ($7,500 annually) from the wind company. Because the wind turbine was the property of the wind company, who directly benefitted from the energy generated by the turbine, they were held responsible for the amount of money owed to AUI.

Although the court ruled in favor of the landowners, the case raises serious questions regarding the lien rights of subcontractors and property owners’ liability. Many contractors, subcontractors and suppliers are engaged in order to create just one wind farm, which can leave several opportunities for payment problems or disputes. What protections do subcontractors have when the property owner is not the one benefitting from the project? Who becomes responsible for monies owed if a party involved in a wind project files for bankruptcy? While answers to these questions may differ based on the specific terms of property owners’ lease agreements, the case is a reminder for all parties involved to read — and understand — the fine print….

 

Arkwright article