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

895 N.W.2d 277, 2017 WL 1375312, 2017 Minn. App. LEXIS 52
CourtCourt of Appeals of Minnesota
DecidedApril 17, 2017
DocketA16-1347
StatusPublished

This text of 895 N.W.2d 277 (M & G Services, Inc. v. Buffalo Lake Advanced Biofuels, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M & G Services, Inc. v. Buffalo Lake Advanced Biofuels, LLC, 895 N.W.2d 277, 2017 WL 1375312, 2017 Minn. App. LEXIS 52 (Mich. Ct. App. 2017).

Opinion

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 [280]*280three to five percent uncondensed corn-distiller solubles. Under ideal fermentation conditions, ethanol production will create ethanol, corn syrup, dry distiller grains, and a small amount of thin stillage. But PRE’s efforts to produce ethanol generated six to nine truckloads of excess thin stillage on a daily basis.

In August 2012, PRE approached the president of Revier Cattle Company, one of the largest cattle farms in the area, and proposed a bartering arrangement where PRE would haul the excess thin stillage to the Revier farm and feed it to the cattle. In return, Revier would eventually receive corn syrup from the plant to feed its cattle once the ethanol plant became fully operational.

Under the direction of PRE, M & G assisted with the delivery and distribution of the excess thin stillage to the Revier cattle farm. As creatures of habit, the cattle would consume the stillage only if it was delivered fresh and hot to their troughs at regularly scheduled feeding intervals. To assist with the round-the-clock delivery of the stillage at the Revier farm, M & G acquired a towable feed trailer and repurposed it with a pumping system so that a semi-truck could tow the trailer around the farm and deliver hot stillage to the cattle troughs. M & G installed and reworked a cover on a pit tank at Revier’s farm to quell noxious fumes generated from certain excess stillage that could not be used as feed. M & G also delivered stillage to the DeLange farm, where it was also fed to cattle.

In November 9, 2012, PRE and West Ventures closed on the purchase of the plant. That same day, M & G executed and delivered a mechanic’s lien waiver, stating that it had received $197,216.69 as payment for all labor, skill, and material, except the sum of $56,584.73. West Ventures paid M & G the remaining balance of $56,584.73 from funds provided at closing and recorded its mortgage on the plant on November 15 at the Renville County Recorder’s Office.

M & G’s work at the Revier farm and the ethanol plant continued unabated during and after closing. On March 14, 2013, M & G recorded an amended mechanic’s lien on the ethanol plant property, totaling $242,476.56, at the Renville County Recorder’s Office. The lien described three noncontiguous parcel tracts in Renville County: the ethanol plant property, the Revier farm, and the DeLange farm. By the date of trial, M & G alleged that it was entitled to a lien totaling $179,025.501 for labor furnished and materials supplied to the Revier and DeLange farms on behalf of PRE. M & G claimed the following lienable items: $6,397.68 for hauling the stillage from the ethanol plant to the Revier and DeLange farms; $48,338.00 for installing and reworking a pit tank cover at the Revier farm; $12,028.24 for labor and materials for the feed trailer used to distribute the stillage at the Revier farm; $66,026.00 for time spent distributing stil-lage from the tractor-pulled feed trailer to cattle feed troughs at the Revier farm; $41,707.94 for labor and materials related to feeding stillage to cattle at the Revier farm; $4,725.34 for supplying a transfer pump at the Revier farm; and $25,747.25 for a 1982 Brenner tank trailer. On March 25, PRE filed for Chapter 11 bankruptcy. Appellant-plant owner Buffalo Lake Advanced Biofuels LLC purchased the ethanol plant from PRE.

On December 26, M & G sued to foreclose the lien. After a two-day stipulated-facts court trial, the district court found that M & G facilitated an improvement [281]*281upon the ethanol plant property by removing the stillage to the Revier farm. It also found that M & G’s lien was superior to West Ventures’ mortgage lien, as the work completed by M & G was continuous in nature and West Ventures had notice of M & G’s ongoing thin-stillage work both before and after it purchased the plant and recorded its mortgage on the plant property. The district court ordered the foreclosure of M & G’s mechanic’s lien in the amount of $179,025.20, and awarded M & G $159,750.14 in attorney fees.

Buffalo Lake and West Ventures (collectively West Ventures) moved for amended findings of fact, conclusions of law, and order for judgment, or a new trial, arguing: (1) the work completed by M & G was not a lienable improvement to the ethanol plant site; (2) the district court erred in finding that M & G’s lien was superior to the West Ventures’ mortgage; and (3) M & G should have filed separate mechanic’s hen statements for its claims against the three noncontiguous parcels. After a hearing, the district court denied West Ventures’ motion.

West Ventures appeals.

ISSUE

Does M & G’s removal and distribution of excess thin stillage 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?

ANALYSIS

M & G’s removal and distribution of excess thin stillage does not constitute a lienable contribution to the improvement of the ethanol plant property under Minn. Stat. § 514.01.

On appeal, West Ventures raises three challenges to the district court’s ruling. It argues that the district court erred in determining that: (1) M & G’s removal and distribution of the excess thin stillage constitute a lienable contribution to the improvement of the ethanol plant property; (2) M & G offsite work was a lienable contribution to the ethanol plant property despite M & G’s failure to file separate lien statements on noncontiguous parcels under Minn. Stat. § 514.09; and (3) West Ventures had actual notice of M & G’s unpaid lienable work at the time West Ventures recorded its mortgage. Because the first issue is dispositive of all of the issues raised by West Ventures, we begin and end with this issue.

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Cite This Page — Counsel Stack

Bluebook (online)
895 N.W.2d 277, 2017 WL 1375312, 2017 Minn. App. LEXIS 52, Counsel Stack Legal Research, https://law.counselstack.com/opinion/m-g-services-inc-v-buffalo-lake-advanced-biofuels-llc-minnctapp-2017.