WATSEKA – The firm that owns the Settlers Trail Wind Farm in Iroquois County said Thursday that progress is being made to resolve an ongoing legal dispute with Sheldon Township.
Sheldon Township Highway Commissioner James Yana filed a lawsuit in July against Chicago-based E.On Climate & Renewables North America LLC, doing business as Settlers Trail Wind Farm LLC. The lawsuit seeks $1.8 million in damages, alleging that the company failed to adequately restore township roads used to build the 94-turbine wind farm in 2011.
After settlement negotiations stalled, the township then tried in late September to draw $1.8 million from a letter of credit that had been provided as security under its contract with E.On. The firm, however, filed a motion earlier this month in Iroquois County Circuit Court seeking a temporary restraining order to prevent the township from drawing on the letter of credit.
While another court hearing remains set for Nov. 7, Elon Hasson, director of external affairs for E.On, indicated Thursday that the dispute may be coming to an end soon.
“We are encouraged with the progress we are making working together with Sheldon Township toward a resolution on road upgrades,” Hasson said in an email. “Sheldon Township, an independent engineer and Settlers Trail have conducted inspections in the field and are scheduled to complete those road inspections next week. Once resolution is reached on identification of all areas of concern, Settlers Trail will begin road upgrades as soon as practicable.”
Yana, in his lawsuit, claims the road restoration work remains “deficient over an approximately five-mile radius.” A road-use agreement between the township and E.On had required E.On to repair all roads damaged during construction to their “preconstruction condition” or better,” but Yana said his numerous attempts to have E.On address the damage over the course of two years “yielded no restoration work.”
Settlement negotiations have been ongoing since the lawsuit was filed, said Paul Bowman, senior vice president of Settlers Trail Wind Farm LLC, in an Oct. 4 affidavit.
On Sept. 26, Bowman said, the township’s attorney sent his firm’s attorney a repair estimate for $1.284 million from Gray’s Material Service, and E.On’s legal counsel “promptly responded that they would review the estimate, and began promptly doing and performing a review of such estimate and began obtaining its own estimates for repair.”
But on Sept. 30, Bowman said, Sheldon Township sent JP Morgan Chase a demand letter seeking to draw $1.8 million from one of two letters of credit.
E.On had posted the letters of credit with JP Morgan Chase – including a $300,000 demand letter of credit and a “performance guarantee” letter of credit in an amount equivalent to one and a half times the cost of the road upgrade and restoration work – as part of the terms of the road-use agreement. The security was provided as emergency funding for the township in the event roads need repaired but E.On does not make the repairs after a “reasonable” chance is given for the firm to do so.
Bloomington attorney Melissa M. McGrath, who is representing the township, said Yana “fears if he does not draw under the performance guarantee letter of credit, (E.On) will cancel the letter of credit,” leaving the township with no financial means of making the repairs.
“Commissioner Yana intends to hold the monies until this court rules on the pending litigation,” McGrath wrote in a recent court filing.
E.On’s attorneys, Joseph Kincaid and Ronald Wisniewski of Chicago, argue that the township should not be allowed to draw from the letter of credit because, among other reasons, the road-use agreement requires the township to have first performed the work or incurred expenses.
But McGrath said in a response filed in court that the contract does not say anywhere that “the township must perform the work, have the work performed or incur expenses prior to drawing on the security.” McGrath added that “the intent of the parties was that Commissioner Yana could draw on the letter of credit if defendants defaulted on the contract.”
McGrath noted that the township is unable to independently fund the repairs and seek reimbursement later.
E.On’s attorneys also claimed the township could not draw on its security because the alleged “washboarding” of the roads was caused by traffic that was not associated with construction of the wind farm, as was stated by White Construction, the company that built the wind farm and restored the roads.
But McGrath said White Construction’s opinion of what traffic caused the damage is irrelevant.
All that is relevant, McGrath said, is that an independent professional civil engineer – Applied Research Associates Inc. (ARA) in Champaign – inspected the roads upon the agreement of both parties and identified “low, moderate and severe washboarding on numerous roadways in Sheldon Township.” E.On had agreed “not to dispute” ARA’s findings and to “proceed to repair any deficiencies identified” by the engineer “as soon as possible,” the suit says.
McGrath said “clearly Sheldon Township has given (E.On) significantly more than a reasonable opportunity to complete the necessary repairs.” McGrath noted that concerns about deficient road work had been raised by Yana since September 2011, two months before the wind farm was even finished.
E.On, in court filings, denies that it breached the contract but argues that Sheldon Township did. The firm says the township, in attempting to draw on the letter of credit, has failed to abide by a “dispute resolution” process set forth in the road-use agreement.
E.On’s attorneys said in court documents that the contract “does not contemplate that, while the parties are exchanging estimates and working in good faith to resolve disputes, Sheldon Township would simply draw down upon the pending letters of credit.”
Yana, along with the attorneys representing E.On and Sheldon Township, did not immediately return messages seeking comment.