Abengoa sues over failed boiler, countersues in second case

By Holly Jessen | May 12, 2011

Abengoa Bioenergy Corp. is currently involved in two separate legal battles over events that happened at its ethanol plants located in Colwich, Kan., and Ravenna, Neb. In the first lawsuit the company is suing a vendor over a boiler that exploded; in the second it is countersuing a trucking company that says Abengoa owes it money. 

The first incident happened in April 2009 at the Abengoa Bioenergy plant in Colwich. The 25 MMgy plant uses mostly milo and some corn as feedstock. It also uses natural gas and landfill gas for power.

Court documents filed in April by Abengoa allege that Faber Burner Co. employees did work on the burner management system. “The following day … the boiler that was controlled by the Faber Burner Windbox Package Burner Management System experienced a catastrophic failure as a result of an explosion in the fire box,” the documents said. Abengoa estimates property damage and economic losses in excess of $3.5 million due to the explosion.

Faber Burner, on the other hand, maintains that the equipment was destroyed due to operator error by an Abengoa employee.  “This incident was not due to any defect or malfunction of the Faber Burner product,” said John Schultz, a Kansas City attorney retained by the company. “Faber Burner denies the allegations made by Abengoa in the lawsuit and expects to successfully defend itself in this case.”

The second case involves the 88 MMgy ethanol plant in Ravenna. In February, Zech Farms Trucking Inc. of Ravenna, sued Abengoa for $148,000 for unpaid work and services. The company outlined a variety of work performed, ranging from sealing and striping a parking lot, snow removal, hauling urea concrete and concrete work and more. Abengoa in many cases paid part of the bill, but not all, Zech Trucking alleges.

Abengoa answered by countersuing and requesting a jury trial. The company also argued that the trial should be moved from Nebraska as Abengoa’s principal place of business is in Missouri, not Nebraska. Abengoa says in court documents that a former plant manager directed work to Zech Trucking that had nothing to do with trucking. In addition, the plant manager did so without obtaining three competitive bids, as is Abengoa’s policy.

From 2008 to 2009, Zech Trucking became the largest vendor to the ethanol plant, invoicing Abengoa for 17 different categories of work and services, including such things as snow removal, landscaping and purchasing uniforms. The company invoiced Abengoa more than $1.2 million in that time period, nearly half a million of which was for non-transportation services. “Most vendors with whom Abengoa has contracts supply no more than two categories of services,” the company said in court documents. 

In addition, the company alleges that the plant manager directed work to the trucking company at inflated prices. For example, Zech Trucking installed flagpoles at the plant for $8,600, when the flagpoles cost between $1,400 to $2,600. In 2008, the average invoice for Zech Trucking was more than $15,000. Another transportation company’s average invoice was $5,800. “Zech Trucking’s invoices are almost triple that of its competitor,” the company said.

Further, the company alleges that the plant manager took kickbacks in the form of hunting trips as well as goods and services in exchange for directing work to the trucking company. One example given was a large heated, two stall garage the plant manager built with concrete and construction work from Zech Trucking. Abengoa alleges that Zech Trucking did not invoice the plant manager for the work and the plant manager did not pay the company. “The garage is so elaborate that individuals in Ravenna refer to it as the ‘garage-ma-hall,’” the court documents state.