A ruling in a wind energy case saved landowners from losing their property when a construction contractor tried to place a lien on the property as well as foreclose against it after a wind tower manufacturer went insolvent.
The case involves subcontractor AUI, which was hired by Postensa Wind Structures USA in 2011 to construct a concrete tower on Louis and Carol Vaessens’ farm in Sublette, Ill. The wind farm was developed by GSG 7 LLC and used Postensa to manufacture a concrete tower.
“The thing that made this unique was that it was the first all-concrete tower,” Jon Kreucher, attorney at Howard & Howard in Royal Oak, Mich., told the Record. “Most towers are tubular steel. But this was designed as a prototype because the idea was if you could pour concrete, you could make greater use of the local resources and you wouldn’t have shipping costs of hauling huge steel tubes across the country or importing them from other places.”
AUI constructed the tower on the Vaessens’ property and was expecting payment from Postensa, but it went bankrupt in 2013 after AUI won $3 million from the company in arbitration for unpaid bills. To ensure it received payment for the work, AUI tried to enforce a mechanic’s lien and foreclosure on the Vaessens' property where the wind tower was constructed.
A suit was filed in Lee County in northern Illinois and a judge there ruled against AUI. During proceedings, AUI argued that the sheer size of the tower and wind turbine made them lienable fixtures to the property, as the structure weighed 1,250 tons and stood 507 feet tall.
AUI had the support of several construction associations.
The decision was appealed to the Second District Appellate Court and Judge Daniel A. Fish again ruled against AUI.
"The tower was a trade fixture that would remain the property of GSG 7 and not become a land improvement," Fish wrote.
GSG 7 was ruled the owner of the turbine and not the landowners, who only received a rental fee for the use of their land.
“It was a good ruling for the wind energy industry because most leases or easements attempt to retain ownership of the turbines that are placed on a farmer’s field,” said Kreucher. “Wind energy developers often spend hundreds of millions of dollars developing a wind farm and it would have shaken their development efforts and their ability to finance if the court would have decided, in fact, the land upon which the turbines are placed own the turbines.”
In addition, the Vaessens risked losing their farm in Sublette if the court had ruled the other way, which would have created a fear among farmers to work with the wind energy industry.
“If landowners believe they have the risk of losing their property over a construction dispute, I don’t think any landowner would lease their land for this purpose,” said Kreucher.