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Dauenhauer, Stillwell and Spizzo apparently agreed to the deal, though they never signed a contract. Dauenhauer's argument in the lawsuit is that the oral contract is enforceable because it was partly performed by both parties: Dauenhauer was paid at least $360,000 plus a separate $75,000 commission.
"It's our view," says Casillas, Dauenhauer's attorney, "that these defendants brought him in to broker this deal and then preyed on the knowledge and experience that he had out there to their benefit without wanting to compensate him accordingly."
Stillwell declined to discuss those allegations. In a prepared statement, he said Dauenhauer "was paid his commissions before he terminated his activities in January as a result of business irregularities occurring during his work."
GIGI filed its answer to Dauenhauer's lawsuit on April 9, denying the allegations and filing counter claims against him, alleging a breach of his real estate agent duties, among other things.
That's not the only legal dispute surrounding GIGI's acquisition of the Frenchtown mill.
In June 2011, Washington-based VanTek, Inc., a supplier of used paper mill equipment, also sued GIGI for breach of contract. About two years earlier, VanTek, owned by Gordon Cassie, signed an agreement with GIGI to partner in buying former paper mills. The two companies created a company called VanGreen, incorporated in Colorado. VanTek claims it spent 18 months working to acquire the Frenchtown mill through VanGreen only to have GIGI pull out of their agreement at the last minute and acquire it separately. VanTek says GIGI exploited its expertise.
A judge dismissed that case on April 11, 2012, at VanTek's request. After reviewing GIGI's financial disclosures, VanTek opted to pull the case because "it appears that they will never be able to pay back the Wakefield Kennedy loan," Vantek's attorney, Donald Grant, wrote in an email to GIGI's attorney on April 10. "Although Gordon believes that GIGI breached the partnership agreement, it also appears that GIGI is headed for insolvency and will likely never be able to pay back any judgment."
Stillwell insists that VanTek's decision not to go forward with the suit had "nothing to do with financial information."
There have been at least two other suits claiming that GIGI failed to pay contractors. Worthing, S.D.-based IntegroEnergy Group sued GIGI subsidiary SWI Energy in December 2011 over an agreement it signed with GIGI to provide consulting services for the ethanol project in Alton, Ill. The case remains open.
In a case that was dismissed in June 2011, John Brutz, of Ohio, and Michael Cohl, of Michigan, claimed GIGI owed them about $30 million for work they performed demolishing, scrapping and salvaging GIGI's mill sites in Canada.
'It all takes time'
Mark Spizzo, GIGI's executive vice president, was in Missoula a few weeks ago. He declined a request for an interview while he was here, but according to County Commissioner Jean Curtiss, Spizzo gave representatives of the Northwest Advanced Renewables Alliance a tour of the mill site. NARA is a Washington State University-led consortium of researchers working to convert wood waste into jet fuel. It recently landed a $40 million USDA grant.
"I just keep crossing my fingers that somebody's going to come in and do something," Curtiss says. "It all takes time."
A more immediate use of the site would be wood chipping, since the mill has a chipper. "We see that as a very viable business activity that we're aggressively working on preserving," Stillwell says.
In GIGI's counterclaim against Dauenhauer, the company blames him for failing to secure a wood-chipping deal with Boise Inc., which, earlier in the year, wound up leasing the chipper at the former Stimson mill site in Bonner, now owned by Western Montana Development.
The chipper is one of the Frenchtown mill site's many assets, some of which GIGI is trying to sell. A year ago, Dauenhauer estimated that the site contained more than $50 million in assets, between the papermaking equipment, heavy equipment like the wood chipper, scrap metal, tools, land, and water rights.
"We obviously look for the best return on our investment that we can get," Stillwell says. "But there is nothing being scrapped that has infrastructure value for ongoing use."
GIGI disputes the $50 million estimate in court documents. Stillwell declines to say what he thinks the sellable scrap and equipment is worth.
There are other potential uses for the site—recycling, biomass electricity generation, wood pellet production. The BitterRoot Economic Development District has been working to explore such possibilities through a feasibility study. It worked with GIGI to get a $20,000 Big Sky Economic Development Trust Fund grant through the state Department of Commerce. GIGI had agreed to chip in another $30,000 for the study, but it hasn't followed through. Spizzo says in an email that the study is "on hold for the time being." It's a matter of "prioritizing" the work at all of GIGI's properties.
BREDD is asking the program for an extension.