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Published June 10, 2015, 05:43 PM

ADM suing North Dakota farmer for defaulting on ethanol plant deal

Archer Daniels Midland Co. is suing a prominent Walhalla, N.D., farmer for $700,000 for defaulting on a deal to buy a former ethanol plant in Walhalla.

By: Mikkel Pates, Agweek

FARGO, N.D. -- Archer Daniels Midland Co. is suing a prominent Walhalla, N.D., farmer for $700,000 for defaulting on a deal to buy a former ethanol plant in Walhalla.

ADM, based in Illinois, says it had a deal on Dec. 2, 2013, to sell the defunct ethanol plant for $2.5 million to Johnson Farms, which is headed by general partner Al Johnson.

A settlement conference is scheduled for June 15, in U.S. District Court in Grand Forks.

Al Johnson declined comment to Agweek about the suit. ADM's lead lawyer, Charles Macdonald, with the Faegre Baker Daniels LLP firm in Minneapolis, was not immediately available.

Johnson allegedly agreed to pay a $250,000 earnest money for the property. The closing was set for Dec. 31, 2013, according to court documents. ADM says Johnson’s attorney told them he "decided to withhold" the money in the deal because a "third party with which Johnson Farms had made an agreement had failed to perform."

ADM rejected a partial sale offer and on Jan. 31, 2014, declared Johnson Farms in breach of contract.

On Feb. 25, 2014, ADM made a new deal to sell the property for $2 million to Walhalla Enterprises LLC.

ADM is suing for the $500,000 difference between the two deals, plus "fees, costs and expenses in excess of $200,000."

Designed for barley

The Walhalla ethanol plant was completed in 1984 as Dawn Enterprises Inc. It was the state's second ethanol plant and the first in the country to make ethanol from barley. Cenex Inc. (later CHS Inc.) bought it and hired ADM to manage it. ADM later bought it and operated it on and off until it was mothballed in 2012, putting about 60 people out of work.

New plant owner Walhalla Enterprises LLC is dismantling and salvaging the ethanol equipment. Company owners include Timothy Hartje, a former ethanol plant employee, and Dean Latowszke, an electrician from Cavalier, N.D.

The company has sold other parts of the facility to other entrepreneurs. S&S Grain Inc., a grain elevator owned by a Walhalla farm family, has about 475,000 bushels of grain storage facilities and flat storage at the site. The company handles corn, soybeans, spring wheat and sunflowers, according to Mike Smith, manager for the company.

Part of the offices this fall will be occupied by Harvest Fuel Inc., which does business as SweetPro Feeds, a company that makes supplemental feed products for horses and cattle. The primary owner is Bob Thornberg, who was a plant manager when the facility was making ethanol. SweetPro bought the wheat gluten plant and a warehouse associated with it, as well as half of the offices.

Walhalla Bean Co. bought one of the warehouses and some adjacent property, Thornberg says.

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