3rd Circuit refuses to block GCS suit against Cleco
Thu, 07/21/2016 - 05:00
A lawsuit filed by Gulf Coast Spinning against the Cleco utility company over the failed construction project in Bunkie will be allowed to continue.
In December, 12th Judicial District Judge Billy Bennett denied Cleco’s motion to dismiss the suit. The state’s 3rd Circuit Court of Appeal refused last month to review Cleco’s argument, thus allowing Bennett’s ruling to stand.
Gulf Coast Spinning filed suit in September 2015 alleging Cleco failed to keep promises it had made to GCS in connection with the planned cotton textile plant to be built at the Bunkie Industrial Park. The lawsuit claims the economic value of the contract GCS lost was about $100 million and included at least 300 new jobs in an area suffering economic hardship.
“We are encouraged by the rulings, but we are still sad that we lost the opportunity to build the plant we had dreamed of building,” GCS chief executive Dan Feibus said. “We lost an incredible opportunity, and we believe the state of Louisiana also lost an incredible opportunity. All we wanted to do was build a plant.”
Cleco spokeswoman Robbyn Cooper said company officials are also disappointed.
“We too are very disappointed that the plant was not built,” she said. “We were committed to serving this plant with reliable power and had completed the electrical system to support the plant's power needs. Bunkie lost an incredible opportunity due to Gulf Coast Spinning’s failed business plan. The Bunkie Industrial Park is a prime spot for a future viable business. Cleco is committed to working with local and state economic development officials to help attract a business that will benefit Bunkie and central Louisiana.”
Dream to nightmare
Bunkie’s dream of a plant creating hundreds of jobs that might lead to even more economic development in the area turned into a nightmare when GCS decided to halt the project and seek another location for the plant.
In December 2013, Gov. Bobby Jindal announced that the cotton-spinning plant would be built in Bunkie.
GCS states it entered into a contract on April 1, 2014, with a large, nationally known company for sales worth more than $300 million of product in its first phase.
Bennett noted in his ruling that Cleco worked with GCS in its plans to build the spinning plant in Bunkie.
In April 2014, Cleco agreed to provide electricity at commercial rates and provide funding to build the plant.
In his ruling, Bennett writes that Cleco “at all times understood and acknowledged that the success of the project was for the mutual benefit of plaintiffs and Cleco. Cleco issued certain term sheets confirming its commitment to the project, together with its continued voice in the project by having a member on the board.”
Cooper said Cleco disputes Gulf Coast’s claims and pointed out that those claims have not been proven.
“The district court ruled only on whether GCS could proceed with the lawsuit based on the allegations in GCS’s petition and did not rule on whether those allegations have merit,” Cooper said. “The 3rd Circuit declined to exercise its jurisdiction to hear the case at this time.”
The lawsuit contends that Cleco made promises of money, including a written promise of $6.5 million on Aug. 4, 2014, which it says confirms Cleco’s promise to loan $6 million to GCS. Gulf Coast said Cleco confirmed its commitment to the project’s general contractor and its involvement with Red River Bank to help secure additional loan funds for GCS.
The lawsuit contends that following Cleco’s October 2014 announced sale to a Canadian-led investor group, Cleco representatives notified GCS that it would not fulfill its promises to GCS and Project Cotton.