A Canadian crown corporation is suing the North American Bison
Co-operative in a U.S. District Court, alleging it failed to pay four
Canadian bison ranches $628,000 US for bison delivered two years ago to
the co-op’s plant in New Rockford, N.D.
Export Development Canada insures Canadian exporters against
non-payment for goods they ship out of the country.
Dennis Sexhus, the co-op’s chief executive officer, called the lawsuit
deplorable and unconscionable.
He said it will further tax the resources of a co-op that is partly
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owned by Canadian bison producers.
“It’s draining us as we speak to try and defend against this,” Sexhus
said.
“They’re just trying to put us out of business. That’s what makes me
angry.”
But an attorney representing the crown corporation said it is doing its
job by protecting the rights and interests of the four ranches that it
insured.
“Export Development Canada has the ability, the power and the right to
assert this claim,” said Edward Feig of the New York City-based law
firm of Arent Fox Kintner Plotkin & Kahn.
In court documents, lawyers for Export Development Canada argue that a
producers’ agreement, drawn up when the bison co-operative was formed,
required the co-op to pay its members at least 80 percent of what was
owed them within 15 days of delivery to the New Rockford plant.
The documents state four ranches insured through Export Development
Canada regularly sent invoices to the bison co-op demanding payment for
bison they shipped to the plant two years ago.
Despite repeated demand for payment, the co-op refused to do so,
according to documents supporting the EDC’s claim.
Feig said the stipulation that producers must get paid within a set
period of time makes it a straightforward case.
“The North American Bison Co-operative is trying to make this into
something much bigger than it is.
“There is a simple agreement that must be honoured.”
Sexhus said the payment requirement was waived by the co-op’s producer
members soon after the co-operative was launched. It was realized that
to make payments within 15 days, the producer shareholders would have
had to invest a lot more money at the outset, he said.
Instead, the producer members were paid in the order the bison were
received and as the meat from those deliveries was sold.
The bison co-op doesn’t have the money to pay the $628,384.81 being
sought by Export Development Canada, according to Sexhus. It’s roughly
the equivalent of $1 million Cdn.
The law firm Dorsey and Whitney, representing the bison co-op, prepared
a statement of defence that questions whether it made sense for the EDC
to insure the four ranches in the first place.
The statement of defence points out the ranches were insured against
non-payment by the enterprise of which they are also part owners.
The statement of defence denies the four ranches regularly submitted
invoices for payment and it alleges that the ranches waived their right
to be paid within 15 days of delivery.
An EDC spokesperson would not comment on the case. However, Rod Giles
said it is normal for the crown corporation to try to recover money
after paying out a claim to insured Canadian exporters.
“That’s just the business of insurance. You pay claims and then you try
to reclaim what’s owed.”
Last year, EDC paid $140 million in claims. Much of that was for
insured exports to the United States.
“There’s a fairly high number of commercial failures in the U.S.,”
Giles said.
According to court documents, the four bison ranches and the amount in
U.S. dollars they were allegedly owed are: Acres $164,503.97, Vestfold
$135,737.02, Silver Creek $261,997.54, and Sundance $66,146.28. The
Sundance ranch is based in Alberta while the other three are in
Manitoba.
Lorne Miller of the Silver Creek Ranch at Binscarth, Man., said in an
interview that Export Development Canada has paid him most of the money
he was owed.
Miller said he continues to have a good relationship with the
co-operative and is still shipping bison there.
He said he wasn’t in a rush to settle the outstanding bill with the
co-op but at the same time he was concerned that if he didn’t agree to
the settlement with Export Development Canada, he could lose the
insurance coverage.
“People are thinking that we’re the bad guys, that we’re the ones that
are suing, but we’re not.”
Giles confirmed that EDC has also settled claims with the other three
ranches.
He did not know if there were other bison producers in Canada who also
had export insurance with the EDC.
The North American Bison Co-operative began processing bison in 1994.
It has more than 300 members, about a third of those in Canada.
Court documents related to the lawsuit by EDC state that the bison
co-operative has not been able to pay its members as quickly as it had
in the past.
Sexhus said there were no payments going out to producers shortly after
the Sept. 11 attacks in the United States a year ago.
There has been some improvement since then, Sexhus said, but the co-op
remains well behind where it wants to be on making payments to its
producer members.
