ELLSWORTH, Maine — A judge on Friday denied a Massachusetts engineering company permission to pursue the personal assets of Quoddy Bay LNG owner Donald Smith.
Coler & Colantonio of Norwell, Mass., is owed nearly $160,000 for engineering work it has done for Quoddy Bay, which is trying to develop a liquefied natural gas terminal on Passamaquoddy Bay at Pleasant Point.
The Norwell firm, represented by Ellsworth attorney Sandra Collier, argued that Quoddy Bay appears to be insolvent and that her client should be given permission to “pierce the corporate veil,” which is a legal term for pursuing the personal assets of a company’s individual officers, rather than just the company’s assets.
Collier said that, including interest and legal fees, Coler & Colantonio is trying to recover more than $210,000 from Quoddy Bay. Quoddy Bay has incurred $16 million in financial liabilities and still has $2 million in outstanding debt, she said.
“[This is] evidence of insolvency,” she told Justice Kevin Cuddy in Hancock County Superior Court.
Quoddy Bay’s attorney, John Mitchell of Calais, argued that Quoddy Bay knows it owes Coler & Colantonio the money and is trying to find the capital to settle the bill. There has been no deliberate attempt by Quoddy Bay to deny the Massachusetts firm the money it is owed, he said.
“They have fallen on difficult economic times and are doing everything they can to stay afloat,” Mitchell said of Quoddy Bay.
Cuddy denied Coler & Colantonio permission to pursue Smith’s personal assets, which include the building that houses Quoddy Bay’s offices in Pleasant Point. The judge did grant a motion by Coler & Colantonio to attach Quoddy Bay’s business assets, such as engineering documents, to the lawsuit.
After the hearing, Collier said her client has been paid more than $700,000 for some of the work it has done for Quoddy Bay. That money came from a firm called Smith Cogeneration Dominica, which is wholly owned by Donald Smith. Smith owns 92.5 percent of Quoddy Bay.
Contacted after the hearing, Smith said he was surprised by the lawsuit.
“We have an agreement that we will pay them money as soon as we raise the money,” Smith said. “I think their legal action is unfair, not reasonable, and unjust.”
He said he has spent more than $15 million of his own money on the Quoddy Bay project, which is more than he ever expected to, and that he is looking for a new financial partner to help settle Quoddy Bay’s debts and move the project forward. He hopes to be able to accomplish this “as soon as possible,” he said.
Smith said that despite the economic climate and his company’s finances, he is optimistic about the long-term prospects of his proposal for Pleasant Point.
“We will never stop, because the need for natural gas in Boston will never stop,” Smith said.