EV battery parts company Gotion sues Michigan township, alleging breach of contract

A company planning a controversial $2.4 billion electric-vehicle battery-parts plant near Big Rapids is suing the township it plans to locate in for reneging on approval of a water line needed for the proposed facility.

Gotion Inc.'s federal suit, filed Friday in federal court, alleges a decision by the Green Township board to rescind its approval of the water line is in breach of a development agreement requiring the township to assist the company in "obtaining the necessary governmental authorizations" for the project.

The agreement was entered into by prior board members who all either resigned or were recalled in the November election.

"To prevent the township’s sudden recalcitrance from unraveling an endeavor already years and millions of dollars in the making, this court should order the township to comply with its obligations under the parties’ agreement," the lawsuit said.

In a statement late Friday, Chuck Thelen, vice president of North American manufacturing for Gotion Inc., expressed regret that the lawsuit was necessary. 

“It’s unfortunate that Gotion has had to resort to litigation to get the township to comply with their obligations under the agreement," Thelen said. "We’re unable to comment further since this is now an ongoing legal matter.”

Green Township Supervisor Jason Kruse, who took on his role after the recall of the past supervisor, said the township was "saddened and disappointed" by the litigation.

"As township supervisor, my No. 1 concern is protecting the interests of the people of Green Charter Township, and we will vigorously defend our township's position in the matter," Kruse said in a statement. "We might be a small community, but we refuse to be bullied."

The suit, filed in the U.S. District Court's Western District, asks federal Judge Jane Beckering to order the township to restore the resolution supporting the water line extension and award attorney fees and costs to Gotion.

The lawsuit also asks the court to take preemptive steps to block the township from suing Mecosta County. The request comes days after Green Township warned the county to halt its review of Gotion's site plan and special use permit application while it puts in place a separate township zoning ordinance.

The lawsuit comes more than a year after Gotion first announced plans for a nearly $2.4 billion battery parts component plan in Green Township near Big Rapids that would create about 2,350 new jobs. The company is set to receive $175 million in state tax incentives and a 30-year tax abatement worth an estimated $540 million as part of its deal to locate in Mecosta County.

More:Feds decline review of Chinese battery plant plans in Big Rapids, company says

Since the announcement of the project, the planned development has been beset by community and political pushback as individuals raised concerns about the secrecy of the deal, the unknown environmental impact in a largely agricultural area and the influence of China on the project.

Gotion was founded in China in 2006, but its U.S. subsidiary has been incorporated in California since 2014. German manufacturer Volkswagen, a purchaser of Gotion's batteries, holds about a quarter of Gotion's shares.

Last year, the entire seven-member Green Township board was either recalled or resigned due to community concerns over the project and were replaced by Kruse and six others.

Shortly before the board was recalled, in October, it entered into a development agreement with Gotion that, among other things, required the township to assist the company in "obtaining or causing to obtain any licenses, permits, or other governmental authorizations necessary to advance the project and conduct business to support the project."

Any failure by either party to comply with the terms, the lawsuit said, is considered an "event of default" that would trigger a 60-day "cure period" to fix the issue.

As part of its proposed construction, Gotion will need up to 715,000 gallons of water per day, with the most feasible option for that supply being a water line extension from the city of Big Rapids' water supply. But extensions of the city's water supply through the township are "subject to review and approval of the township" to determine the effect the extension would have on "orderly development."

The township adopted a resolution supporting two options for Gotion's water supply: One routing a water main directly from the Big Rapids system to the Gotion site and another that would construct a new city well and water plant on or near Gotion's property. The final decision on which is more feasible, according to the resolution, would be left to the city.

But with the November recalls, the lawsuit alleges, new trustees were elected who "have publicly expressed anti-Gotion sentiment."

A week after election, the board voted 4-3 to rescind the water extension resolution because they said they lacked "sufficient time and legal expertise to review the resolution and agreement terms," the lawsuit alleges.

Gotion notified the board it was in breach of contract on Dec. 8, according to the suit. The township responded in February that the project's water needs were not pressing because Gotion still had to obtain permits, approvals and a finalized project design.

In addition to the township's refusal to restore the water line resolution, the township board on March 7 sent a letter to Mecosta County's zoning board warning it to hold off on approvals of Gotion's site plan or face potential litigation.

The township said it intends to publish it's own zoning ordinance by late April that should be used to assess the project's suitability.

But Mecosta County Administrator Paul Bullock told The Detroit News this week that the county zoning ordinance obligated it to begin a 60-day review of the project plans when they were submitted February. The county has a May 1 meeting scheduled to approve or disapprove the plan.

It appears that Green Township's zoning ordinance would take precedence if the township can publish it before May 1, Bullock said.

Both township efforts, Gotion said in the suit, exhibit breaches of the development agreement in which the township agreed to assist Gotion in obtaining needed licenses, permits or authorizations.

eleblanc@detroitnews.com