Logging Firms Clash Over Chiniak Operation

Two timber firms are struggling in court over a share of the profits of a four- to six-year logging operation near Chiniak.

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By Kodiak Daily Mirror

Story Created: Feb 2, 2011 at 5:18 PM AKDT

Story Updated: Feb 3, 2011 at 11:28 PM AKDT

Original article posted Feb. 1, 2011

Two timber firms are struggling in court over a share of the profits of a four- to six-year logging operation near Chiniak.
 
In a pair of cases filed in U.S. District Court in Anchorage this fall, the company conducting the logging is suing - and being sued by - another logging company that says it has not been paid for helping to find a buyer and investor for the logs.

At stake is a percentage of the profits from a 9,000-acre harvest that sold for $15 million pre-harvest, according to the purchase agreement and a request for loan proposals last May.

The legal conflict began in September 2010 when the company that says it helped coordinate financing, Post Falls, Idaho-based Frontier Timber Inc., recorded a lien on the logs cut down by the other firm, Chehalis, Wash.-based A-1 Timber.

Frontier founder Clarence Maxey argues his company is entitled to a share of the timber's sale because he had worked out a deal with A-1 by e-mail to help find timber buyers and investors in return for 25 percent of the profits.

A-1 President Tom Loushin contends that A-1 does not owe Frontier because he never formally entered a contract.

In November 2010, A-1 sued Frontier to remove the lien, and at least $75,000 in damages for interfering in the company's business. Frontier in turn filled a counterclaim against A-1 for breach of contract.

Both cases are still in progress. In the next month District Court Judge John Sedwick is expected to rule on whether Frontier's lien on the logs is valid. Any decision on the breach of contract issue will likely take at least a year, attorneys on both sides of the case said.

Kodiak's Jill Wittenbrader is representing Frontier. Matthew Claman with the Anchorage firm Lane Powell LLC is representing A-1.

The Chiniak logging operation began last spring, and has carried three shiploads with about 11.4 million board feet of logs to two Chinese ports.

The logging job is the first significant logging on Kodiak Island since the market for logs dropped in 1997, although there are several logging operations on Afognak Island.

A-1's contract with landowner Leisnoi Inc. covers 100 million board-feet for four years, with the option to purchase an additional 50 million board-feet. The purchase price was $150 per 1,000 board-feet.

The logging operation stopped in December for the Christmas holiday but is expected to resume soon, Loushin said Friday.

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