By Bonnie Hedrick

The future of a Lutak fish-processing plant is likely to be decided this spring by 12 Petersburg jurors and a Ketchikan judge.

A jury trial is set for April 26 in the dispute between Rainbow Glacier Seafoods and former landlord Ed Lapeyri, owner of Chilkoot Lumber Co. and a new venture, Chilkoot Fish and Caviar.

The Superior Court case is being heard in Petersburg, home to Lapeyri’s attorney, partly because Haines District Court isn’t authorized to handle cases involving sums larger than $50,000.

Lapeyri is asking the court to grant him official title to fish-processing equipment that he says was abandoned at the Lutak sawmill. That’s only fair, the lawsuit maintains, since rent and storage fees in excess of $110,000 are owed.

Rainbow Glacier Seafoods is fighting the action, however, claiming the equipment was never willingly abandoned. With more than half a million dollars invested in the plant, it’s worth more than anything Lapeyri might be owed, co-owner Brian O’Riley testified in an affidavit to the court.

O’Riley and partners have filed a counterclaim seeking damages from Lapeyri for illegal use of the fish-processing plant’s equipment in 2003 and 2004.

The state of Alaska has also weighed in on the case, saying money still owed from a 1998 loan of $300,000 to Rainbow Glacier Seafoods takes precedent over Lapeyri’s claim as landlord.

Parties in the lawsuit were close-mouthed this week, but hundreds of pages of documents filed in nearly two years of litigation spell out most issues. A settlement conference scheduled last week proved unsuccessful.

Petersburg attorney Fred Triem is representing Lapeyri, and calls the dispute "a simple case about a tenant’s unpaid debt that is owing to its former landlord…. The tenant defaulted, departed the premises, but left its stuff behind."

He claims that even though the state of Alaska and a private investor have recorded liens on the property that predate Rainbow Glacier Seafood’s alleged abandonment of the plant, "The landlord’s lien is so strong that it trumps a prior recorded lien."

Most of the money owed to Chilkoot Lumber Co., about $98,000, is attributed to $2,000 per month storage fees that have been piling up since Chilkoot Lumber Co.’s lease with the seafood processor ended in late 1998. A clause in the 1998 lease established the monthly rate, should the parties choose to extend the six-month agreement.

Although Lapeyri claims the property, including blast freezers, an ice machine, and other fish- and caviar-processing equipment, was abandoned by Rainbow Glacier Seafoods, O’Riley said in his affidavit to the court that that was far from the case.

Lapeyri began restricting access in 1997, O’Riley claims, acknowledging that his fish company was behind in its rent payments at the time.

"You should not attempt to re-enter the premises or remove anything… without the permission of Lutak Holding, Ltd. (a Chilkoot Lumber subsidiary)," O’Riley said he was told.

"The equipment we "abandoned" we were still paying equipment insurance on and the loan payments to the Division of Investments. We were not permitted on the property and could not remove anything, so it seems to me we were forced to abandon our equipment while we were still paying for it," O’Riley said.

The state also rebuts Lapeyri’s claim.

"There is absolutely no evidence before the court that it was RGS who exercised this option (to extend the lease). For all we know, CLC could have locked out RGS and prevented RGS from retrieving its equipment," wrote assistant attorney general Mary Ellen Beardsley.

"The lease in question clearly gives RGS the opportunity to remove the equipment. Has CLC afforded RGS the opportunity to remove the equipment and repair the premises if such repair is needed?" she wrote.

Beardsley said the 1998 loan predates Rainbow Glacier Seafood’s rental dispute, and the state shouldn’t be forced to play second fiddle in collecting about $80,000 still owed.

"If CLC is allowed to retain the equipment free and clear of the State’s security interest, it would be able to receive a significant windfall. It would now own equipment without ever paying for it and which had a value in 1998 of approximately $116,375. CLC should not be allowed to receive a significant windfall by being permitted to retain all of this equipment without paying something for it."

But Triem maintains that the initial lease signing predates the state’s involvement, even if the rental dispute didn’t, and therefore Chilkoot Lumber Co.should rank first among debtors. If not for the landlord’s involvement protecting the property, the state would have nothing to rest its security claim on, Triem wrote.

"If the law were as the state would have it, then a secured party could get free storage indefinitely – forever! – simply by delaying repayment and asserting its security agreement – and despite the continuing labor and risk of the landlord, who would be forced to keep the stuff of its former tenant until somebody comes to get it. This defies common sense, logic and equity."

O’Riley claims that not only is Lapeyri’s claim for compensation baseless, but the sawmill owner owes Rainbow Glacier Seafoods for any processing that occurred with the plant’s equipment in 2003 and 2004.

Chilkoot Lumber Co."unfairly profited at the expense of the defendants and has usurped opportunities that would have otherwise been available to them," the counterclaim reads.

According to Lapeyri, the Lutak fish plant employed up to 16 employees and processed 600,000 pounds of salmon in 2004. No 2003 figures were available.

The plant was unused in 2002, but was leased to Seapak in 1999 and 2000, and to Chilkoot Fish Co. in 2001, O’Riley testified.