- Associated Press - Tuesday, October 27, 2015

SIOUX FALLS, S.D. (AP) - A Minnesota-based software company and four of its shareholders are trying to get a lawsuit filed over the business’ failure to move into a $4.2 million technology center built for it moved into federal court.

The Vermillion Area Chamber of Commerce and Development Company had sued Eagle Creek Software Services in October 2014, saying the company breached a contract by not moving into the tech center. The facility was to be the centerpiece of a partnership backed by South Dakota Gov. Dennis Daugaard, but Eagle Creek never moved in, citing issues with economic development incentives.

After the chamber filed an amended lawsuit this month adding Eagle Creek President and CEO Ken Behrendt and three other company shareholders to the case, Eagle Creek petitioned the U.S. District Court in Sioux Falls to take over the Clay County circuit court case. Attorney Andrew Damgaard wrote in his motion that federal court is the appropriate venue because the chamber is based in South Dakota yet the company and the four shareholders are all based in Minnesota.

The chamber’s original lawsuit said the company agreed to move into the building once it was finished, and the building was “substantially complete” in May 2014. It asked the circuit court to award $144,000 in past rent and $3.1 million in future rent. The amended lawsuit filed Oct. 5 requests unspecified damages.

Melissa Jelen, an attorney representing the chamber, said in a brief that the company provided written consent for the chamber to amend its lawsuit, and if it wanted to move the case to federal court is should have done so after the initial filing.



“Eagle Creek chose not to exercise its right to remove the matter,” Jelen argued. “Instead, Eagle Creek actively litigated the case and engaged in substantial discovery in state court.”

The company has countersued, asking the court to void the lease agreement and award the company unspecified damages.

Eagle Creek said it expanded its Vermillion operations in good faith based on an agreement with the chamber and the Governor’s Office of Economic Development that it would receive cash reimbursement economic incentives of just under $15,000 per employee for up to 200 employees.

Damgaard said in court records that the economic authorities did not intend to pay Eagle Creek the promised reimbursement and intended to divert the money to other purposes. He accused the chamber and economic development office of “attempting to make their proposal look better on paper than it actually was.”

Tony Venhuizen, a spokesman for Gov. Daugaard, said Tuesday he could not comment on pending litigation.

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Follow Dirk Lammers on Twitter at https://twitter.com/ddlammers

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