Business

Distillers across country accuse Boise business of breaking contracts

Distilleries from around the country are accusing a Boise business of breaking promises and wasting their money.

Corson Distilling Systems has been sued by at least four distilleries in the past 13 months.

The lawsuits, all with some similarities, say Corson failed to produce working equipment — or in some cases, any equipment — after customers paid them. Combined, the customers and their attorneys blame Corson for at least $500,000 in losses and damages, and the deaths of two pet cats.

“What I’m trying to do is just have my money returned,” said Larry Forrest, owner of Ghost Hollow Distillery in Illinois. “Nothing was ever delivered to me, nothing was ever received. ... If they’re not willing to return my money, where is that money?”

The Corson brothers declined through their attorney to be interviewed, instead providing a prepared statement: “We are aware of, and respectful of, the concerns of our customers. Corson Distilling Systems stands by its products and prefers to work out any issues and legal claims in a court of law, not in the court of public opinion.”

The Corsons and their attorney also did not respond to an emailed list of questions about the lawsuits, other complaints and Corson’s business practices.

In court, the company has denied some of the allegations. But its main strategy has been to argue that its contract requires disputes to be handled in arbitration, outside of court and outside of public view. As a result, it has not responded to some of the claims in public court filings.

Corson in the spotlight

Corson Distilling was founded by local brothers Tory and Josh Corson, who previously worked in law and real estate but had a passion for spirits and distilling.

Boise Mayor David Bieter lauded the company in his 2016 State of the City address, calling the business “one of the top four still makers on the planet, with revenue of around $6 million and 42 employees.”

“Tory and Josh embody the entrepreneurial spirit that Boise is known for,” Bieter added.

Shortly after, the Idaho Statesman published a profile of the business. The company was growing fast, the Statesman reported. Corson made Boise one of the few places where the booming distillery sector could find American-made equipment. And the turnaround time it advertised — four to five months — was enticing. It could take twice as long, or more, to get systems from other manufacturers.

“The Corsons thought they could underprice the competition,” the September 2016 story reads. “They knew the demand was there, as craft distilling is taking off the way craft brewing did five years ago. So they took their freshly built copper-and-steel equipment, made it the gleaming centerpiece of their website and waited as Google searches brought them customers.”

Many of the customers who ordered from Corson Distilling were, like them, small businesses and startups. They wanted Corson’s gleaming stainless-steel and copper stills, whiskey and vodka columns, mash tuns and other pieces of liquor machinery to be the centerpieces of their new or growing distilleries.

At the time, Corson was just a couple of years old. But already, former customers allege, the company had begun falling short of its obligations.

In addition to the four lawsuits, distillers from outside Idaho have posted to social media and an industry forum about lengthy delays and equipment problems.

The owner of a Kansas distillery ordered a system from Corson in early 2015. The equipment arrived five months later than expected — in November 2015 — but didn’t function until Corson made repairs in June 2016, said Hayes Kelman, the distiller. It still doesn’t work as well as it should, he said.

The short turnaround time Corson advertised “was a huge part” of the reason Kelman ordered from the Boise company, he told the Statesman. “You look at other manufacturers, you’re way out. You might even be on the list for a year before it goes into production. For us, that [short turnaround] was very attractive.”

‘Paid ... for, literally, nothing’

One of Corson’s early customers was a San Francisco distillery, located in a former naval firehouse on the city’s Treasure Island. It’s now been two years since Treehouse Craft Distillery signed a contract with Corson, and it is in the process of settling a lawsuit against the company.

Treehouse and Corson signed a deal in November 2015. Treehouse paid Corson its deposit — $69,500 — over the next few months. Corson said the equipment would be finished in spring 2016, the lawsuit says. Treehouse sent the rest of its payment, another $78,000, in May.

“This payment was made early, in good faith, and with the understanding that the equipment would be delivered and installed by the end of May 2016 or early June 2016,” Treehouse said in its lawsuit.

The day after making that final payment, a Corson employee told Treehouse the system would be installed in San Francisco in mid-June. But nothing showed up all summer, according to the lawsuit.

Treehouse’s lawyer sent Corson a letter in late September 2016 saying it had breached the contract and must refund the $151,000 that Treehouse “paid to Corson Distilling for, literally, nothing.”

The companies began to fight over who was responsible for the delays — and whether Treehouse was obligated to accept the equipment on Corson’s terms. The distillery sued Corson in October 2016 in 4th District Court in Ada County.

Then, Corson had good news: The system was ready.

Treehouse’s owner and lawyer showed up at the Boise factory on Nov. 4, 2016, to see it in person. They had “significant quality concerns” about the equipment, and whether Corson had actually built it or had bought it from another manufacturer and “slapped its name on it,” Treehouse says. But the distillery agreed to take the equipment as long as it could be delivered within two weeks.

The equipment arrived at Treehouse later that month — with problems, Treehouse says, such as “numerous missing components” and none of the serial numbers “required by various regulatory agencies.”

Corson in court denied Treehouse’s claims, saying Treehouse has crafted a “winding and grossly misleading narrative,” with a “multitude of misleading and blatantly false ‘facts.’ ”

Corson says the distillery’s owner failed to tell Corson about a big modification to the original still plans until four months into production. That required Corson to redesign, re-engineer and rebuild the system, it claimed.

“Once Corson did deliver the still to Treehouse’s facility, the Corson installation team found that Treehouse’s facility was not in compliance with federal regulations,” Corson told the court. “Finally, Mr. Byerly inexplicably refused to allow Corson’s installation team to fully set up and test the still.”

It’s unclear what happened with the lawsuit. The judge approved Corson’s request to address the matter in arbitration.

A year and ‘nothing to show for it’

Larry Forrest wanted Corson to build the equipment for Ghost Hollow Distillery after seeing the company’s website — “American made, quality equipment, 16- to 20-week lead time” and help with the whole process — and then after talking with Tory Corson.

So in October 2015, he sent a $10,000 down payment. He sent the rest of the deposit — $104,125 — the following July. Based on the estimated build time in the contract, Forrest expected his shiny new equipment to arrive around Thanksgiving 2016.

But, according to the lawsuit, Forrest flew someone to Boise in February 2017 to check on the progress and found that Corson had yet to start work.

“Mr. Forrest has now paid a total of $114,125 to your company and has nothing to show for it,” said a letter Ghost Hollow’s lawyer sent to Corson this March.

Ghost Hollow sued Corson in June in Adams County, Illinois. Corson had until Friday, Dec. 1, to respond to the allegations in court.

“After this much delay, I just want my money back so I can move on,” Forrest told the Statesman.

Another distillery sued in May. Florida-based Grindstone Distillery said it paid Corson a $73,000 deposit in October 2016 for a 500-gallon system. Corson refused to refund the money days later, after the two businesses failed to agree on the terms of a contract, the lawsuit says.

Corson in reply suggested the two companies did indeed reach a purchase agreement, but that it doesn’t have a copy of the paperwork. That case is scheduled for a two-day trial next August.

“My concern is this client paid this deposit, and that deposit is going to disappear into a black hole,” said Richard J. Armstrong, an attorney at Kirton McConkie in Lehi, Utah, who is representing Grindstone.

Lost profits, lost pets

Adam Stumpf and his wife started Stumpy’s Spirits in the barn on his family’s farm in Illinois. Stumpy’s is a “farm to table” distillery, using grain grown on the farm to make whiskey and vodka. Within six months, it had outgrown its still and needed a big upgrade.

Stumpy’s hired Corson in January 2016 to build a 500-gallon, steam-heated, custom pot still and other equipment. The company wired Corson a total of $125,000 by March 2016.

Stumpy’s received the equipment in February and March 2017, seven or eight months after it was supposed to arrive, Stumpf said.

In the meantime, he had honored a contract he made with another distiller to sell an older still he thought he no longer needed. With no new still yet in November, Stumpf bought a 75-gallon still from a Chicago source as a stopgap measure until Corson came through.

Stumpy’s sued Corson in Illinois in July. The lawsuit also alleges Corson’s equipment was “defectively designed and manufactured ... not fit for its ordinary purposes.” For example, it had no pressure gauges, its pressure-relief valve was inadequate and the pot-still hatch didn’t work as it should, Stumpy’s said.

Stumpy’s attorney Lawrence B. Wittels said the problems continue to mean the stills aren’t distilling liquor as efficiently as they should.

Soon after the equipment arrived, it exploded during use, Wittels said. The hatch blew off, he said, and the 500-gallon still erupted into a geyser of 180-degree liquid.

“There was what was basically corn and barley oatmeal plastered to the ceiling — that was the force of the explosion,” Wittels said. The ceiling is 23 feet high, he said.

“The explosion happened the first time we actually ran a full grain mash,” Stumpf told the Statesman. “About 250 gallons of that 180-degree liquid blew out and covered the entire front half of the distillery. It coated the ceiling, it coated the barrels.”

When the scalding mash came back down to the ground, it fell onto Stumpf’s back as he dove away from the explosion. It also landed on two pet cats that lived in the distillery, Whiskey and Riesling. Whiskey lived a few days before succumbing to the burns, and Riesling lived a little while longer but eventually died from the burns, Wittels said.

The cats’ deaths were “certainly emotionally one of the hardest things,” Stumpf said. “They were quite the characters.”

After repairs to address the explosion’s cause, the still remains in use.

Stumpy’s is suing Corson on nine different counts. Wittels said his client’s damages are probably close to $300,000 due to months of lost profits, damage from the explosion, further needed repairs and other expenses.

Audrey Dutton: 208-377-6448, @audreydutton

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