Kentucky Blue Grass suit marks another day in courtroom

Another pre-trial round of the Kentucky Bluegrass Seed suit, a motion by Scotts Co. to eliminate claims for consequential damages, was argued Friday afternoon in Whitman County Superior Court. Attorneys for Scotts, Seeds Inc. of Tekoa and Dye Seed Co. Pomeroy presented their arguments before Judge David Frazier.

At the end of the session, the judge said he would need time to study their arguments before announcing a decision.

Friday’s argument related a partial motion for summary judgment by Scotts to dismiss claims for consequential damages allegedly sustained by the growers. Those claims would involve alleged losses sustained by growers who decided to contract for Kentucky Blue Gross production instead of using their land for other crops such as wheat production.

The growers suit evolved out of an alleged move by Scotts to refuse to make payments on Kentucky Blue Grass which was harvested in 2010 under future’s contracts. Growers sued Scotts, Seeds Inc., and Dye Seed, area companies which actually contracted with growers for the seed production on behalf of Scotts.

Scotts contended some of the crop delivered in 2010 was from non-contracted acres. Growers, they alleged, delivered seed from non-contracted fields to take advantage of the contract prices which by last fall were higher than the spot market price.

The collapse of the housing market resulted in a drop in the demand for lawn seed in the time between when the future’s contracts were negotiated and the time of harvest.

Seeds Inc. and Dye in cross suits have contended they cannot honor the contracts to pay the growers until Scotts pays them.

Pullman Attorney Tim Esser, representing Seeds, Inc., Jan. 31 received a partial summary judgment of more than $7.4 million said due growers for harvested seed delivered to Seeds in 2010. The sum was judged over due on two of the three payment dates set in the contracts.

Scott’s motion for summary judgment contends claims for consequential damages should be dropped because the contracts are governed under the Uniform Commercial Code. The contracts deal with contracted sale of goods and cannot apply to consequential damages which would be based on unsubstantiated claims of potential loss.

Seattle Attorney Colin Folawn argued the Consumer Protection Act could only be applied if one party in a contract knew in advance that the contracts would involve loss and failed to inform the other party. He contended in court Friday Seeds and Dye have failed to provide any evidence that was the situation when the contracts were signed.

Esser, again representing Seeds said claims for consequential damages need to go to trial as questions of fact to be presented to a jury.

Esser said one of the consequential damage claims could involve a move to the Coeur d’ Alene tribe to pull contracts with grower tenants who were caught in the Kentucky Blue Gross payment dispute.

He contended elements of evidence to pursue damages under the state Consumer Protection Act are present. He noted farmers were induced to use acres for production of blue grass instead of wheat when the prices went the opposite direction.

Esser noted growers were not informed until after the crop was delivered that Scotts would decline to pay.

“That course of conduct is an unfair practice,” he contended.

Kime argued the Scotts decisions had an impact beyond that sustained by the growers. Fertilizer companies, banks and other lenders and landlords have all been impacted, he argued.

Also included in the debate was whether or not growers should be awarded attorney fees in the event they prevail at trial. The Scotts affidavit argues nothing in the contracts specifies payment of attorney fees in the event of a dispute.

Esser and Kime argued the contracts were made under American Seed Trade Association provisions which incorporated rules for payment of attorney fees. Esser said Scotts own sales confirmation forms and purchase orders cite the seed association rules and presented copies Friday to the court.