$8 million motion: Scotts suit draws SRO crowd to courtroom

Arguments in a suit involving unpaid contracts for Kentucky Bluegrass production in 2010 were presented before a standing-room-only crowd of growers and others Monday in Whitman County Superior Court. The court hearing lasted more than 90 minutes.

Growers alleged the Scotts Company owes them millions after the company did not pay for contracted seed because of a depressed grass market, brought on by the collapse of the national housing market.

Scotts contends growers overstated production volumes and did not provide them seed that met quality standards.

After listening to both sides, Judge David Frazier vowed to make a ruling as soon as possible on the dispute.

“I appreciate everyone’s in a big hurry,” the judge said after the session. He noted the suit is complex and complicated. Motions, affidavits and declarations for the three-sided dispute have now filled five folders in the court records.

The judge assured the attorneys and the crowd that packed the courtroom that he had reviewed the filings and will review them again in light of the arguments presented Monday.

At issue in Monday afternoon’s court session was a motion by Pullman attorney Timothy Esser for a summary judgement from the court.

The motion contends the suit does not have to go to trial because issues of fact have been resolved.

Filed Dec. 6, Esser’s motion seeks $8,231,542 in payments alleged due from the Scotts Co. The dispute stems from seed production contracts made by Scotts with growers in the grass seed production area of eastern Washington and northern Idaho.

In addition to the payments due, Esser contends interest on the unpaid contracts was compiling at $4,060 per day.

Esser pointed out many growers are obliged for production costs, landlord fees and financing.

The suit was initiated by growers against Seeds Inc. of Tekoa and Dye Seed of Pomeroy, processors of seed. Seeds Inc. and Dye, in turn have contended they are unable to pay the growers because Scotts, facing a depressed market for certified Kentucky Bluegrass seed, has not paid the seed companies.

Matthew Turetsky, Seattle attorney representing Scotts, Monday repeatedly contended the suit involves “issues that have to be resolved in Scotts’ favor.”

Turetsky contended a “massive breach of contract” was involved in the dispute.

Esser started his argument by describing a series of three-year contracts which were negotiated for growers. The three year contracts carry different prices for production depending on the series of issue and the market.

The contracts call for Scotts to make payments for growers production after delivery. Esser’s motion seeks payments due on the 2010 crop in September and December.

The contract also included a third “make good” payment due after seed processing is completed at the end of the crop year and the actual delivery volume to Scotts is determined.

Esser pointed out Seeds Inc. and other processors are compensated through a processing fee on the volume.

Esser noted some growers and Seeds representative met with Scotts officials in Spokane and learned Scotts did not intend to make September and December payments on the 2010 crop.

He referred to statements made by Pete Supron, a company vice president, who said Scotts did not intent to pay.

A declaration from Lonnie Green at Fairfield, one of the growers, alleged Supron stated at a Sept. 21 session in the Ramada Inn, “Contract, contract, contract. I’m tired of hearing about you farmers’ contracts. The market price is way below your contract price. What are you willing to do to help Scotts?”

Green’s declaration said growers were shocked to learn the Scotts stance at the meeting. He said growers pointed out a contract is a contract, and they could have planted wheat or other crops if Scotts had not offered the seed contracts.

Turetsky in his argument contended Scotts position involved the amount of seed delivered, quality of the seed and other factors which violated the contract. Scotts has sought an audit of the Seeds Inc. records to confirm the production volume.

Scotts also contends the amount of seed which fails to meet quality standards is a factor which has to be determined at trial.

Turetsky also said the statement attributed to Supron at the Spokane session was taken out of context.

One of the issues raised in filings prior to the hearing was whether the practice of “stuffing” which involves allegations of seed delivery by growers from fields not under contract, was involved.

Esser, during his rebuttal, placed one of his display boards flat on the attorney’s table in the courtroom and dumped out a baggie of seed to describe how the seed is re-processed to meet quality standards. Esser noted when production seed fails to meet quality standards after first run processing, it is sent through the process again.

He said he was willing to let his argument “stand or fall” on the basis of declarations by Dutch Schroeder on the procedure used at Seeds Inc. to get seed to meet purity standards required in the contracts. The re-processing led to a substantial reduction in the percent of seed which failed to pass the purity level required in the contracts, he pointed out.

In a late declaration filed before the hearing Schroeder described how Scotts officials and auditors during a week in October were provided access to all Seeds Inc. records to audit crop production records for the year.