Scotts details stuffing contention before seed hearing

Attorneys for The Scotts Company Friday detailed accounts of the company’s contentions of seed contract stuffing in a 57-page response filed in superior court. The response asks the court to dismiss a third amended motion filed by Seeds, Inc. of Tekoa which asks the court to drop counter claims for damages filed by Scotts.

The motions are part of a massive civil suit filed by Kentucky Bluegrass growers against Scotts, Seeds Inc, and Dye Seed Ranch of Pomeroy.

The motions, statements and other papers filed in the suit now fill 20 folders in the Superior Court clerk’s file, and the suit is slated for a week-long trail in June.

The suit involves sums alleged due and damages to the growers after Scotts cut off payments on contracts for Kentucky Bluegrass Seed grown in northern Whitman County and adjoining areas in Idaho and Spokane Counties. The growers contend Scotts, facing a drop in seed prices when the economic slump hit the construction industry, sought to get out of the contracts.

Part of the Scotts response involves contentions that Seeds Inc., a co-defendant in the suit, sold Scotts seeds which had not been included in the contracts, a practice referred to as “stuffing” in the court documents. Seeds, Inc., and Scotts are scheduled for a hearing next Tuesday in superior court.

In their motion filed Friday, Seattle attorneys Colin Folawn and Matthew Turetsky, who have represented Scotts in the legal battle, contend Seeds Inc. sold Scotts Kentucky Blue Grass seed from deliveries produced in 2006 and 2007. The introduction to the filing alleges Seeds purchased the seed on the open market and then sold it to Scotts at the higher prices contained in the Scotts contracts.

The filing alleges Seeds, Inc. ”heaped excessive losses on Scotts while reaping the benefits of huge gains” by moving seed purchased on the open market into Scotts inventory as seed produced under the contracted prices.

Friday’s filing contends audits done on the Seed, Inc. books point to damages of $4,610,901 sustained by Scotts for open market seed which was passed off as contracted seed.

An alternate damage calculation allegedly done by auditors placed the Scotts loss at $2,251,119 which represented the difference in what Scotts paid for the seed under the contracted rate and what the seed subsequently sold for on the market.

The filing again noted the Scott-Seeds dispute evolved out of failed negotiations for sale of the company to Scotts. It said negotiations for the sale extended from February until May of 2007 when Scotts dropped plans to buy the company.

The two companies then executed a settlement and supply agreement from which contracts for seed deliveries. Prices stepped up for seed deliveries in future years from .85 cents per pound in 2007 to $1.10 last year.

Last January, Seeds, Inc., prevailed in a first motion for a partial summary judgment for a $7,448,103 ruled due for seed delivered under terms of the 2007 and 2008 series contracts for seed produced in 2010. The court ruled no issue of fact on the sums due under terms of the contracts needed to be determined at trial.

Seeds Inc., filed for the partial summary judgment under the premise they were unable to pay growers for their harvested seed until Scotts paid them. The court allowed 18 percent interest as of the Jan. 31, 2011, date of the court order.