Montana Milling, D.K.B. mired in lawsuit

by Eric Schroeder
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Montana Milling organic wheat
Montana Milling says Dave’s Killer Bread breached a multiyear contract to purchase organic wheat.

GREAT FALLS, MONT. — Montana Milling Inc. (M.M.I.) has filed a lawsuit against Dave’s Killer Bread (D.K.B.), claiming the Milwaukie, Ore.-based baker breached a multiyear contract to purchase organic wheat.

In the suit, filed March 24 in the U.S. District Court in Great Falls, Montana Milling described a scenario in which numerous commitments were made between the company and D.K.B., dating back to 2012. Among the commitments, according to the allegations, is that D.K.B. agreed to acquire organic wheat from a pair of two large grain processing facilities in Great Falls and Conrad, Mont., between 2014 and 2017, as well as in future years.

Following a meeting in December 2013 and relying on what it claims were promises made by D.K.B., Montana Milling said it started working with milling equipment suppliers on a mill expansion project to accommodate the large quantities of wheat products that D.K.B. promised it would purchase in the future. A year later, in December 2014, Montana Milling said it commissioned a new flour mill and cracking mill to meet D.K.B.’s promises.

Dave's Killer Bread, Flowers Food
 In December 2014, Montana Mill said it commissioned a new flour mill and cracking mill to meet D.K.B.’s promises.

“At that time, D.K.B. was going to need 100% of the milling and processing capacity of M.M.I. in the future,” Montana Milling noted in the March 24 filing. “Based on those promises, M.M.I. made the decision to not actively obtain new milling customers since M.M.I.’s capacity would be needed to meet D.K.B.’s represented demands. During this time period, relying on the promises of D.K.B., M.M.I. continued to contract with organic wheat growers to procure the wheat for D.K.B.”

In June 2015, Montana Milling said it was told by D.K.B. that “We need all the wheat you can raise. We will always need Montana wheat.”

According to the court filing, things changed when Thomasville, Ga.-based Flowers Foods, Inc. acquired D.K.B. in August 2015. Following the acquisition, Montana Milling said in the filing that Flowers refused to accept the organic wheat that D.K.B. had agreed to accept, causing extensive damages to Montana Milling and the organic wheat farmers.

The contract terms called for Montana Milling to pay up to $21.25 a bushel to the organic wheat farmers, with D.K.B. in turn agreeing to pay between 38c and 53c per lb based on different factors, according to the lawsuit. Montana Milling is seeking restitution for the breach of contract.

In a subsequent filing on March 28, D.K.B. and Flowers Foods moved the court to dismiss the allegations because they “fail to state a claim upon which relief can be granted.” The companies have made no other comments on the lawsuit.  
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By Steve smith 4/8/2017 5:06:32 PM
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