Northwest farmer Frank Tiegs has prevailed against the J.R. Simplot Co. in a legal dispute over the ownership of a Washington food processing company.
The relationship between Tiegs and Simplot, who once held equal ownership of Pasco Processing, turned acrimonious last year over the need to inject money into the company.
Tiegs wanted each owner to contribute $3 million to Pasco Processing to resolve a loan default but Simplot didn’t agree to the cash infusion. The National Frozen Foods Corp. in Albany, Ore., is wholly owned by Pasco Processing.
The conflict prompted Tiegs to invoke a contract provision allowing him to buy the company if the two partners deadlocked on a key decision.
Citing contract terms, Tiegs claimed he wasn’t forced to pay anything for Pasco Processing due to its poor financial performance.
Both partners eventually filed lawsuits against each other, with Tiegs seeking a declaration that he owned the company and Simplot accusing him of deliberately mismanaging the firm.
U.S. District Judge Rosanna Malouf Peterson has now sided with Tiegs, finding that he was allowed to take complete ownership of Pasco Processing due to the deadlock with Simplot.
The judge ruled against Simplot’s argument that she consider additional evidence regarding Tiegs’ credibility, finding it was irrelevant to deciding the contract dispute.
While it’s “uncontested” that Tiegs tried to follow dispute resolution procedures, “Simplot refused to participate,” which resulted in the deadlock, she said.
Simplot’s claims that Tiegs tried to “manufacture” a “sham” deadlock are immaterial in terms of the contract, the judge said.
“The court concludes that in this case if a conflict looks, walks, and talks like a deadlock, it is a deadlock,” Peterson said.
Before Tiegs could buy Pasco Processing, the contract did require him to reach a five-year deal for supplying Simplot with vegetables, the judge said.
However, Simplot effectively waived this requirement when it refused to negotiate the supply agreement with Tiegs, according to the ruling.
Similarly, Simplot disregarded contract terms by refusing to participate in mediation scheduled by Tiegs, Peterson said.