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E & J Gallo Sues LMR Wine Estates for $420K Alleging Non Payment for 2020 Grapes

by Kerana Todorov
February 08, 2021

E. & J. Gallo Winery filed a lawsuit against a Napa Valley winery over a grape contract, according to court records.

The world’s largest company alleges LMR Wine Estates LLC of St. Helena owes at least $420,000 on fruit harvested in 2020, according to the complaint filed Jan. 28 in Napa County Superior Court. The Hall family owns Long Meadow Ranch.

The contract called for LMR Wine Estates to purchase 120 tons of Cabernet Sauvignon grown at Sun Lake Vineyard in Pope Valley for $5,500 per ton, according to the court filing. The fruit was harvested between Sept. 30 and Oct. 22, according to the lawsuit.

The contract also covered the purchase of grapes from the 2019 crop, according to court filings. 

However, LMR Wine Estates allegedly did not pay for the fruit harvested in 2019 under that contract, according to court records. And in September, Gallo requested “adequate assurances” from LMR Wine Estates under rules set by the California Commercial Code that the company could pay for the 2020 crop, according to the complaint. 

When LMR Wine Estates did not respond, Gallo sold the fruit to another party, Carneros Vintners, according to the complaint. However Gallo sold the fruit for less money than the $5,500 price per ton stipulated in the grape purchasing contract with LMR Wine Estates, according to the complaint.

“Despite reasonable efforts to sell the 2020 crop at the Purchase Agreement’s rate of $5,500 per ton, Plaintiff realized $2,000 per ton,” according to the lawsuit.

The Cabernet Sauvignon had not been damaged by smoke, according to the court filing. 

The $420,000 figure cited in the complaint is the difference between what LMR Wine Estates would have paid – $660,000 – and the sales price to the third party - $240,000, according to the court filing. 

The lawsuit also seeks interest on the debt. The contract included a provision that accrued interest on the debt would be 18 percent, beginning in January, according to the complaint. In addition, Gallo seeks attorney fees and other court costs, according to the lawsuit. 

Gallo and LMR Wine Estates declined to comment on the matter.

The lawsuit filed last month is the second litigation Gallo has undertaken in Napa against LMR Wine Estates over the grape purchasing contract signed early 2019. In September, Gallo filed a breach of contract complaint against LMR Wine Estates in Napa for non-payment for fruit harvested and delivered in 2019, according to court filings. That case was dismissed in December over a technicality, according to court records. 

The Hall family has been involved in winemaking, ranching, viticulture, organic farming and other operations in the Napa Valley for decades.

The Hall family’s holdings also include vineyards and Farmstead Restaurant At Long Meadow Ranch in St. Helena.

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