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Claims of California North Coast wine grape smoke damage head to court

Even as the potential for this fire season heats up, the legal impact of the 2020 North Coast blazes continues to smolder in local courthouses.

Three North Coast cases have come to the fore in the past six months related to wine grapes harvested amid the Glass, Walbridge and Hennessey fires in Napa, Sonoma and Lake counties.

In January, Gallo Vineyards Inc., a grape growing arm of the Gallo family’s wine ventures, sued an affiliate of Napa Valley’s Long Meadow Ranch, claiming it lost $420,000 because contracted fruit last fall was rejected because of smoke damage and had to be sold just before harvest at a much lower price, according to the complaint. The original contract price with LMR Wine Estates LLC was $5,500 a ton, totaling $660,000, but Gallo ended up selling the fruit to custom-crush winery Carneros Vintners for $2,000 a ton, or $240,000 altogether.

Napa County Superior Court Judge Monique Langhorne ruled in June that LMR could compel Gallo Vineyards into arbitration and stay the lawsuit until that process concludes, according to a filing.

Attorneys for Gallo and LMR couldn’t be reached for comment.

In May, Napa vineyard owners Dan and Jerry Linstad sued Anderson Conn Valley winery owner Todd Anderson in Napa County Superior Court, alleging that two years into a four-year grape purchase contract the vintner broke the deal by rejecting fruit last fall worth $536,208 at $7,500 a ton.

“Our comment is that we have no comment,” said a woman who answered the phone at the winery. “We’re friends with him. Until this is settled, there is nothing to talk about.”

The vintner’s attorney and the Lindstads’ didn’t return messages seeking comment.

Also in May, Middletown’s Langtry Farms LLC sued Sonoma County-based grape grower Hugh Reimers and Torick Farms LLC, one of his grape growing companies, alleging $330,266 was needed to replace tanks and barrels supposedly damaged by smoke-tainted grapes. Reimers countersued, claiming the grapes were OK when accepted and that bulk wine made from the fruit is being improperly held back.

Lake County Superior Court Judge Michael Lunas approved a temporary restraining order sought by Reimers and Torick to allow 21,900 gallons of stored wine to be sold, ordering that the proceeds be held in a jointly held trust account until the dispute is resolved. A ruling on a preliminary injunction is pending.

One of the key legal challenges that’s come up in West Coast wine regions in the past few years is the general lack of specificity in many commercial agreements about which party bears the risk for a peril like smoke damage, according to Todd Friedman, a Portland, Oregon-based partner in law firm Stoel Rives who also has represented a few hundred California North Coast wine-related clients.

“When there is a lawsuit, some parties may not want to see it through unless they know they have a good chance of winning,” Friedman said. The expensiveness of litigation is a big factor in why he doesn’t expect many of the disputes to become lawsuits.

He’s dealt with roughly a couple dozen disputes related to smoke, primarily coming out of California last year for rejection of fruit or reductions in price. Most of these have been resolved before going to an arbitrated or mediated settlement or litigation, Friedman said.

“Before that point, parties tend to agree to a break on the price to take all the fruit or get a break on pricing next year for an extension of terms and the grower’s giving of something back to the winery,” Friedman said.

Also at stake in a dispute over acceptability of fruit could be long-standing relationships between growers and vintners, such as vineyard-designate wines, he said.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.

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