Missouri Court of Appeals for the Western District in Kansas City
KANSAS CITY — The Missouri Court of Appeals Western District affirmed a Boone County trial court judgment awarding more than $1.25 million to Majestic Milling Company in a breach of contract dispute with River Valley Ag Exchange, concluding that River Valley failed to meet its contractual obligations and violated the implied covenant of good faith and fair dealing.
In an opinion filed March 17, the appellate court rejected River Valley’s arguments that its failure to supply contracted soybeans did not constitute a breach and that it could not be held liable under the contract’s terms.
The court upheld the trial court’s finding that River Valley breached the agreement and acted in bad faith and it also granted Majestic’s request for attorneys’ fees on appeal, remanding the case to the trial court to determine the appropriate amount.
The dispute stems from a 2020 agreement in which River Valley agreed to supply Majestic with 252,000 bushels of organic soybeans over 12 months at an average price of $20.85 per bushel.
Majestic, which processes organic grain into finished feed, relied on the agreement to secure supply for its own contracts with third-party buyers.
Although River Valley began deliveries in late 2020, the supply slowed significantly in early 2021 as soybean prices increased.
By April 2021, River Valley had delivered only 40,579 bushels, which was far short of the agreed amount, and ultimately stopped deliveries altogether.
Evidence presented at trial showed that Majestic was forced to purchase replacement soybeans from third-party suppliers at significantly higher prices, totaling more than $5.2 million during the contract period.
River Valley argued on appeal that the contract expressly stated it would not be liable if it was unable to supply soybeans and that its performance was excused by rising market prices.
The appellate court disagreed, finding that the contract, when read as a whole, required River Valley to use its best efforts to deliver the agreed quantities at the specified prices and did not allow it to avoid performance simply because fulfilling the contract became less profitable.
The court noted that any flexibility in the contract related to delivery timing and quantities, not pricing, and noted that price increases do not excuse performance when supply remains available.
Testimony showed that soybeans were still obtainable on the open market and that Majestic successfully secured replacement supply from vendors in the same regional market where River Valley operated.
The court found that River Valley failed to comply with the contract’s requirement to provide a formal 10-day notice of insufficient supply.
While River Valley sent an email in January 2021 indicating low inventory, testimony established that the communication did not meet the contract’s notice requirements.
On the issue of good faith and fair dealing, the appellate court upheld the trial court’s determination that River Valley engaged in “opportunistic behavior” by failing to procure available soybeans and by charging above-contract prices for certain deliveries when Majestic was in a vulnerable position due to low inventory.
The court concluded that such conduct deprived Majestic of the expected benefit of its fixed-price contract.
The trial court had awarded Majestic $869,110.79 in compensatory damages, along with $115,895.41 in attorneys’ fees and $265,732 in interest, for a total judgment of $1,250,738.20. The appellate court affirmed that award in full.
Missouri Court of Appeals for the Western District case number: WD87895
