Company says abrupt breach of agreement ruined business, seeks at least $11 million in damages

TIDINGS FILE PHOTO - In a federal lawsuit filed Oct. 30, West Linn Paper claimed that its business was fatally wounded when the Marubeni America Corporation breached its agreement to supply pulp.Shortly after announcing Oct. 16 that it would close permanently after 128 years of business, the West Linn Paper Company filed a lawsuit in the U.S. District Court against its former pulp supplier, the New York-based Marubeni America Corporation.

The lawsuit, filed Oct. 30, claimed that Marubeni breached an agreement to supply West Linn Paper with pulp, thus causing the mill to shut down. The agreement — referred to in the lawsuit as the "Peace River Agreement" in reference to the name of the type of pulp that was to be supplied — was an extension of a long-term supply contract between the two entities and was set to run from Nov. 2016 through Dec. 31, 2017 before an abrupt change in late September, according to the lawsuit.

West Linn Paper made two claims in the lawsuit: that Marubeni breached its contract and, in doing so, also breached the "duty of good faith and fair dealing."

"The duty of good faith and fair dealing requires that the contracting parties not act in a way that destroys or injures the rights of the other or that frustrates or defeats the object of the contract," the lawsuit read.

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The problems began in late September, when West Linn Paper was caught off-guard by the news that its supply order could not be met.

"On or about September 27, 2017, in advance of the October 2017 delivery of pulp, Defendant notified WLPC that it would only be providing half of the amount of pulp required to be supplied under the Peace River Agreement," the lawsuit read. "(Marubeni) stated to WLPC that WLPC should seek replacement pulp from another supplier. As of the time of this notice, WLPC was current on all payments due under the Peace River Agreement and otherwise in full compliance ... Defendant also notified WLPC that it would not provide WLPC any amount of pulp for November 2017.

"Without the pulp to be supplied from Defendant, WLPC had no way of continuing its paper mill operations."

West Linn Paper estimated the damages to be in excess of $11 million. At the time that it announced its impending closure, the company employed 277 people. All operations at West Linn Paper are expected to cease by the end of the year.

The allegations presented in the lawsuit match what West Linn Paper Chief Operating Officer Brian Konen said in an interview with the Tidings shortly after the announcement that the paper mill was closing. Konen said the abrupt stoppage in pulp shipments was the result of a boiler explosion at the company's supplier in Alberta, Canada, and efforts to obtain pulp from other suppliers were unsuccessful in the face of what he deemed a "credit squeeze."

Marubeni America is a subsidiary of the Marubeni Corporation, which is based in Osaka, Japan. The American headquarters is in New York. As described on its website, Marubeni America is a general trading company that is "engaged as an intermediary, importer/exporter, facilitator or broker in various types of trade between and among business enterprises and countries."

West Linn Paper and Marubeni did not respond to requests for comment.

West Linn Tidings reporter Patrick Malee can be reached at 503-636-1281 Ext. 106 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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