Minnesota dairy farmer takes Hastings Creamery to court over unpaid milk deliveries

HASTINGS, MINN. – The demise of a historic creamery that burned down this fall reached the county courthouse on Friday, with an attorney for a Minnesota dairy farmer — allegedly stiffed by the creamery in its waning days — asking a judge to block a bank from cashing milk checks.

"The creamery was buying milk and not paying my client," John Giesen, attorney for Valley Acres Dairy, told Dakota County District Judge Ann Offermann.

Valley Acres Dairy, of Lewiston, Minn., filed a lawsuit in September, days after the legendary Hastings Creamery was lost in an overnight fire. The creamery had financially hobbled through the summer after the Metropolitan Council kicked the creamery off the city sanitation system for dumping raw milk into the sewer.

Court records filed by Glenwood State Bank, the creamery's creditor, suggest the creamery's ownership group, four farmers from Otter Tail County, had defaulted on millions of dollars in loans. In August, according to affidavits and court testimony on Friday from the dairy farmer, the bank cut off funds for the creamery to pay producers, causing the creamery to close.

"They didn't shut down with a lot of money in the piggy bank," Jim Lodoen, attorney for the creamery, told the court.

But missing payments to the dairy farmers, who were left without any place to sell their milk, were put in an increasingly strained financial position, Valley Acres said in affidavits.

In text messages filed to the court, Carey Tweten, owner of Valley Acres, was contacted via text message by Justin Malone, the former CEO of Hastings Creamery, asking about payment for milk deliveries.

"Did you get your checks yesterday?" Malone asked on July 6.

"No I did not," Tweten replied.

Later that day, Tweten wrote, "Not sure we have anywhere for the milk to go today[.]"

According to court records, Valley Acres Dairy started shipping milk in July to a creamery in nearby Altura.

While the plaintiff alleges Hastings Creamery owes the dairy more than $800,000 for missing payments, Friday's temporary injunction dispute centered around four checks sent to the creamery from buyers of Hastings' products. Tweten's attorney asked the judge to freeze those assets. But the bank, creamery and former creamery owners have argued against the injunction, which they call an "extraordinary" measure this early in the process.

Hastings Creamery is facing at least one more lawsuit, filed by an Altura-based dairy farmer, who argues the creamery errantly deducted $600,000 from his pay for hauling milk. In that lawsuit, as in Valley Acres' suit, the creamery's former owner, Justin Malone, argued that a down cycle in the milk market necessitated the shift in hauling fees and payment rates beginning in the spring of 2023.

Last year marked a tumultuous year for dairy producers across Minnesota and the U.S. The price of milk bottomed out and, by December, dozens of milk licenses were voluntarily rescinded.

Asked on the stand Friday about last year, Tweten said, "It wasn't a good time to be a dairy farmer."

Just a couple miles from the courthouse, the damaged creamery has yet to be fully cleaned up. John Hinzman, Hastings' community development director, said the city has had "very limited conversations" with the creamery, which was open for 110 years, since the fire occurred.

After the creamery's attorney on Friday played-out how sellers to a business might normally secure missing revenue, Judge Offermann underscored the distinction in this instance, interjecting that was the case "in a situation that the business isn't burned down."