LONOKE -- Lawyers for Lonoke County rice farmers seeking a recovery of their losses related to the failure of a grain company in Brinkley must provide more information regarding their claims, a judge ruled Thursday.
Circuit Judge Sandy Huckabee's ruling came in favor of KBX Inc., a Benton grain dealer and defendant in the lawsuit. But Huckabee also ruled against KBX's demand that the 18 farmers turn over their individual income tax returns.
The farmers say they were never paid for $6 million in rice in the waning days of Turner Grain Merchandising Inc.
Huckabee has scheduled the trial in Lonoke County Circuit Court from May 9 to June 2. Another pretrial hearing is set for May 2 on other motions, including those by some defendants asking for either summary judgment in their favor or to be dismissed as defendants.
Any motions not dealt with May 2 will be addressed May 8, with jury selection to begin May 9, Huckabee said.
Turner Grain was closed down in August 2014 after inspectors with the U.S. Department of Agriculture found no grain in bins, contrary to certifications by Turner stating otherwise. The visit came just days after talk circulated through the small farming community that Turner Grain checks written to several farmers were being returned by the bank for insufficient funds.
Within two months of its closing, Turner Grain Merchandising Inc. had filed for Chapter 11 bankruptcy (later converted to Chapter 7), initially listing $23.8 million in debts and $13.8 million in assets. The total of the debts was later amended to nearly $47 million.
Scott Poynter, a Little Rock lawyer for KBX, one of the largest grain dealers in the state, said defendants were entitled by law to information used by the plaintiffs' lawyers in developing their lawsuit filed more than two years ago.
The lawsuit named nine causes of action, including breach of contract, fraud through false representation, theft by deception, violations of the Arkansas Deceptive Trade Practices Act, civil conspiracy, and unjust enrichment.
Among the lawsuit's claims:
• KBX officials knew Turner Grain was in financial trouble but didn't warn farmers.
• KBX knew Turner's officials were engaging in a "Ponzi scheme" but did and said nothing.
• KBX was the actual purchaser of the grain, while Turner Grain merely brokered the deals.
Poynter said the 20 defendants in the case deserved those answers and that the other side shouldn't be allowed to cite "attorney-client privilege" or "work product" in refusing to turn over the information.
Don Campbell of Little Rock, a lawyer for the rice farmers, disagreed.
"We shouldn't have to subsidize and hand-feed what's important in this case [to defendants]," he said.
Besides KBX, defendants are Dale Bartlett and Jason Coleman, co-founders of Turner Grain Merchandising, and several of the company's related entities.
Turner Grain Merchandising Inc. itself isn't a defendant in the Lonoke County lawsuit because it is under federal bankruptcy protection.
Lawyers have turned over corporate tax records for the four farming enterprises that the 18 rice farmers operate but contested demands for their individual tax returns.
KBX contended they were necessary to show how each farming operation was managed.
Campbell said the individual tax returns were not relevant.
"Everybody admits our clients were not paid," he said. "We have shown that rice was delivered and [no money] came in," he said. "That is the loss."
In seeking the individual tax returns, Poynter cited a federal judge's ruling in a class-action lawsuit in 2011 against Bayer Crop Science. In that suit, the plaintiff claimed that the company's genetically modified rice had tainted other rice supplies across the nation. That judge ordered the release of the returns, saying plaintiffs, in bringing the lawsuit, had to expect to lose a small amount of privacy.
The main case against Bayer was settled for $750,000, but some Arkansas farmers, including one family now involved in the Turner Grain lawsuit, were awarded $48 million by a Lonoke County jury.
Business on 04/28/2017
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