LONOKE -- The state Department of Agriculture has become embroiled in a looming trial related to the 2014 collapse of a Brinkley grain company, with the department's attorney saying a staff member had falsely testified under oath.
Wade Hodge initially made the claim Jan. 10 in telephone calls to attorneys for plaintiffs and defendants involved in a civil lawsuit set for a jury trial starting Monday in Lonoke.
Hodge testified during a pretrial hearing Tuesday and made the same claim.
The lawsuit pits a group of Lonoke County farmers against an entity of Turner Grain Merchandising Inc. and KBX Inc., a grain dealer in Benton. Lonoke County Circuit Judge Sandy Huckabee has set aside nearly three weeks for trial. Jury selection is scheduled for Friday.
The farmers contend they're owed some $6 million for rice from Turner's collapse. The actual lawsuit seeks an unspecified award of compensatory and punitive damages.
Turner Grain Merchandising filed for Chapter 11 bankruptcy protection in federal court, listing about $14 million in assets and about $47 million in debts.
The farmers contend that Turner Grain was an agent of KBX, and that KBX was the actual buyer of their rice.
KBX disputes the claim, citing $28 million made in payments to Turner during Turner's waning weeks as evidence that its deals were with the Brinkley company, not with farmers.
Michael Churchwell, a 35-year veteran of the department and supervisor of the grain warehouse division, took part in a deposition Dec. 23 after being issued a subpoena by Kendel W. Grooms, a lawyer for the plaintiffs.
According to a transcript of the deposition, Churchwell said he was testifying as a representative of the Agriculture Department.
Hodge said Tuesday that wasn't true, because Churchwell had been told months earlier that he couldn't testify in an official capacity. Hodge also said he didn't enjoy having to make the telephone calls to the opposing counsels.
Hodge testified that Churchwell resigned shortly after the Jan. 10 telephone calls. His annual salary was $54,343.
Churchwell testified on Dec. 23 that he had worked earlier for KBX's attorneys as a paid expert witness, starting in early 2018. He was paid $1,125 -- for 22.5 hours at $50 an hour -- to look at grain contracts and to explain the origins of a state law that grew out of the collapse of Turner Grain. Churchwell said he helped draft the law.
At the time, the state had no law governing the operations of Turner Grain Merchandising Inc., which was a dealer as opposed to a broker required to register with federal regulators.
Churchwell said in the Dec. 23 deposition that he was given permission to do the outside work, as a paid expert, by the late Terry Walker, who was Plant Board director at the time, as long as the work was outside state working hours. Churchwell also said he had worked with the attorney appointed to serve as the trustee for Turner Grain in federal bankruptcy court.
Churchwell said in the deposition that around mid-May last year he'd verbally withdrawn from working with KBX as a paid witness. He said he withdrew because the new Plant Board director, Butch Calhoun, had advised against such an arrangement.
He said he was taking part in the Dec. 23 deposition only because of the subpoena from Grooms.
Grooms' filing of two weeks ago also said Churchwell had falsely testified that an "anonymous" source had called him about Turner Grain's apparent financial troubles in its final days. Grooms said Churchwell, instead, knew the "anonymous" source was Terry Fuller, a member of the state Plant Board then and now.
Hodge also said Tuesday that Churchwell's claim of an anonymous source was false.
Churchwell, according to lawyers on Tuesday, has since filed a correction to his deposition, saying he'd misunderstood the question about his source.
The tip to Churchwell prompted him to call federal officials, who soon went to Turner Grain. Its operations were closed after investigators found no grain in bins certified as being full.
Of the 22.5 hours Churchwell billed KBX attorneys in 2018, 20 were performed on Saturdays or during weeknights well after normal state office hours, according to his invoice filed in court. The remaining hours were toward the end of normal state office hours.
The Churchwell deposition is among several components of a motion filed by Grooms claiming that KBX and its lawyers have routinely hidden or destroyed documents that should be available to the plaintiffs' lawyers as part of the rules of discovery for court cases. He has asked the judge to sanction the lawyers and issue a default judgment in favor of the farmers.
Scott Poynter, a KBX attorney, has made similar accusations and filed similar motions against the farmers' attorneys. "We're going to learn at trial, as we have already have the past few years, we're not going to agree on much," Poynter said in court of the various legal disputes between the two sides. "I hate it, but every time we turn around, there's a contempt motion."
Poynter has a separate motion asking Huckabee to sanction the farmers' attorneys for withholding relevant documents.
Huckabee took the motions of both sides under advisement and said he'd rule on them by Thursday.
Calhoun, who was secretary of agriculture at the time of Turner Grain's collapse and who retired as Plant Board director on June 30, has been scheduled to testify. His Plant Board successor, Scott Bray, also is scheduled to testify, as is deputy secretary of agriculture Cynthia Edwards. Fuller also has been issued a subpoena.
Not all of that testimony is related to Churchwell's deposition. While Churchwell also is scheduled to testify at trial, Grooms is seeking to have that testimony excluded.
That motion, and some 40 others, is scheduled to be heard in court today.
Business on 01/29/2020