PITTSBURGH – Federal defendants are seeking to dismiss counts from litigation brought by a pair of brothers from Western Pennsylvania and their dairy farm, which lodged formal action over a dispute concerning a loan process the farm was involved in, and a subsequent sheriff’s sale on their property.
David E. Kimmel of Plumville and Michael T. Kimmel and Kimmel Brothers Farms, LLC of Home initially filed suit in the Indiana County Court of Common Pleas on May 18, versus Elderton State Bank and Ray Sleppy of Elderton, Farm Service Agency of Washington, D.C., David Poorbaugh of Harrisburg and Charles Glasser of Indiana, Pa.
(The case was later removed to the U.S. District Court for the Western District of Pennsylvania on June 25.)
The plaintiffs said they purchased their dairy farm from their parents, Robert and Doris Kimmel. In 2013, though the farm was milking 100 cows and cash grain farming about 1200 acres, it lacked an adequate drying system and grain storage, they were empty stalls in their barns and they needed to update their bulk tank and milking equipment.
In order to maximize the farm’s resources, the plaintiffs planned an expansion of the operation, including a new barn, water beds, fans, ventilation and a bulk milk tank to improve, not only the quality of milk production, but also the quality of milk produced. As a result, the plaintiffs purchased an additional 100 dairy cattle.
To finance their expansion, the plaintiffs obtained a loan from Elderton State Bank on April 28, 2015, guaranteed by the Farm Service Agency, in the amount of $330,000. A second phase of the loan for $251,500 was also approved on May 15, 2015. Defendants Poorbaugh and Glasser approved the loan and were otherwise involved in the process, per the litigation.
In 2015, unpredictable weather led to untillable soil and limited spring planting, in addition to falling milk prices and crop failure. When they undertook efforts to restructure their loan payments, the plaintiffs said the defendants became difficult work with and delayed any such action in that regard throughout both 2015 and 2016.
On June 6, 2017, David Kimmel was trampled by a bull and sustained a broken neck, which eliminated his ability to work on the farm. Not until December 2017 did Poorbaugh meet with the plaintiffs and said their loan was “non-cash flowable” and advised them to file for bankruptcy.
In September 2018, the plaintiffs’ loans to Elderton State Bank became delinquent, but they assert they submitted a five-year repayment plan to the bank, which Poorbaugh allegedly made “non-cash flowable” by taking income off grains, not changing expenses and used an average number which put the plan in a negative light.
Elderton State Bank levied on the plaintiffs’ milk checks, while the Indiana County Sheriff’s Department levied on the plaintiffs’ cattle and equipment the following month. At that time, defendant Glasser allegedly contacted the department, wanting a levy placed on the entire farm.
While Sleppy initially wanted to set a meeting which would “bring everyone to the table”, Sleppy reneged on the arrangement soon after Glasser visited the farm and said any communication had to be done through attorneys.
“Plaintiffs’ bankruptcy attorney Michael Heney spoke with Elderton State Bank’s attorney and was informed that contact between the plaintiffs and Gary Groves had gone badly. The plaintiff then called Groves to tell him that their meeting with Elderton State Bank had been abruptly canceled,” the suit stated.
“In the course of that conversation, the plaintiff also informed Groves that their attorney had spoken with the bank’s attorney and had been informed that it was Groves’s opinion that the meeting had not gone well. Groves expressed surprise in that he had never spoken to Glasser or Elderton State Bank.”
On June 20, 2019, the sheriff’s sale advocated for by Glasser on the plaintiffs’ cattle and equipment took place. An individual named Jake Dressler bought the entire herd of cattle and took them away that day, allegedly through a pre-arranged agreement between him and Elderton State Bank.
UPDATE
The federal defendants filed a motion to dismiss the plaintiffs’ complaint on Sept. 14, for lack of subject matter jurisdiction and for failure to state a claim.
“The Farm Service Agency, David Poorbaugh, and Charles Glasser, move to dismiss the amended complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim under Rule 12(b)(6). Plaintiffs bring various claims related to loans they obtained from defendant Elderton State Bank that were backed by the Farm Service Agency,” the motion read.
“The Court lacks subject-matter jurisdiction over Count IV, because the Federal Tort Claims Act does not waive the United States’ sovereign immunity for the tort of intentional interference with a contract relationship and because plaintiffs did not file any administrative claim prior to bringing suit. Plaintiffs fail to state a claim on Count III because they have not alleged facts consistent with a violation of the Credit Repair Organizations Act because their allegations are inconsistent with the text and purpose of the Act.”
For counts of breach of contract through breach of the duty of good faith and fair dealing, breach of contract through promissory estoppel, violation of the Credit Reporting Organization Act and intentional interference with a contractual relationship, the plaintiffs are seeking damages in excess of the arbitration limit and an injunction preventing foreclosure or sheriff’s sale of their farm, costs and such relief as the Court may deem proper, including but not limited to punitive damages, and a trial by jury.
The plaintiffs are represented by Alexander H. Lindsay Jr. and Max B. Roesch of the Lindsay Law Firm, in Butler.
The defendants are represented by James L. Rockney and Brian J. Willett of Reed Smith, plus Jacqueline C. Brown of the U.S. Attorney’s Office for the Western District of Pennsylvania, all in Pittsburgh.
U.S. District Court for the Western District of Pennsylvania case 2:20-cv-00954
Indiana County Court of Common Pleas case 10297 C.D. 2020
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com