PITTSBURGH – Litigation from 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, is headed back to an Indiana County court.
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.
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.
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 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,” the dismissal motion read.
“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.”
UPDATE
U.S. District Court for the Western District of Pennsylvania Judge William S. Stickman IV concurred with the defendants in a Feb. 9 memorandum opinion, dismissing the federal counts and thus, remanding the remaining state-law counts to the Indiana County Court of Common Pleas.
“Plaintiffs do not argue that the Agency is not a federal agency as defined by the Federal Tort Claims Act, nor do they present any argument outside of those arguments already set forth in their opposition to the United States’ motion for substitution. As a result, because plaintiffs’ claim alleges intentional interference with a contractual relationship against Glasser, it is not permitted under the Federal Tort Claims Act. Therefore, the Court grants the United States’ motion to dismiss Count IV of the amended complaint for intentional interference with a contractual relationship for lack of subject matter jurisdiction,” Stickman said.
“Neither the Agency nor the Guaranteed Farm Loan Program, encompass the activities of or transactions involving a credit repair organization. Rather, the Agency and the Guaranteed Farm Loan Program provide farming borrowers that are unable to obtain credit in the normal course with credit for the purposes listed. Therefore, because this case does not concern the conduct of a credit repair organization, or conduct connected with the activities of, or transactions involving a credit repair organization, the Court grants the United States’ motion to dismiss Count III of the amended complaint.”
Stickman then remanded the case to an Indiana County court for further proceedings.
For counts of breach of contract through breach of the duty of good faith and fair dealing, breach of contract through promissory estoppel, 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