APPEAL
FROM THE DESHA COUNTY CIRCUIT COURT [NO. 21CV-15-125]
HONORABLE ROBERT BYNUM GIBSON, JR., JUDGE
Waddell, Cole & Jones, PLLC, by: Ralph W. Waddell and
Justin E. Parkey, for separate appellant Agrifund, LLC.
Gill
Law Firm, PLC, by: Brooks A. Gill and Kelly K. Brown, for
separate appellant Hampton Pugh Company, LLC.
Snellgrove, Langley, Culpepper, Williams & Mullally, by:
J. Chad Owens and Todd Williams, for separate appellee
Regions Bank.
Bridges, Young, Matthews & Drake PLC, by: John P. Talbot,
for separate appellee Optimum Agriculture, LLC.
PHILLIP T. WHITEAKER, JUDGE
The
appellants, Agrifund, LLC (ARM), [1] and Hampton Pugh Co., LLC
(Pugh), [2]appeal the judgment of the Desha County
Circuit Court finding that the security interest of appellee
Regions Bank in crops and crop proceeds had priority over
their separate, respective security interests. ARM and Pugh
also appeal the circuit court's ruling that appellee
Optimum Agriculture, LLC, had a landlord's lien of
approximately $79, 000 in the proceeds. We do not address the
merits of these arguments because we must remand the case to
settle and supplement the record and for rebriefing.
We
provide the following summary of the procedural history to
explain why remand and rebriefing are necessary. Scott Day
operates and controls farming entities that utilize different
operational names. In 2014, three of Day's
entities-collectively "the Old Entities"-received a
crop-production loan from Regions. In exchange for the loans,
the Old Entities executed security agreements granting
Regions security interests in their crops. Regions perfected
its security interests by filing the appropriate UCC
financing statements as to the Old Entities. At the end of
the 2014 crop season, the Old Entities could not fully repay
their loans to Regions.
In
2015, Day intended to farm utilizing the names of the Old
Entities, subject to the ability of the Old Entities to
obtain financing. The Old Entities sought a new
crop-production loan from Regions, but Regions declined to
finance the 2015 crop for the Old Entities. As a result, Day
took other actions. He purchased the necessary seed and other
inputs on credit from Pugh and Hill Seed and Elevator, Inc.
(Hill), to get the 2015 crop planted. Day then sought
financing through ARM for the 2015 crop in the names of the
Old Entities. ARM would not loan monies to the Old Entities
unless Regions entered into a subordination agreement with
ARM, which Regions refused to do. Being unable to secure
financing in the name of the Old Entities, Day then decided
to farm the lands in the names of three new entities he had
formed in late 2014 or early 2015-collectively "the New
Entities." Evidently, ARM made a crop-production loan to
the New Entities. ARM obtained security agreements from the
New Entities in the 2015 crops and filed the appropriate UCC
financing statements as to both the New Entities and Day,
individually. Pugh and Hill, who had also provided financing
for the 2015 crop, likewise had security agreements and filed
the appropriate UCC financing statements as to the New
Entities.
By the
end of the 2015 crop season, Day and his farming operations
owed several entities but did not have enough assets to pay
everyone, which became the catalyst for this litigation. Hill
and Pugh were the first to file suit regarding who had
priority to the 2015 crop proceeds. They sued Regions; ARM;
the New Entities; Hubbard Brake, LLC; and
Optimum.[3] ARM then filed a separate suit against the
New Entities, their individual partners, Regions, Hill, and
Pugh. Within these two separate suits, numerous
counterclaims, cross-claims, and third-party complaints were
filed. The circuit court later consolidated these two
separate suits into the case originally filed by Hill and
Pugh, and the proceeds from the 2015 crop-approximately $2.9
million-were deposited in the registry of the court.
After a
two-day bench trial, the circuit court entered judgment
finding that Regions' lien had priority over the liens of
ARM, Hill, and Pugh. Optimum was found to have a
landlord's lien in the proceeds. The proceeds were
distributed $79, 000 to Optimum, approximately $1.8 million
to Regions, and the remaining funds were to be divided
between ARM, Hill, and Pugh pursuant to a settlement among
those parties, with ARM receiving 68 percent and Hill and
Pugh dividing 32 percent. This appeal by ARM and Pugh
followed.
We
cannot reach the merit at this time, however. Our rules of
procedure direct that if anything material to either party is
omitted from the record, this court may direct that the
record be settled and supplemented and that a supplemental
record be certified and transmitted. Ark. R. App. P.-Civ.
6(e); Boyd v. Crocker, 2016 Ark.App. 382. Here, we
have determined that the record filed with our court is
incomplete. Specifically, we note that all pleadings filed in
the suit initiated by ARM predating its consolidation with
the suit filed by Hill and Pugh are not before us. For
instance, we do not have ARM's original complaint, which
appears to be the only pleading in which ARM seeks
affirmative relief. In its answer to Regions' second
third-party complaint, filed after the consolidation of the
cases, ARM adopted and realleged the allegations contained in
its original complaint. However, we cannot know what was
adopted and realleged without the original pleading being in
the record. We also do not have other postconsolidation
pleadings in the addendum that respond to pleadings in the
ARM case.[4]
Accordingly,
we order the record to be settled and supplemented pursuant
to Rule 6(e) with the pleadings filed in the case brought by
ARM prior to the consolidation of the cases. In addition, we
order supplementation of the addendum pursuant to Arkansas
Supreme Court Rule 4-2(b)(4). ARM and Pugh have thirty
calendar days to settle and supplement the record. ARM and
Pugh shall then have fifteen days from the date the
supplemental record is lodged to revise their briefs as
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