Settlement Talks Bring Halt to Wortman-Ferguson Dispute After 3 Days of Testimony

by George Waldon  on Monday, Feb. 7, 2011 12:00 am  

The bitter dispute over an 11,479-SF dream home that allegedly turned into a nightmare appears headed toward a mid-trial settlement.

Lawyers representing Steve and Missy Wortman and upscale homebuilder Rick Ferguson called a halt last month after three days of testimony - most of it by Steve Wortman - before Pulaski County Circuit Judge Chris Piazza and indicated a settlement was reached.

At last report, that settlement was supposed to be finalized and the necessary court documents filed before Valentine's Day. Ferguson and Steve Wortman, president of Kaufman Lumber Co., couldn't be reached for comment.

The Wortmans were seeking more than $6 million in damages from Ferguson and his Rick Ferguson Inc., Pinnacle Precast Co. and VFE Inc. for alleged major construction flaws in their Valley Falls Estates mansion in west Little Rock.

The couple's accusations against Ferguson and his business entities included breach of contract, implied warranty of inhabitability, negligence and deceit.

Ferguson denied those allegations and declined to take the $3.6 million property back. The disagreement between former friends and business partners erupted into a lawsuit filed Dec. 8, 2009.

The trial was scheduled to last two weeks beginning on Monday, Jan. 24, but there was no courtroom action that day because attorneys told Piazza's office that a settlement had been reached.

The trial was back on Jan. 25 after disagreements scuttled the proposed resolution. Talk made the rounds that Ferguson offered to trade another grand house for the Wortman manor as part of a settlement.

In the months leading up to the trial, the case generated voluminous back-and-forth filings sprinkled liberally with inspection reports and excerpts from sworn depositions.

The Wortmans and two of their expert witnesses testified beginning mid-day on Tuesday, Jan. 25, all day Wednesday and most of Thursday. The trial was put on hold before the start of testimony on the morning of Friday, Jan. 28, by the pending settlement.

Ferguson's lawyers were to begin cross-examination of the Wortmans' second expert witness, Kenneth Bownds of Curtainwall Design Consulting of Dallas.

The bulk of the Wortmans' initial complaint is devoted to details of alleged construction defects that threaten the structural integrity of the house. Those allegations include improperly installed pre-cast stone, interior support piers and beams and poor site preparation.

In the days preceding trial, Ferguson's lawyers requested that accommodations be made for taking the jury to see the Wortman house firsthand. That drew fire from the Wortmans' lawyers although the matter became moot when the parties settled on a non-jury trial.

"Defendants should be careful what they wish for, because if a viewing of Plaintiffs' home is practical and appropriate, then a viewing of Ferguson's own home and other houses is equally practical and appropriate," the Wortmans' lawyers responded.

Ferguson's home in Valley Falls Estates and others are built with pre-cast stone.

Stories have circulated that Steve Wortman made an unsuccessful attempt to turn the dispute into a class-action lawsuit by recruiting other Valley Falls Estates neighbors.


Strained Relationship

Steve Wortman's relationship with Ferguson was strained even before his March 2008 move into the house that has generated so much contention.

According to Wortman's testimony, he asked Joe White of White-Daters & Associates Engineering of Little Rock to introduce him to Ferguson in 2001, and Ferguson quickly became "a good customer" of Kaufman Lumber.

The two were never social friends - "We didn't ... eat dinner together or go out at night or anything like that," Wortman testified - but their business dealings became more and more intertwined.

In 2002, Ferguson began construction on a house for the Wortmans on Valley Creek View in Valley Falls Estates. The next year, Wortman joined Ferguson on the local advisory board of Arvest Bank, but the circumstances that led to that appointment are in dispute.

In an Aug. 19 deposition, Ferguson said Wortman "expressed an interest in [joining the bank board]. And so I had asked Ron Strother [then chairman of Arvest's central Arkansas operations] and Jim Walton [chairman and CEO of Arvest Bank Group] if there was a place ... for him."

Wortman's recollection on the witness stand Jan. 25 was different. "I think Ron Strother had asked Mr. Ferguson to ask me if I would be interested in filling that position ... ."

In 2004, shortly after the Wortmans' first Valley Falls home was completed, Wortman bought three lots in the Waterview Estates subdivision that "he was trying to get off the ground" near Lake Maumelle.

That same year, Ferguson also invited Wortman to invest in the purchase of Pine State Bank of Kingsland, which was moved to Little Rock and renamed Centennial Bank. Both men served as directors of Centennial and both profited handsomely when Centennial was acquired by Home BancShares Inc. of Conway in January 2008.

Another major investor in Centennial Bank was Gene Cauley, then a Little Rock lawyer and now a federal prison inmate. Ferguson, Cauley and Wortman were the three largest shareholders in the bank's holding company, Centennial Bancshares Inc., owning a combined 88 percent stake.

Their respective holdings and estimated payout in the transaction were: Ferguson, 33.26 percent, $8.315 million; Cauley, 32.74 percent, $8.185 million; and Wortman, 12.33 percent, $3.083 million.

(Ron Strother also had made the move from Arvest to Home BancShares during that period, and he, too, had bought a house from Ferguson in Valley Falls Estates. He was president and COO of Home BancShares when he killed himself on Jan. 31, 2010.)

Although the Wortmans had moved into their 9,089-SF home on Valley Creek View less than two years earlier, they bought three more Valley Falls lots from Ferguson in 2005 and began in October of that year construction of the house that is now in dispute.

Naturally, the lumber used in the construction was purchased from Kaufman Lumber.

In 2006, according to Wortman's testimony, "Mr. Cauley approached me and wanted to know if I would be interested in selling two-thirds of the ownership of [Kaufman Lumber] to Mr. Ferguson and himself."

That deal, financed entirely by Kaufman Lumber without any cash payments by Ferguson or Cauley, was done in July 2006, with Wortman retaining voting control until his new partners had paid him half of the leveraged debt.

By the time the Wortmans moved into the rambling new house in March 2008, according to Wortman's testimony, his relationship with Ferguson had been damaged because Wortman refused to give Ferguson's brother-in-law a job at Kaufman Lumber and because Ferguson believed Wortman was overcharging him for building material.

Ferguson apparently wanted someone looking out for his interests inside Kaufman, although Wortman denied overcharging him. Wortman was unable to regain Ferguson's trust, and the homebuilder began unwinding his business dealings with Wortman.

That drew retaliation from Wortman.

According to a source in the Ferguson camp, Wortman tried to have Ferguson ousted from the Centennial Bank board in Little Rock, a move made while Ferguson was on a business trip to Dallas.

Wortman threatened to resign if Ferguson wasn't removed from the board. Instead, the directors offered to accept his resignation, but Wortman wouldn't submit it, according to the source.

The unsuccessful coup was especially galling to Ferguson because he was responsible for Wortman's entry into the world of bank directorship.

The Wortmans bought the Kaufman Lumber Co. stock back from Ferguson and Cauley in May 2009, the same month that Cauley's theft of more than $9 million from a client trust account was publicly reported.

In the run-up to the trial, Wortman attempted to keep Cauley far removed from his battle with Ferguson.

"Defendants should be prohibited from mentioning Mr. Cauley's name or referring to him in any way because of the tendency of such reference to inflame the jury or confuse the issues," his lawyers asked the judge in a pre-trial filing.


Related Parties

Judge Chris Piazza is overseeing another case filed against Rick Ferguson Inc. last summer by Dr. Christopher Pope and his wife, Katherine.

Their July 30 complaint alleges the homebuilder is responsible for construction flaws in their house that weren't discovered until they entered the ownership picture in 2006.

The residence in west Little Rock's Belle Pointe neighborhood was built by Ferguson in 1999.

Mistakes made during construction led to water and mold damage that required more than $100,000 in exterior and interior repairs to remedy, according to Christopher Pope.

"We're still in the process of doing depositions," he said.

In answering the complaint, Ferguson has denied responsibility for the leak problems at the Popes' house.

According to the complaint, the Popes paid Ferguson's company $1,800 in 2007 to fix the problem, which allegedly was more extensive and required more than just recaulking to solve as recommended and performed by the company.

"We called them because they had built the house," Christopher Pope said. "The work did not address the problem, and we ended up sustaining more damage."

The Popes' lawyer? William Almand, who has represented Steve Wortman.



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