The Arkansas Supreme Court recently overturned a $12.1 million jury award to a group of Lonoke County farmers who were victims of defunct Turner Grain Inc. of Brinkely.
The unanimous ruling found that there wasn’t enough evidence to support the jury’s ruling against K.B.X. Inc. of Little Rock, a grain exporter and merchandiser that did business with Turner Grain. The state’s high court also overturned the award against K.B.X.’s owner and president, Steven Keith Sr.; Keith’s son, who worked at K.B.X., Steven Michael Keith Jr.; and employee Shay Sebree.
The Feb. 24 ruling by Chief Justice John Dan Kemp said that K.B.X. bought rice from Turner Gain, but Turner Grain didn’t pay the farmers. “There was no evidence that the KBX Individuals personally received payment for the farmers’ rice.”
In the summer of 2014, K.B.X. paid Turner Grain more than $28 million with $5.95 million of that supposed to go to farmers, but which didn’t, the opinion said.
“What the ruling told us is something we really knew all along — that K.B.X. didn’t do anything wrong and did what they were supposed to do under the contracts that they had with Turner grain,” said attorney Scott Poynter of the Poynter Law Group of Little Rock, one of the lawyers who represented K.B.X. defendants. “And to win an appeal, where seven justices on the Supreme Court unanimously decide that plaintiffs’ own proof showed that our client did right, that’s total vindication for our clients.”
In 2014, about 20 farmers sued Turner Grain, alleging they lost millions of dollars working with the grain broker, which closed in 2014 after questions surfaced about its handling of grain and its finances. It ended up in Chapter 7 bankruptcy liquidation. The farmers also named other defendants, including the K.B.X. defendants, alleging conversion, constructive fraud, theft by deception and civil conspiracy. K.B.X. buys and sells rice through brokers and other entities.
K.B.X. had contracts with Turner Grain, but it completed the contracts, Poynter said. “And then [K.B.X.] paid all the money due on those contracts,” he said. “So it did its job.”
The farmers argued in court filings that K.B.X. knew about Turner Grain’s poor financial condition as far back as early as 2013 but didn’t warn the farmers.
In February 2020, after more than three weeks of trial, the jury awarded the farmers about $5.9 million in compensatory damages and $6.2 million in punitive damages. Lonoke County Circuit Judge Sandy Huckabee also awarded $2 million in interest.
The jury found that Turner Grain and its former owner Jason Coleman, who died in 2019, were liable for more than 90% of the judgment. The jury found that K.B.X., Steven Keith Sr., Steven Michael Keith Jr. and Sebree were liable for a total of 8% of the compensatory judgment and interest. For the punitive damages, only Steven Keith Sr., Coleman’s estate and Turner Grain were liable.
But Huckabee ruled that Steven Keith Sr. was jointly and severally liable for the damages, meaning the farmers could collect the full $14.1 million judgment from him even though the jury assigned most of the blame to Coleman’s estate and Turner Grain.
The K.B.X. defendants appealed the ruling. In the meantime, K.B.X. has been doing well, Poynter said. “I think that’s why they got sued, because they were the [deep] pockets in the case,” he said.
The state Supreme Court also ruled that Huckabee will have to recalculate $526,819 awarded as attorneys’ fees to the farmers’ lawyers. The award should have been for fees and costs related to an order tied to the deletion of nearly 46,000 text messages between Turner Grain and K.B.X. But the fees weren’t. The state Supreme Court said that Huckabee must award fees actually related to the deleted text issue.
The farmers were represented by Kendel Grooms and Don Campbell of Campbell & Grooms of Little Rock. Jerry Kelly of the Kelly Law Firm in Lonoke also was an attorney for the plaintiffs.