Kimmel v. Elderton State Bank
| Decision Date | 09 February 2021 |
| Docket Number | Civil Action No. 2:20-cv-954 |
| Parties | DAVID E. KIMMEL, et al, Plaintiffs, v. ELDERTON STATE BANK, et al, Defendants. |
| Court | U.S. District Court — Western District of Pennsylvania |
Hon. William S. Stickman IV
The United States of America ("United States") filed a Motion for Substitution of Party (ECF No. 18), together with an accompanying Brief in Support requesting that the Court substitute it in place of Defendant, Charles Glasser ("Glasser"), with regard to Count IV of the Amended Complaint, (ECF No. 13). The United States also filed a Motion to Dismiss the Amended Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 20). Defendant, Elderton State Bank ("the Bank"), filed a Motion to Dismiss (ECF No. 15) the Amended Complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 15).
For the reasons that follow, the Court grants the United States' Motion for Substitution of Party (ECF No. 18) and grants the United States' Motion to Dismiss (ECF No. 20) Counts III and IV of the Amended Complaint against Defendants Farm Service Agency ("the Agency"), David Poorbaugh ("Poorbaugh"), and Glasser. The Court denies the Bank's Motion to Dismiss (ECF No. 15) as moot and remands this case to the Court of Common Pleas of Indiana County, Pennsylvania, because it lacks subject matter jurisdiction to adjudicate the remaining claims premised on Pennsylvania state law.
Plaintiffs David Kimmel, Michael Kimmel, and Kimmel Brothers Farms, LLC ("the Farm"), brought suit against the Bank, the Agency, Poorbaugh, and Glasser, alleging various violations of state and federal law. Plaintiffs allege that the Bank violated Pennsylvania state law by asserting a breach of contract, breach of the duty of good faith and fair dealing, and promissory estoppel. (ECF No. 13, ¶¶ 77-90). Plaintiffs allege that the Agency and Poorbaugh violated the Credit Repair Organizations Act, and that Glasser intentionally interfered with a contractual relationship. (ECF No. 13, ¶¶ 91-104).
David and Michael Kimmel are Pennsylvania residents, and each has a one-half ownership interest in the Farm. (ECF No. 13, ¶¶ 1-3). The Farm originally operated as a dairy farm, with approximately 100 cows and cash grain farming spanning approximately 1200 acres. (ECF No. 13, ¶¶ 10-12). Because the Farm lacked an adequate drying system and grain storage, and because the Farm's bulk tank and milking equipment needed an upgrade, the Farm planned to expand its operation. (ECF No. 13, ¶¶ 12-13). The planned expansion was to include a new barn, water beds, fans, ventilation, and a bulk milk tank. (ECF No. 13, ¶ 14). The Farm also purchased an additional 100 heads of dairy cattle. (ECF No. 13, ¶ 15).
To finance the expansion, the Kimmel Brothers obtained a loan from the Bank that was guaranteed by the Agency. (ECF No. 13, ¶ 16). Plaintiffs allege that the Bank has substantial experience with farm loans, particularly with dairy farm loans. (ECF No. 13, ¶ 17). Plaintiffs allege that part of that experience includes knowledge of several conditions commonly affectingdairy farms, including weather conditions and fluctuations in milk pricing. (ECF No. 13, ¶ 18). On April 28, 2015, the Kimmel Brothers received a loan guaranteed by the Agency of $330,000 from the Bank for the expansion of the Farm. (ECF No. 13, ¶ 20). The loan was approved by Ray Sleppy, and to an unknown extent, Poorbaugh, with 90% of the loan being guaranteed by the Agency. (ECF No. 13, ¶¶ 21-23). On May 15, 2015, the second phase of the loan was distributed in the amount of $251,500. (ECF No. 13, ¶ 24).
In 2015, milk prices dropped nationwide resulting in reduced income from the Farm. (ECF No. 13, ¶ 25). Poor weather conditions also resulted in untillable soil, limiting Plaintiffs' ability to plant crops. (ECF No. 13, ¶¶ 26-27). As a result of these external factors, the Kimmel Brothers contacted the Bank to discuss restructuring their loan. (ECF No. 13, ¶ 30). Ray Sleppy informed them that the Agency had troubles guaranteeing "old loans," and that the Agency had an issue regarding collateral adjustment between it and the Bank. (ECF No. 13, ¶ 31). Restructuring discussions were delayed and Plaintiffs struggled to obtain enough money to plant their crops in the spring of 2016. (ECF No. 13, ¶¶ 33-35). The Bank subsequently put the Kimmel Brothers on an interest-only repayment plan and, even so, the loan became delinquent with the Agency in April of 2017. (ECF No. 13, ¶¶ 36-37).
In the spring of 2017, Glasser, Chief Executive Director of the Agency in Indiana County, allegedly made it difficult for Plaintiffs to pursue a crop insurance claim. (ECF No. 13, ¶¶ 8, 38). Shortly after, David Kimmel was run over and trampled by a bull, which resulted in a broken neck and his inability to continue working on the farm. (ECF No. 13, ¶ 39). Because David Kimmel could no longer help on the Farm, Plaintiffs submitted a renewed restructuring plan. (ECF No. 13, ¶ 40). Poorbaugh, however, informed Plaintiffs that their plan was "non-cash flowable" and that they should proceed to file for bankruptcy. (ECF No. 13, ¶ 41). Plaintiffs thereafter sought toobtain a mediation between the Agency and the Bank to discuss possible restructuring avenues. (ECF No. 13, ¶ 42). In 2018, Plaintiffs' loan with the Bank became delinquent.
In October of 2018, Plaintiffs brought their plans to Krystal Pizarchik ("Pizarchik"), an Agency loan officer, for her to "load into [the system]." (ECF No. 13, ¶ 44). She allegedly informed Plaintiff that Poorbaugh "had put the purchase plan under water in excess of $300,000." (ECF No. 13, ¶ 45). Thereafter, David Kimmel and Pizarchik found "numerous typographical errors, mistakes[,] and fraudulent numbers [that made the plan] not cash flow." (ECF No. 13, ¶ 46). After fixing the errors, the plan "did cash flow[]" (ECF No. 13, ¶ 47), and after making Poorbaugh aware of the fixes, Poorbaugh expressed his unhappiness with Plaintiffs. (ECF No. 13, ¶ 48). The requested mediation between the parties did not occur and the plan, which included the Bank restructuring the debt with the Agency's guarantors, was eventually denied. (ECF No. 13, ¶¶ 49-50). One year later, however, Plaintiffs obtained a mediation with Poorbaugh to create a new restructuring plan, but that plan put them "in excess of $600,000 'underwater.'" (ECF No. 13, ¶ 52). Poorbaugh's plan allegedly "fail[ed] to 'cash flow[]' [because it] took income off grains, did not change expenses[,] and used the Kimmel Brothers['] average number which was inaccurately put in a negative light." (ECF No. 13, ¶¶ 52-53).
In March of 2019, the Bank levied on the milk checks of Plaintiffs. (ECF No. 13, ¶ 54). The next month, the Indiana County Sheriff's Department levied on the Farm's cattle and equipment. (ECF No. 13, ¶ 55). The Kimmel Brothers had a meeting with Gary Groves, State Executive Director of the Agency, in which they requested a meeting between the Agency and the Bank to discuss their current situation. (ECF No. 13, ¶ 56). Around the same time, Glasser began contacting the Sheriff's Department in an effort to have the Farm levied. (ECF No. 13, ¶ 57). Plaintiff again called Ray Sleppy to set up a meeting between themselves and the Bank to discussthe current situation. (ECF No. 13, ¶ 58). Ray Sleppy "seemed to be very open to [that] in order to remedy Plaintiffs' financial situation." (ECF No. 13, ¶ 59). David Kimmel contacted Gary Groves to advise him of an upcoming meeting with Ray Sleppy. (ECF No. 13, ¶ 60). Glasser visited the Farm and complained to Plaintiffs that "he had been 'thrown under the bus' after comments were made about his rushing the Sheriff to levy . . . Plaintiffs['] cattle, equipment[,] and farm." (ECF No. 13, ¶ 61). David Kimmel informed Glasser that, later the same morning, a meeting had been arranged with the Bank. Shortly after departing the Farm, David Kimmel received a text message from Ray Sleppy cancelling the meeting and any future communication. (ECF No. 13, ¶ 65). Plaintiffs then called Gary Groves to inform him that the meeting with the Bank had been cancelled, and Gary Groves was surprised because he allegedly had not spoken with Glasser or the Bank. (ECF No. 13, ¶¶ 68-69).
In June of 2019, the Farm's cattle and equipment were sold at a sheriff's sale. (ECF No. 13, ¶ 70). Although, in Plaintiffs' experience, the highest price for cattle was usually received when the cattle are sold individually or in small lots, the Bank "credit bid the cattle at $165,000 for the entire lot of cattle . . . ." (ECF No. 13, ¶ 73). The Bank allegedly entered into a prearranged agreement for Jake Dressler to purchase the cattle in their entirety, and Jake Dressler subsequently did so. (ECF No. 13, ¶¶ 75-76).
A motion to dismiss filed pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A plaintiff must allege sufficient facts that, if accepted as true, state a claim for relief that is plausible on its face. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court mustaccept all well-pleaded factual allegations as true and view them in the light most favorable to a plaintiff. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Although this Court must accept the allegations in the Complaint as true, it is "not compelled to accept unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation." Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citations omitted).
The "plausibility"...
To continue reading
Request your trial