The opinion
Cite as 2019 Ark. App. 414
Digitally signed by Elizabeth
Perry
ARKANSAS COURT OF APPEALS
Date: 2022.07.26 10:35:17 -05'00' DIVISION II
Adobe Acrobat version: No. CV-18-158
2022.001.20169
AGRIFUND, LLC, AND HAMPTON
Opinion Delivered: September 25, 2019
PUGH COMPANY, LLC
APPELLANTS
APPEAL FROM THE DESHA
COUNTY CIRCUIT COURT
[NO. 21CV-15-125]
V.
HONORABLE ROBERT BYNUM
REGIONS BANK; HILL SEED & GIBSON, JR., JUDGE
ELEVATOR, INC.; OPTIMUM
AGRICULTURE, LLC; AND REMANDED TO SETTLE AND
HUBBARD BRAKE, LLC SUPPLEMENT THE RECORD AND
APPELLEES FOR REBRIEFING
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
1
Agrifund is the successor in interest to Ag Resource Management, LLC (ARM),
and was substituted in place of ARM. Consistent with the parties, we will refer to the main
appellant as ARM.
2
Although Pugh filed a separate brief, it adopted ARM’s abstract, addendum, and
argument.
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
2
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.
3
Hubbard Brake, LLC, and Optimum are landlords of farmland leased by the farming
operations of Day.
3
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 necessary and to file a supplemental
4
For example, we do not have answers to ARM’s complaint from any party. We also
do not have any counterclaims, cross-claims, and third-party complaints that were filed in
the case initiated by ARM. These should be included. The record before us contains ARM’s
answer to a counterclaim and third-party claim of Hill and Pugh. However, the
counterclaim and third-party claim are not in the record.
4
addendum. Regions and Optimum will then have fifteen days to revise their briefs if they
so choose.
Remanded to settle and supplement the record and for rebriefing.
ABRAMSON and GLADWIN, JJ., agree.
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.
5