The state Supreme Court intervened in a controversial lawsuit in Winnsboro against area banks last week and removed the case from the reach of Fifth Judicial District Court judges who refused to recuse from it.
The Supreme Court appointed an ad hoc, or special, judge to preside over the case from this point forward.
Retired Judge Anne Lennan Simon, of New Iberia, was appointed by the court as an ad hoc judge to preside over KT Farms and others v. Citizens Progressive Bank and others. Supreme Court Justice Marcus Clark, of West Monroe, signed the court order appointing Simon.
“Considering the unique facts presented in this case, we find the interests of justice warrant the appointment of a judge ad hoc,” stated the Supreme Court’s per curiam, or unanimous, order, issued Nov. 13.
In the KT Farms lawsuit, a group of farmers sued local banks for some $5 million, claiming the banks breached a credit agreement with the plaintiffs. Since earlier this year, the lawsuit has detoured into a series of accusations between district court judges and the plaintiffs’ attorney, Sedric Banks, of Monroe.
Banks has levied numerous accusations against Fifth Judicial District Court judges Terry Doughty, James “Jimbo” Stephens and Steve Dean. Some of those accusations entailed concealing business and financial relationships with defendants, “carryover” bias by a judge from one lawsuit to another where Banks was involved, as well ex-parte conversations with defendants.
In response to Banks’ allegations, Doughty and Stephens accused Banks of manufacturing grounds to force them to recuse from the case, which they refused to do.
The two judges have filed complaints against Banks with the Office of Disciplinary Counsel, asking that Banks be suspended from practicing law.
The Supreme Court’s Nov. 13 order contained an aside which appeared aimed at both Banks and the judges, though it did not identify anyone specifically.
“In making this appointment, we emphasize that lawyers should not engage in conduct calculated to force the recusal of the assigned trial judge where no grounds for recusal would otherwise exist,” stated the Supreme Court order. “Such conduct may raise significant ethical concerns. Similarly, trial judges presented with such conduct should act with restraint and decorum in order to avoid creating an appearance of impropriety.”
On behalf of his clients, Banks submitted a Nov. 13 application to the Supreme Court, calling for “expedited consideration” in light of recent rulings by Dean and Doughty as well as the Second Circuit Court of Appeal’s decision on Nov. 2 to deny any writs concerning the two judges’ rulings.
“...a judge shall be recused when he is biased or prejudiced toward or against the parties or the parties’ attorneys or any witness to such an extent that he would be unable to conduct fair and impartial proceedings,” stated the Second Circuit’s Nov. 2 decision by judges Jeff Cox, Harmon Drew Jr. and Joe Bleich. “KT Farms provides no specific evidence that is sufficient to support this allegation of bias or prejudice.”
According to Banks, Dean and Doughty issued rulings denying an “oral motion to continue” the case and a motion to recuse Doughty without holding a hearing. The Second Circuit’s decision left those rulings in place.
Banks originally filed a request for an ad hoc judge with the Supreme Court in August.
“Due process will be denied as to pending application to appoint ad hoc judge (filed in August) since dispositive motions will be ruled on while recusal motions are pending,” Banks’ application stated. “The Second Circuit grossly departed from proper judicial proceedings, when it failed to address constitutional grounds for recusal properly pled, briefed and ripe for decision.”
Specifically, Banks argued the Second Circuit erred by concluding there was no evidence to support the allegations of the judges’ bias or prejudice. The Second Circuit could not reasonably reach such a conclusion because the KT Farms plaintiffs were not allowed an evidentiary hearing or any other opportunity to present evidence in open court, Banks contended.
Banks noted the Second Circuit did not “mention the fact that Judge Doughty summarily denied plaintiff-applicant’s second recusal motion, without a hearing.”
“Judge Doughty erred in summarily denying plaintiff-applicants’ Second Motion to Recuse Judge Doughty without referring the matter to another judge,” stated Banks’ Nov. 13 application. “Instead, the court issued ‘who’s on first’ rulings, where Judge Stephens referred the case to Judge Dean, who then returned the case back to Judge Doughty, all without allowing plaintiff-applicants an evidentiary hearing, let alone (an) opportunity to place new evidence of record showing Judge Doughty had testified falsely during the original recusal hearing, while failing to disclose his close social, political, and familial ties with the named defendant, Citizens Progressive Bank, its sister bank, Caldwell Bank & Trust, and/or the holding company which owns and operates defendant, Commercial Capital Bank.”
Doughty was scheduled to consider Banks’ motion to compel discovery as well as some defendants’ motions last week. In light of the Supreme Court’s action, the Nov. 14 hearing was canceled.
The lawsuit stemmed from a written credit agreement in 2013 between the KT Farms partnership and others with Citizens Progressive Bank, Commercial Capital Bank and Caldwell Bank & Trust, according to Banks’ Nov. 13 application.
“Faced with a carryover debt in 2012 due to wet harvest conditions, the parties agreed to refinance the 2012 carryover debt in annual payments and extend funds to make a 2013 crop,” stated Banks’ Nov. 13 application. “In late 2012, plaintiffs had planted approximately 7,000 acres of wheat for harvest in May/June of 2013. More particularly, plaintiffs agreed with defendants to pay $400,000 from the profits realized on their 2013 wheat crop toward 2012 carryover debt and refinance the remainder on annual payouts.
“Under the agreement, plaintiffs were entitled to the remainder of 2013 farm profits, over and above the $400,000 wheat proceeds, with which to make arrangements with outside creditors. Plaintiffs allege defendants (the banks) intentionally breached specific loan requirements and converted both plaintiffs’ farming operation and 2013 profits....During the course of depositions, it became apparent documents critical to plaintiffs’ case had been withheld, misidentified, and/or mislabeled.”
Banks noted the focus of the KT Farms lawsuit shifted once Doughty disclosed in February his relationship with Delhi tax preparer David Stephens and his wife, Michelle Ogden Stephens. Stephens works with Larry Pickett, a Delhi certified public accountant. Pickett also is the chairman of the board of directors at Commercial Capital Bank, which is a defendant in the KT Farms lawsuit.
“The takeaway for instant purposes of recusal is that Stephens’ testimony (i.e. testimony of Judge Doughty’s former partner) is required to show motive, opportunity and intent of defendants, Citizens Progressive Bank, Commercial Capital Bank, and Caldwell Bank & Trust, to intentionally breach loan requirements in written credit agreements in order to harm plaintiffs and wrongfully convert plaintiffs’ farming business for the mutual, collective and respective benefit of named defendants,” stated Banks’ Nov. 13 application.
Earlier this year, Doughty recused from a Richland Parish lawsuit which involved David Stephens as a defendant but did not recuse from the KT Farms lawsuit. Banks pointed out the Richland Parish lawsuit did not involve any banks as defendants.
In September 2016, the Second Circuit reversed part of Doughty’s ruling, specifically where Doughty ruled some of the plaintiffs had no valid basis for the lawsuit.