When wrongly pushed against a wall, Craig Gordon is one tough hombre.
On Monday, October 5, a jury in San Bernardino County, California, awarded Defendant/Cross-Complainant Gordon Hay, Inc. judgment against Citizens Business Bank, including monetary damages of $1,264,158.05 for the Bank’s breach of contract and judgments of $178,134, $101,250, and $35,000 for the Bank’s conversion of three pieces of equipment belonging to Gordon Hay. The jury’s verdict came after a trial lasting five weeks.
At issue: in 2019, Citizens Business Bank terminated a line of credit and wanted the $7,000,000 line of credit to be repaid immediately. The Bank claimed its decision was based on financial considerations, while Gordon argued his dairy always timely made its payments and the real reason for the termination was Gordon’s role in legal actions taken by Stop QIP in 2019.
After Gordon sold more than 6,000 cows and heifers in 2021, the bank claimed Gordon Hay still owed a million dollars and started collection proceedings, including sweeping money from the dairy’s business account, in addition to sweeping $180,000 from Gordon’s wife’s inheritance account … despite Gordon Hay having more than $2M worth of dairy equipment and over $500,000 in dairy retains. The Bank next filed a lawsuit and went in ex parte to obtain a Writ of Possession, which it used to force the sale of more of Gordon’s dairy assets.
The jury came back with four general verdicts and seven special verdicts, including findings: (1) Gordon Hay, Inc. did not breach the contract with Citizens Business Bank; (2) Citizens Business Bank breached its loan agreement with Gordon Hay, Inc.; and (3) The Bank converted three pieces of GHI’s farm equipment. The jury awarded Gordon Hay damages totaling $1,502,292.05.
Why did Citizens Business Bank go after Gordon? The jury appears to have agreed with Craig’s argument that the Bank terminated his line of credit not because of concerns about the financial viability of the dairy but because his legal challenges to California’s Quota Implementation Program (QIP) threatened the financial foundations of some big, well-established dairy farms associated with Citizens Business Bank.
Craig: The highlighted section below rambles. That said, I will leave it to you and Pete to decide what goes in your collective article.
Starting in early 2019, Gordon has spearheaded a series of efforts challenging the legality of the QIP program. Simply stated: QIP is a program that rewards individuals and firms that hold so-called “milk quota.” Currently, QIP deducts 39¢ per hundredweight from all Grade A producers’ milk income each month. Quota holders are rewarded $1.40 to $1.70 per hundredweight, depending upon their location in the state. Since 2018, California has lost over 540 dairies, almost all of them are non-quota dairies.
QIP quota involves mega-bucks. At the start of Gordon’s challenging the system, QIP quota was worth about $1 billion. Quota may be bought and sold. Quota may be used as collateral for loans. But it is the Quota payment the quota holders get every month that is the sticking point. Some dairymen get over $220,000 a month on their certificates of quota.
QIP was instituted by the California Department of Food and Agriculture (CDFA) on November 1, 2018. That’s when California became regulated by the federal milk order system. The end of California’s state milk regulation required a new mechanism for continuing the quota program. Gordon and others allege that CDFA legally botched the creation of QIP. (Gordon has on audiotape comments by a CDFA attorney admitting the program was not legally established.) You can listen to the comments on the StopQIP.com website. Under the state’s Administrative Procedures Act, QIP has no basis in California law. Thus, Gordon and his merry band charge, QIP deductions from Grade A milk producers are an illegal taking of assets, a transfer of wealth.
Stop QIP assaults – plural – continue against CDFA’s administration of QIP.
Citizens Business Bank put the financial hammer down on Craig Gordon’s dairy farm and hay businesses in 2019 – months after he spearheaded the initial challenge to QIP.
Craig Gordon challenged “the big boys” of California’s dairy and agricultural banking … and was put through the financial wringer for his efforts. But after a month-long trial, a thoughtful and reasoned jury issued a verdict which suggests the tide has turned.
Gordon was represented by Ferrari Law, P.C., based in Palm Springs, California.
More details next month!
