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In re Bradford

United States District Court, D. Idaho

January 3, 2019

In re RYAN CLIFFORD BRADFORD and JUDY KAY BRADFORD, dba PITCHFORK CATTLE CO., Debtors.
v.
BANK OF EASTERN OREGON, a national banking association, Defendant. RYAN CLIFFORD BRADFORD and JUDY KAY BRADFORD, dba PITCHFORK CATTLE CO., Plaintiffs,

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill U.S. District Court Judge

         INTRODUCTION

         Before the Court is Plaintiff Ryan and Judy Bradford's Motion to Withdraw the Reference (Dkt. 1) and Motion to Transfer Venue (Dkt. 4). The Court will grant the motion to withdraw the reference to the extent plaintiffs ask the Court to withdraw the reference when the case is ready for trial but will deny the motion to the extent an immediate withdrawal is sought. The bankruptcy court will preside over all pretrial matters in the proceeding, including the pending motion to transfer venue.

         BACKGROUND

         A. Procedural Background

         In November 2017, Ryan and Judy Bradford filed a chapter 12 bankruptcy petition in this District. A plan of reorganization has not been confirmed, and the bankruptcy court has sua sponte scheduled a dismissal hearing for January 9 and 10, 2019. Several months before that hearing was scheduled, the Bradfords filed an adversary complaint against one of their creditors, the Bank of Eastern Oregon (“BEO” or “the bank”). The Bradfords now ask this Court to withdraw the reference and transfer the adversary proceeding to the District of Oregon.

         B. The Adversary Complaint

         In their adversary complaint, the Bradfords allege various state-law claims against BEO, including breach of contract, fraud, breach of fiduciary duty, negligence, unjust enrichment, intentional interference with economic relations, accounting, and defamation.[1] The claims are based on the following alleged facts:

         The Bradfords operate a cattle ranch in Malheur County, Oregon. For several years, they financed their operation with loans from BEO. Every year between June 2010 and March 2016, the bank approved a revolving line of credit. The Bradfords would use monies they received from cattle sales to pay down their loans. The Bradfords remained current on their loan obligations, and as of November 2015 the bank had been paid in full for all previous loans.

         In March 2016, BEO issued the seventh - and what turned out to be the final - operating loan for $788, 000. At that time, the Bradfords also needed another $240, 000 to repay a loan from the Producers Livestock Marketing Association (the “Producers”). The Bradfords had purchased cattle from the Producers on credit and the $240, 000 owed to Producers represented an operating loss. See Adversary Compl., Bankr. Dkt. 1, ¶ 36. The bank issued a $201, 000 loan to cover this loss, with instructions to the Bradfords to use their operating loan to make up the shortfall.

         Roughly six months later, in September 2016, the Bradfords needed another $220, 000 to purchase cattle feed. The bank agreed to lend this amount, but only if the Bradfords secured the loan with real estate. The Bradfords report that this was unusual, given that the bank had not previously secured its loans with real estate. Id. ¶ 42.

         The Bradfords agreed to execute a deed of trust for the $220, 000 loan, but when they showed up at the title company to sign the papers, they were surprised to discover that

BEO was attempting to obtain additional security not just for the $220, 000 loan, as BEO had represented to them. Instead, and contrary to BEO's representation, BEO prepared paperwork for additional security that was for all of the outstanding obligations by the Bradfords with BEO. BEO did not inform the Bradfords of this unexpected change. Furthermore, the additional security was not limited to their business related real estate, but included their personal residence. This was contrary to the express representations by BEO when the $220, 000 loan was discussed and verbally authorized.

Id. ¶ 43.

         The Bradfords initially refused to sign the deeds but said they eventually did so because of the imminent need to purchase feed and because they did not have sufficient time to explore other financing options. Id. ¶ 46. They also believed that because they had now signed over all their real estate to the bank, the bank would later renew the operating line of credit.

         The Bradfords thus obtained additional funds for cattle feed during the fall, but the winter of 2016-17 was extremely severe, which resulted in a need for substantially more feed than in a normal year. In February 2017, the Bradfords asked the bank for an additional loan to purchase more feed.

         The bank responded by asking Ryan Bradford to come meet with his loan officer to renew the line of credit. Mr. Bradford met with the BEO loan officer and other bank representatives on two occasions and both times, bank representatives assured him that BEO “was an agricultural bank and that they were in it for the long haul.” ¶ 58.

         In a third meeting, however, BEO loan officers told Mr. Bradford that the bank would not renew the operating line of credit unless Bradford put his cattle under contract. Id. ¶ 68. Mr. Bradford did as the bank requested, even though this was not his normal practice. In years past he had been able to get better prices by selling the cattle later. Regardless, he put cattle under contract because he needed to renew the line of credit.

         When Mr. Ryan had the contracts in hand, he reported back to the bank, fully expecting that the line of credit would be renewed. But plaintiffs report that the bank reneged on its promise to renew the line of credit and also told Mr. Ryan to “‘break all contracts and hedges' and ‘sell the cattle.'” Id. ΒΆ 77. Mr. Bradford refused to do so; he says if ...


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