Suit Claims J.B. Hunt, Others Tried To Steal Agracat From Owners
Hunt, Downing, Goforth, Others Deny Claims And Want Suit Dismissed
Last updated Saturday, April 22, 2006 10:45 PM CDT in Business
By Lana F. Flowers
The Morning News
A lawsuit claims that J.B. Hunt, who founded the Lowell trucking company that still bears his name, and others conspired to steal tractor and ATV distributor Agracat from its founders.
Fayetteville attorney David Nixon filed a lawsuit on behalf of Agracat Inc. and Agracat Incorporated in March in Washington County Circuit Court. The suit named as defendants AFS-NWA LLC, Hunt, Charles Goforth, Downing and Associates Inc., Dan Downing, Outsource Investments LLC, J.B. Hunt LLC and 10 John Does.
The suit stated that Agracat formed in July 2000 and designed small and mid-sized tractor, farm implements, all terrain vehicles and related equipment.
Downing formed Outsource Investments in September 2002. Outsource also was owned by Hunt and Goforth. Outsource loaned money to Agracat to buy inventory, with the first inventory purchased in April 2003, according to the suit.
AFS-NWA and Downing then started a series of dealer and import transactions and payments to Agracat employees that misappropriated Agracat's contracts with equipment importers, employees and dealers, according to the suit.
Nixon said in a prepared statement that those contractual relations now are being used by Montana Tractor, a company Hunt started in Springdale.
Mel Robinson of Springdale, an Agracat founder and former officer, said Agracat approached Hunt and others to serve as business partners and financial backers of Agracat.
Robinson said Agracat officers earned approximately $104,000 per year before AFS-NWA on Jan. 23, 2004 reduced the officers' salaries to $500 per month.
Robinson said he thought that salary reduction was an attempt to make the Agracat officers financially unable to fight what Robinson alleged was "a hostile, illegal takeover" of Agracat by Hunt, Goforth, Downing and the other named defendants.
The lawsuit does not specify damages. However, Robinson estimated the three former Agracat officers, who owned a majority of the stock, suffered losses in the millions. There also were 17 other shareholders, Robinson said.
"This literally crushed 20 people, not to count the small businesses that supplied us that literally could not take the hit," Robinson said.
The suit alleges Hunt, Goforth, Downing, Outsource and other defendants breached their fiduciary duty to Agracat; failed to recognize a joint venture with Agracat as an attempt to defraud Agracat; committed theft; interfered with trade opportunities; and engaged in deceptive trade practices.
Agracat asked the court for a jury trial and to award unspecified damages, including punitive damages to punish the defendants for their alleged actions.
Fayetteville attorney Ken Shemin on Monday filed a response on behalf of Hunt, Goforth, Downing, AFS-NWA and the other defendants. Shemin asked the court to dismiss Agracat's lawsuit and order Agracat to pay court costs and attorney's fees.
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