Terminella Hearing Results in Fine, Denials of Motions

A rare occurrence, depending on perspective, happened Friday morning in Washington County Circuit Judge Kim Smith’s courtroom.

Smith granted a motion for Rule 11 sanctions to be imposed upon Robert Ginnaven, lead counsel in a rancorous lawsuit against Metropolitan National Bank of Little Rock.

Ginnaven is representing Northwest Arkansas developer Tom Terminella and Grand Valley Ridge LLC.

Judge Smith ordered a $5,000 fine for Ginnaven.

“This is an unfortunate day that should not have happened,” MNB attorney Phil Kaplan said. “It’s rare that (Rule 11 sanctions) happens. It almost never happens but it’s the second time it’s happened to (Ginnaven).”

In his argument Friday, Kaplan implored Judge Smith to “lower the boom” on Ginnaven, who has been dogged and relentless in keeping the case alive despite the Judge’s final order in February 2009 ruling in favor of MNB.

Terminella sued Metropolitan of Little Rock in Washington County in 2007, alleging breach of contract and bad faith by the bank. MNB alleged Terminella defaulted on the loan.

Terminella claimed MNB breached the loan contract first by refusing to continue to fund the interest carry payments out of the loan proceeds.

The developer sought $50 million in response to the bank’s foreclosure on two loans worth $14.4 million.

“I’ve never seen anything like it; he just refuses to let it die,” Kaplan told the court. “You’ve lost. Pack it up, go home and go live life again. Instead it’s been one vindictive event and one vindictive allegation after another.”

Following Judge Smith’s decision in February 2009, separate suits filed by plaintiffs in Benton and Pulaski counties were dismissed in February 2010. In Pulaski County, Circuit Judge Chris Piazza also imposed sanctions under Rule 11 in the amount of $5,000.

In May 2010, the Arkansas Supreme Court ordered a rebriefing of the suit, stating that the appellants omitted documentation and failed to meet requirements that would allow the court to move forward.

Judge Smith also denied Ginnaven’s motion Friday to set aside the previous judgment. Ginnaven alleged, among other things, that MNB engaged in reckless practices and that Kaplan misrepresented his client’s financial condition prior to the bench trial in October 2008, and that was the reason for the bank receiving the favorable ruling.

Judge Smith opined that the plaintiffs had not produced evidence in support of that allegation, and even so was irrelevant to the argument.

“I just don’t find that you all have proven that all that occurred,” he told Ginnaven. “That’s your burden. This matter to me lacks relevancy. Even assuming Mr. Kaplan was untrue, I don’t see how it would’ve effected this judgment one iota.”

Ginnaven acknowledged it was a rough day in court, but said he plans to file an appeal to return the case to the Arkansas Supreme Court.

“I’m disappointed,” he said. “The facts are there. I have produced unequivocal evidence of fraud to the court and it’s been ignored. And I’m the one being sanctioned.”

Kaplan said he anticipates the wrangling is not finished.

“Hopefully this puts an end to this tortured litigation,” he said. “But given history, I am confident they will appeal. The basis of the appeal is another matter.”