OneSouth Bank filed a breach of contract suit against Herman Curt Titshaw, a watermelon grower, for allegedly defaulting on a loan and selling bank-owned watermelons without authorization through the “buyer defendants,” Crisp Melons, Inc.; Summer Time Melons, LLC; Global Produce Sales, Inc.; Stephen Ross Nichols; Lee Allen Wroten, III; and Mark A. Elliott. Monday’s Middle District of Georgia filing by OneSouth seeks compensation for the breached contract, misappropriation of bank-owned property, and reimbursement of the plaintiff’s attorneys’ fees and costs.
According to the submission, OneSouth is a Georgia-chartered bank. Titshaw, the primary defendant, is “an agricultural producer specializing in watermelon production.” Titshaw allegedly entered into an agreement with OneSouth in November 2018 and executed two loan agreements, a security agreement, and a promissory note to obtain operating funds for his 2019 watermelon crop.
The security agreement granted OneSouth a security interest in, among other assets, “all crops and proceeds of crops owned by Titshaw.” According to OneSouth, in the event of Titshaw’s default, it would be and was entitled to “all rights and remedies in and against the property securing the obligations under the Security Agreement…”
In August 2019, Titshaw made two partial payments, but failed to pay the remaining balance and interest by its Nov. 29, 2019, due date. This June, OneSouth notified Titshaw of his default and asked for payment of $491,487.15 plus ongoing interest accruing at $85.91 per day.
The complaint alleged that prior to the partial payments, in June and July 2019, the buyer defendants, “as a selling agent, commission merchant, or otherwise, sold to third-party buyers the watermelons owned by Titshaw which were subject to the Bank’s security interest and received the proceeds from the sale of such watermelons.” The bank requested that the buyer defendants pay it Titshaw’s watermelon sale proceeds, but allegedly, they have not complied.
The complaint further contended that the “separate existence of each of the Buyer Defendants as distinct entities and individuals,” is a “fiction.” It explained that in reality, there is a “unity of interest and ownership between defendants Crisp, Summer Time, Global, Nichols, Wroten, and Elliot.” The three individuals reportedly own all equity in these entities and improperly moved assets freely between them for their own benefit.
Their use of the companies is improper because according to the complaint, the individuals who orchestrate the companies have “failed to follow corporate formalities,” and left the entities undercapitalized. The buyer defendants supposedly acted under the name Crisp, an entity “administratively dissolved by the Georgia Secretary of State for non-payment of annual registration fees,” instead of conducting business through legitimate companies.
The complaint’s first cause of action is for breach of contract against Titshaw, then conversion/misappropriation of collateral and proceeds against the buyer defendants. OneSouth also seeks recovery of its attorneys’ fees and costs, pursuant to state law providing for reimbursement of those expenses in instances coupled with bad faith. OneSouth alleges that the buyer defendants acted in bad faith prior to the filing of the complaint because they “ignored” OneSouth’s security interest in the watermelon crop and refused to pay its demands.
The plaintiff is represented by Conger and Smith, LLC and Bracker & Marcus, LLC.