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Business Observer Friday, May 7, 2004 18 years ago

Feuding Falkners

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They're still at it. The Michigan transplants make millions growing cucumbers, peppers and tomatoes in Manatee and Hillsborough counties. After a year in court, their internecine squabble is far from patched up.

Feuding Falkners

They're still at it. The Michigan transplants make millions growing cucumbers, peppers and tomatoes in Manatee and Hillsborough counties. After a year in court, their internecine squabble is far from patched up.

By Francis X. Gilpin

Associate Editor

At the ripe old age of 75 last year, August John Falkner Jr. committed to paper his painful experience going into business with family.

For 20 years after World War II, Falkner tilled Michigan soil with his father and brother. The land and farming equipment were in his father's name. When the old man handed over everything to his brother, the jilted Falkner sued. Sorry, a court ruled in 1967: No partnership contract, no agricultural inheritance.

"From that point on, I repeatedly told all of my children to avoid family partnerships and if they did [go into business with each other], the agreement had to be in writing," John Falkner Jr. stated in a 2003 affidavit.

Do kids ever listen?

These days, most of John Falkner Jr.'s offspring spend almost as much time with accountants, court officials and lawyers as they do in the fields and packinghouses around Myakka City. That's because they didn't put it writing.

This third generation of Falkner farmers came south in 1985 to grow cumbers for pickling. They started on a large tract in south Hillsborough County that August John Falkner III chipped in $4.5 million to acquire with local luminaries such as former Beneficial Corp. Chairman Finn M.W. Caspersen and the late Tampa land appraiser C.L. Knight.

The Falkners later moved across the county line to Myakka City and built an industrial farming operation on 23,000 acres that made them the largest landowners in Manatee County. But John III, like his uncle before him, is staking a claim to the business that other family members say isn't solely his to claim.

When last we looked in on this dysfunctional clan ("Caught in a Pickle," GCBR, June 6-12, 2003), three Falkner siblings and a brother-in-law had taken John III to Hillsborough County circuit court. They accused John III of breaching an oral contract and misappropriating the profits of a partnership that he believes is a figment of their imagination.

"John Falkner places great emphasis upon the fact that there is not a written partnership agreement," the siblings' Tampa attorney, David A. Maney of Maney, Damsker, Jones, Kiely & Kuhlman PA, wrote of the defendant's stance. But Maney pointed out that the state Uniform Partnership Act recognizes agreements can be "written, oral or implied."

Circuit Judge Gregory P. Holder issued a May 2003 injunction that may have saved that year's spring harvest. Since then, the legal wrangling has shifted to federal court and the stakes have shot up.

With tens of thousands of acres and millions of dollars in profits hanging in the balance, a federal judge, a special master and a mediator are trying to arrange a permanent truce among these relatives who are fighting - literally, at times - over a family fortune.

"We always trusted our brother, John III, and I can't believe that he has betrayed us this way," Christopher Falkner stated in an affidavit.

It's true. Their mutual trust used to be so strong that the siblings employed a rather informal accounting system. It was extraordinary for a business that routinely makes cash transfers like a $5 million one from Florida to Michigan in 2002.

Since at least 1976, the Falkners practiced their own brand of familial socialism. They pooled business funds and, in Michigan, stashed a supply of ready cash in a filing cabinet. Family members dipped into the filing cabinet to pay living expenses on an honor system. Withdrawals were recorded by family members who wrote down their name and the amount removed on a "chit" left in the filing cabinet.

The undocumented partnership expanded and flourished in Florida. According to a court brief filed by the siblings suing John Falkner III, he told Chris in 1987: "You know, we have all made millions. You can file separately or you can roll it together and keep it in the family business."

Chris Falkner opted for the latter and was put in charge of the south Hillsborough farm in Sun City.

Another brother, Thomas Falkner, took up residence in a doublewide trailer on the farm in 1986, with the intention of building and moving into his own house in a year or two. Six years later, Tom still didn't have a house. John III had persuaded him to leave his share of each year's profits in the business to finance expansion. That way, John promised, Tom would end up with enough money to construct a palace for himself.

"He finally lost patience and took sufficient draws to build his home," according to the court brief filed by Maney.

In a sworn statement last August, Tom Falkner says he had to show John III how to adapt to their Michigan cucumber-growing technique to the Florida climate in the summer of 1986. "This was most definitely the real beginning of our success in the farming industry in Florida," Tom stated.

If anybody owns the Florida end of the Falkner farming empire, it might be Tom. He filed state intangible tax returns and county personal property tax returns for the business. The migrant farm worker camp registrations and water permits were in his name.

"I do not work for John Falkner III. I am his partner and his equal," Tom stated in the affidavit. "I have not worked for the last 27 years, day and night, to make my brother, John III, a wealthy land baron."

Brothers Tom and Chris have been brutally meticulous in spelling out the alleged shortcomings of John III as a businessman.

Recalling John III's frequent warning to his siblings that "we either all sink or swim together," Chris wryly noted in an affidavit: "John III almost 'sunk' the family because of one of his business decisions." Chris says the family lost $12 million when John III invested in Vlasic Foods International Inc. with hopes of winning a seat on the pickle maker's board of directors. Vlasic Foods, which the Falkners supplied with cucumbers for pickling, went belly up in 2001 and was bought out of bankruptcy court by an investment firm.

Chris says the Falkner business survived that and other crises, including an arson fire at an office and packinghouse, because the family stuck together.

Like many Florida farmers, the Falkners discovered their crops to have been contaminated by a fungicide called Benlate and won a $2.85 million settlement from the chemical's manufacturer, E. I. du Pont de Nemores & Co. The Falkners used $2.3 million of the settlement to buy more land.

But John III's belligerence since the beginning of the spring 2003 harvest has posed the biggest challenge to the future of Falkner farming, according to Chris.

On March 25, 2003, Chris says John III threw down some paperwork and stomped from the business office. "I'm out of here," he quoted John III. "It's all yours. I'm not distributing any more money here. You're all on your own."

Their sister, Linda Falkner Wright, took over John III's role as grader, seller and shipper of the produce, according to Chris.

"Perhaps in its more complicated form, it's a divorce case," Judge Holder remarked of the controversy at a subsequent court hearing.

There was much to battle over. After Holder issued his injunction, Linda reported net income of $6.3 million on sales of $15.4 million from the spring 2003 crop.

Linda's profit figure was overstated by $2.5 million, says John Falkner III, who is represented by Tampa lawyers David T. Knight and Timothy C. Ford of Hill, Ward & Henderson PA and Roy W. Cohn of Gibbons, Cohn, Neuman, Bello, Segall & Allen PA.

While disputing his sister's bookkeeping, John III repeatedly threatened the siblings after that harvest, according to Chris Falkner.

"Only the family knows the truth, no one else. I will convince the judge to see things my way," Chris says John III told him in June of last year. "My stories, I can make them believable, because the best way to tell a lie is to have a shred of truth in it."

Yet, doing an end run around all the lawyers, John III and his siblings briefly came together last summer to draft a tentative agreement to split up the bulging bank accounts and farming assets. But that deal fell apart amid new bickering.

Last August, John Falkner III took it upon himself to fire Chris, Tom, Linda and her husband, Leland Wright, a retired state police detective from Michigan. "It is obvious that we can no longer work together," John III wrote to his estranged relatives. "For that reason I have no choice but to terminate your continued employment and affiliation with my business."

That testy correspondence set the stage for a violent confrontation that erupted Sept. 19 at one of the Manatee farms.

John Falkner III hired Tampa private detective Rodney D. Erdman to shadow him that day with a video camera as he visited one of the family's farms on State Road 64. Within minutes of driving onto the property, according to Erdman's account, Tom Falkner drove up alongside their pickup truck in one of his own and, "in a complete rage," yelled "get the [expletive] out of here."

While Tom's truck blocked John III's truck, Chris Falkner came up from behind and positioned his truck so there was no escape the other way, according to Erdman.

When John tried to leave, Erdman says Tom stepped in front of John's truck and screamed: "You're not leaving, you b------."

Out of the truck with his camera rolling, Erdman says Chris backed him up against the vehicle and yelled: "Who the [expletive] are you?" Erdman says he told Chris that he was just there to shoot video. "I want that [expletive] camera now," Erdman says Chris ordered him.

Erdman used his cellular telephone to summon Manatee sheriff's deputies. He refused to hand over the camera. That's when Erdman says Tom came up from behind him and placed the private detective in a chokehold. Erdman says Chris belted him on the side of the face multiple times and grabbed his camera. Tom and a Falkner employee named Flaaco, who had also arrived on the scene in a truck, joined in with more punches, Erdman says.

John III asked for the camera back. Instead, Erdman says Chris placed the camera in front of Flaaco's truck and called out: "Run the son of a b---- [the camera] over."

As Flaaco drove away with the flattened camera, Erdman says he turned to see Tom swinging a shovel at his head. Erdman says he ducked and succeeded in disarming Tom.

John Falkner III and Rod Erdman finally left the farm under their own power. The private eye had gotten the worst of it. Erdman says he suffered a broken nose, chipped tooth and a black eye.

Tom's version of the events of Sept. 19 differs considerably from Erdman's. Tom says John "ran over me with his pickup truck" and Chris was just trying to protect him.

"Tom's declaration is false and a complete fabrication," says Erdman. "Tom, Chris and Flaaco attacked me, without provocation."

Lawyer David Maney, representing John III's siblings, questioned in a court filing last month how Erdman's injuries could have been inflicted by Chris Falkner. In 1996, Chris underwent a kidney transplant, with an organ donated by another sister, Felecia Falkner Akerley. He had a heart attack in 2001.

John III clearly intended to provoke a reaction from his siblings that Erdman could videotape, says Maney.

The unenviable task of sorting out the charges and countercharges has fallen to U.S. District Court Judge Elizabeth A. Kovachevich. She appointed retired judge Herbert Stettin as a mediator to try first.

Stettin held two mediation sessions with the Falkners and their attorneys last month in Tampa. Not surprisingly, Stettin reported the two sides have reached an impasse.

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