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Dr. Michael Coleman denies he owes what UMB Bank claims in Express Grain collapse

Friday, December 16, 2022, 6:43 pm News Flash Archive

This afternoon, Greenwood ophthalmologist Dr. Michael Coleman finally filed his answer to UMB Bank's $38 million lawsuit against him in the Express Grain bankruptcy and collapse.

But Coleman denies that he owes what UMB Bank claims, and raises some interesting defenses along the way. He claims that he didn't sign the most recent Guaranty Agreement in 2018, which would have obligated him to repay the bank for the remaining loan amounts. See Dr. Coleman's Answer to the complaint here: Dr. Coleman's Answer to UMB Bank's Complaint

UMB Bank had loaned Express Grain $71 million, and called its loans when it discovered that EG had deceived the bank about its inventory.

On December 6, John Coleman, who is Dr. Coleman's son and the president of EG, was arrested on state and federal charges of defrauding the farmers, UMB Bank, and two state agencies by providing them forged audit reports and false information regarding the company's grain inventory.

No allegations of misconduct have been levied against Dr. Michael Coleman, who owned 99% of the company.

Dr. Coleman's answer denies almost every single claim made by UMB Bank in its complaint against him. UMB Bank claims that Dr. Coleman signed a personal guaranty for the $71 million in bank loans to EG, and that Coleman has violated his contract with UMB Bank by not paying the $38 million the bank says it has not recovered from the EG bankruptcy proceedings. See our previous reporting on UMB Bank's lawsuit here: UMB Bank sues Dr. Michael Coleman for $38+ million in Express Grain collapse

In fact, of the 76 numbered paragraphs in UMB Bank's lawsuit, Dr. Coleman denies all but four of them: he admits that UMB Bank sued him alone, he admits his present address, he admits he's a citizen of Mississippi, and he admits that UMB Bank and he are domiciled in different states. Everything else he denies.

Most of the claims made by UMB Bank are denied by Dr. Coleman with this standard, boilerplate language:

Coleman is without sufficient knowledge and information to determine the truth or falsity of the allegations in paragraph [x] of the Complaint, and, as a result, denies each and every allegation therein contained.

Thus, Dr. Coleman denies the recitation of how much money UMB Bank agreed to loan to EG, denies that at least some of the Loan Agreements were executed, or that they were modified numerous times. He also denies the various security interests and collateral that UMB Bank was granted by the loan agreements that he signed. He denies that there was a guaranty agreement by him promising to pay UMB Bank the money that was owed. Coleman denies UMB Bank's claims of how EG defaulted on its loans. He denies the method of calculating how much EG could borrow from UMB Bank based upon EG's inventory. He denies that EG provided false inventory ownership figures to UMB Bank.

Dr. Coleman denies that UMB Bank notified the guarantors, including himself, that the notes were called on September 24, 2021. UMB Bank has produced a copy of the Notice of Default.

Dr. Coleman denies knowledge about how the bankruptcy court liquidated the assets of EG and sold the physical assets to Delta Grain and others.

Dr. Coleman denies UMB Bank's claim regarding the amounts presently due on the bank loans, and owed by him as a guarantor.

Dr. Coleman denies this claim against him by UMB Bank, that:

Defendant [Dr. Coleman] executed the Guaranty in exchange for the extension of credit to Borrowers, including the Loans.

Finally, Dr. Coleman denies that he is in default of the guaranty, or that he owes the money claimed by UMB Bank.

Dr. Coleman then raises a number of affirmative defenses, including:

Coleman demands proof that the Plaintiff possesses the original blue-ink loan documents. The Plaintiff has provided copies of the loan documents, including, the "Guaranty" with the Complaint. If the Plaintiff cannot prove actual possession of the original Loan Documents, the Plaintiff cannot enforce the instruments and Coleman demands strict proof thereof in the form of presentment of the original Notes and loan documents for inspection by Coleman.

Plaintiff did not present Coleman with any loan documents directly to execute after the spring of 2018. Plaintiff failed to notify Coleman of the incurrence of increasing and additional guaranteed debt after the spring of 2018. The failure to notify Coleman of the incurrence of increasing debt by the Borrowers through numerous modifications and amendments releases Coleman from any alleged obligations to Plaintiff.

Coleman denies execution of the Third Amended and Restated Guaranty Agreement (Exhibit H to the Complaint) as the signatures contained on the document are not like his other signatures.

Coleman's obligation to Plaintiff under any loan documents was revoked by Coleman in the spring of 2018 through direct communications with Plaintiffs representatives, and all debt incurred after the revocation is not covered by any guaranty. Coleman intends to further base this affirmative defense on facts that he anticipates will come to light through the course of discovery.

Plaintiff [UMB Bank] has failed to mitigate its damages. Plaintiff failed to exercise reasonable diligence to mitigate damages as it continued to recklessly provide Borrower with access to funds as the Borrowers spiraled towards bankruptcy. The extent of the damages, allegedly over $38.5 million and growing after liquidation of most of its collateral, was caused by Plaintiffs own failure to monitor the business of the Borrowers as admitted by Plaintiff in paragraphs 33 through 59 of the Complaint. Coleman intends to further base this affirmative defense on facts that he anticipates will come to light through the course of discovery.

Plaintiff has not provided sufficient evidence of default, acceleration and amounts owed. Coleman disputes amounts Plaintiff alleges is owed.

The lawsuit was filed in Missouri, where UMB Bank is headquartered. Dr. Coleman is represented by his lead attorney Robert D. Maher of McDOWELL. RICE, SMITH & BUCHANAN, of Kansas City, Missouri.

In John Coleman's personal bankruptcy case, the judge has approved the immediate payment of around $120,000 in fees and costs to Albert Altro, the court appointed Examiner, and to the law firm of Phelps Dunbar. Their requests for payment resulted from the court-mandated investigation into John Coleman's personal finances. See our previous reporting here: Court appointed Examiner and Lawyers run up a $120,000 bill in John Coleman's personal bankruptcy case

Finally, John Coleman's criminal defense attorney John Colette has asked for a continuance of his trial, which was initially set for January 30, 2023. The court has not yet acted on that request, but it is very common for initial trial dates to be continued. Colette states that the prosecution has no objection, and that there is voluminous discovery that he has not yet received from the government.


To read all our coverage of the Express Grain bankruptcy case, see here: Index of Express Grain articles

John Pittman Hey
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