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Arbitrator awards damages for faulty farm buildings

A Newton County farmer has been awarded more than $600,000 in damages through arbitration in a dispute over the construction of several houses for the raising of chickens.

“Almost from the start, he started experiencing problems not only with the equipment but with the buildings themselves,” said Russ Schenewerk of Schenewerk & Williams.

Due to a contract clause, arbitration was eventually ordered in the case filed by Brandon Keeling against Preferred Poultry Supply which built six semi-automated structures to house his birds under a contract worth more than $2 million.

But Keeling’s petition alleged a wide variety of difficulties with the finished product including incorrect exhaust fans and improperly installed wiring, pumps, doors and feeding equipment.

Schenewerk also said that the buildings were leaning and attempts by the company’s representatives failed to correct the ongoing issues.

He said the defense claimed that problems related to site preparation were the responsibility of the client and that the claimant’s use of the buildings constituted acceptance of the work.

“The trouble is that you can’t tell that the house is in a good working order until you have birds in there,” Schenewerk said. “The arbitrator, I think, understood that.”

Arbitrator James Lawson agreed with Preferred Poultry that site compaction and soil creep, two of the three factors making the buildings out of plumb were the claimant’s responsibility but that a third factor — improper post imbedding — fell under the respondent’s purview. He granted a third of the claimed damages on that point.

However, most of the total award came in regard to the electrical issues. Lawson rejected the respondent’s argument that any award would be speculative because it was only based on the potential for damages that might arise later.

“The evidence supports a finding that the six buildings constructed by Respondent are rife with electrical problems due to faulty workmanship and installation,” he wrote. “These instances of code violations and safety hazards should be corrected BEFORE a loss occurs, and the fact that damage to person, property or livestock may not have happened to this point does not excuse the failure of the Respondent to install the electrical system in the poultry houses in a safe and workmanlike manner.”

However, the arbitrator did reject Keeling’s attempt to recover on a series of invoices and repair orders which related to attempts to correct problems. He also turned away claims for negligence, negligent misrepresentation and breach of express warranty.

Schenewerk said that he is now engaged in post-judgment collection activity to enforce the award.

“When you are a farmer and you spend $2.1 million on buildings, you expect to get something in return,” he said.

In addition to the award, the arbitrator tacked on nearly $80,000 in attorneys’ fees and more than $26,000 in costs.

David Gershner of Davidson Law Firm was listed as representing the respondent. He did not return a request for comment.

The case initially was filed in Newton County Circuit Court, but the defendant filed a motion to compel arbitration, which the Southern District Court of Appeals ultimately affirmed. Arbitration was conducted in April in Bentonville, Arkansas.

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