Garth Conlan, 52, still gets teary-eyed when he thinks about the gloomy day in September 1984 when his farm machinery went on the block. The burly farmer and his wife, lone, stood by helplessly as an auctioneer dispatched virtually every piece of the equipment they needed to make a living on their 1,500-acre spread near Castroville, Calif.; the farm had been owned by Conlan’s family since 1890.
It was a scene that’s become all too familiar in rural America, where farms are now failing at the rate of 2,100 a week. What made the Conlan sale particularly tragic was that it wasn’t caused by any of agriculture’s usual wild cards. Garth Conlan wasn’t done in by bad weather, falling prices or a shift in world agricultural markets. Conlan was done in by the same people who’d encouraged him to modernize and expand his truck farm in the first place. “Things were humming along very nicely until the bank just shut me down,” Conlan says. “They cut my throat.”
Five months before the auction, the Wells Fargo Bank had abruptly canceled Conlan’s credit and called his loans in default. Many of his crops were just a few weeks from market, but Conlan suddenly could not afford to harvest them and had to plow under $1 million worth of endive, parsley, broccoli, spinach, lettuce, snow peas and cabbage. It was heartbreaking. It was unfair. Could it possibly be within the law? “I don’t know much about the legal process,” says Conlan. “But I just thought that the bank didn’t stick to their end of the bargain, and that the way I was treated was not correct.”
In June a California jury agreed. They awarded Conlan $60 million in his lawsuit against the Wells Fargo Bank: $10 million to compensate him for the lost crops and equipment—out of which he must repay the bank $5.35 million—and a whopping $50 million to punish Wells Fargo for fraud, breach of contract and bad faith.
The latter amount was later reduced to $25 million by a superior court judge, and the bank plans to appeal. Nevertheless, the verdict “serves notice to bankers that they are going to have to clean up their act,” says Michael Barosso, president of the California chapter of the American Agriculture Movement. Garth Conlan is not the only farmer who’s been snookered by lenders concerned only about their own bottom lines. Also in June a jury levied $50 million against the Bank of America for improperly seizing the life savings of two octogenarian sisters, and Conlan’s own lawyers, Bill Lukens and Don Drummond, had already won a similar lawsuit. More suits may follow now that Conlan has exposed the finagling that almost cost him the farm.
Conlan had wanted to be a farmer ever since he was a boy and studied agriculture in college against the day when he would assume stewardship of the Castroville property. His dream was to see its dry pastureland abloom with berries and vegetables. When he took over the spread in the mid-’70s, he began laboriously laying some 14 miles of irrigation pipeline.
Then, in 1981 he ran into an old college friend, Roy Fellows, who had just been appointed head of the agricultural division of the Wells Fargo bank. At Fellows’ suggestion, a delegation of bankers visited the farm in February 1982, surveyed the new plantings and touted Wells Fargo as the type of financial institution that would stick by farmers in good times as well as bad. Within two days, the bank approved an $8 million loan to Conlan for crop production and high-tech equipment. Given solemn assurances that the bank would allow plenty of time for the fledgling business to show a profit, Conlan swallowed hard and signed over the 1,500 acres as collateral. The next year, Wells Fargo increased Conlan’s credit to $9.7 million and encouraged him to build a $400,000 vegetable-cooling facility.
Within a few months, though, the bank had decided those farm loans it hustled so hard to write were getting risky, and it began taking steps to get them off the books. Conlan’s start-up deficits were suddenly declared excessive. They cut off his credit but promised to restore it for four months, if Conlan would put up another 1,200-acre spread he owned in Marin County as collateral. Reluctantly, Conlan agreed. But as soon as he’d signed on the dotted line, Wells Fargo triggered a default by applying his payments to principal rather than interest. “Wells Fargo had no intention of giving him four months,” says attorney Lukens. “They just wanted to get him to sign the contract before they foreclosed.”
By May 1984 Conlan had declared bankruptcy. He’d destroyed the crops and laid off most of his 100 employees. But still he was not ready to see his dream die. He continued to get up at dawn each morning and, with the two ancient tractors left to him, prepared plots for leasing to tenant farmers. He also called in Lukens and Drummond after he’d heard about the case they’d won against the Bank of America.
“You look at what happened and it just makes you aghast,” says Lukens. At the 34-day trial this spring, Wells Fargo was accused of shredding a key file relating to Conlan’s loans after he filed suit, and of attempting to intimidate a witness by making a veiled threat to foreclose on the man’s mushroom farm. Drumming his fingers impatiently on the witness stand, Wells Fargo’s chairman of the board, Carl Reichardt, declared the case a waste of his time.
Little wonder that the jury sided with Conlan when it came to the complex financial calculations about how well the farm was doing. The bank said that it had just been trying to pull Conlan back from the brink of ruin. But “there were some jurors,” laments Wells Fargo attorney William Trautman, “who were going to side with the farmer, whoever he was and whatever his circumstances, instead of the bank.”
It may be years before Conlan sees any cash from Wells Fargo. But at least the foreclosure is on hold, the land is blooming under the hands of his 39 tenants—and Conlan has made his point. “They lied, and they can’t do that,” says Conlan firmly. “The players are going to have to change. They’re going to have to live with what they tell you.”
—Written by David Grogan, reported by Dianna Waggoner