A Carthage couple who won a $20 million verdict in a popcorn worker’s lawsuit eight years ago have filed for bankruptcy and are being forced to sell the home, to pay off creditors, they built for $3.9 million.
Eric and Cassandra Peoples filed for Chapter 7 bankruptcy Sept. 10 in U.S. District Court in Springfield.
Their petition, filed with the assistance of Carthage attorney Kevin Checkett, puts the current value of their residence and its 10.5 acres at $700,000. They also list personal property assets totaling $32,992.
The couple claim liabilities totaling $611,085, which includes a mortgage of $482,876 with U.S. Bank, secured claims totaling $7,031 on two all-terrain vehicles purchased through Neosho Power Sports, and unsecured claims of 11 creditors totaling $129,584.
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The couple did not return a call from the Globe.
The couple won a $20 million verdict in 2004 against International Flavors and Fragrances Inc. and Bush Boake Allen Inc., makers of a butter flavoring used at a popcorn plant in Jasper where Eric Peoples worked.
The lawsuit claimed that he developed bronchiolitis obliterans, an irreversible disease of the lungs, as a result of exposure to diacetyl, a chemical present in the butter flavoring. Doctors testified that he would eventually need a double-lung transplant.
A Jasper County jury awarded Eric Peoples $18 million and his wife $2 million. Their case was the first of many brought by workers at the plant and their spouses against three different makers of the butter flavoring.
Exactly how much of the verdict the couple received has never been made public. Eric Peoples said at the time that his attorney’s firm was to receive 35 percent of the award. The attorney, Ken McClain, indicated that a portion was to be spread among other workers involved in the lawsuits.
Among the unsecured claims Peoples and his wife list in their bankruptcy petition is a judgment granted Nov. 1, 2011, in Jasper County Circuit Court to Jeff Neely, the contractor who built their home. Neely sued them in August of last year, claiming they still owed him $107,147.
When the couple failed to respond to the lawsuit in a timely manner, Circuit Judge David Mouton granted Neely a default judgment at an annual interest rate of 9 percent. The Peoples’ bankruptcy petition lists the liability at $108,000.
The couple filed a motion in December of last year asking Mouton to set aside the default judgment in light of difficulties the couple were undergoing that fall with a downturn in Eric Peoples’ health and the strain on Cassandra Peoples of having to tend to the family’s affairs.
Joplin attorney Norman Rouse, who was appointed interim trustee to the bankruptcy proceedings, had the case in Jasper County Circuit Court removed to federal court Sept. 26. Rouse noted in his notice of removal that Mouton had yet to rule on the motion to set aside the judgment and that the couple’s argument may have legal merit.
The couple’s motion asserts a basis for a counterclaim against Neely. They said their house initially was estimated to cost $400,000, but project costs ballooned to more than $3.9 million.
Neither the motion to set aside the default judgment nor the bankruptcy petition explain the $3.2 million difference between what they say they paid to build the home and what they say the property’s current value is.
An attorney with McClain’s firm wrote in the motion filed last December: “Not only should the charges claimed as part of the default judgment be challenged, defendants should be given the opportunity to challenge the entire transaction and recoup some of the money paid to plaintiff as the general contractor of this project through assertion of appropriate counterclaims.”
Neely told the Globe a year ago that he built the house for the couple over a five-year period but stopped work early last year when the unpaid bill came to a head.
“I was never told to quit (work on the house),” he said. “I just got a bad check.”
Neely said he took the matter to the Jasper County prosecutor’s office when a check Cassandra Peoples wrote him bounced twice. She was charged with a felony count of passing a bad check. The charge was resolved Sept. 24 when she pleaded guilty and received a suspended imposition of sentence.
She still faces a forgery charge for having allegedly cashed checks totaling $1,800 at Hometown Bank in Carthage, making them payable to her employer, Smith Midwest Realty, by using the employer’s stamps on the back of the checks. The checks were written on her account at U.S. Bank, which did not have sufficient funds to cover them, according to a probable-cause affidavit.
Bankruptcy court records indicate that the creditors of Eric and Cassandra Peoples met Thursday at Carthage Memorial Hall and will be meeting again Nov. 2 at the law office of Norman Rouse, the interim trustee in the couple’s bankruptcy proceeding.