After long legal fight, Leachman ranches head to auction block
JAN FALSTAD Of The Gazette Staff
Two Leachman Cattle Co. ranches east of Billings, entangled in years of legal wrangling, are finally going to be sold at a U.S. Marshal's auction to pay off nearly $2.4 million in debt to the federal government.
At 1:30 p.m. Wednesday in front of the Yellowstone County Courthouse, the U.S. Marshal's office will auction off the Hairpin Cavvy ranch on Highway 87E, two miles east of Billings, and the Home Place ranch, about 16 miles southeast of Billings.
The foreclosure sale was set after the 9th U.S. Circuit Court of Appeals in San Francisco upheld earlier rulings by U.S. District Judge Richard Cebull of Billings. On Dec. 27, 2006, Cebull ordered the federal Farmers Home Administration to collect its delinquent loans by foreclosing. The Hairpin will be sold first, followed by the main ranch.
Cattle company founder Jim Leachman and his Billings attorney, Tom Towe, appealed Cebull's ruling to the 9th Circuit, arguing that there were technical faults with the mortgages and that Leachman should not have to sell the Hairpin ranch to cover his company's debts.
"It was not Leachman Cattle Company's property at all. It was Jim Leachman's property," Towe said. "But we lost at the 9th Circuit Court of Appeals."
Cebull allowed Leachman to keep his Billings residence.
Over three decades, Leachman built his Montana beef cattle genetics into a global asset, and buyers from around the world attended his spring bull sales east of Billings. However, his cattle operations eventually fell into a deep canyon of debt and lawsuits, including lawsuits between Leachman and his eldest son.
Recently, he has been doing business under the Leachman Cattle Baron Bulls & Hairpin Cavvy brand and has concentrated on breeding and selling quarter horses.
Some who may be interested in the two large Eastern Montana ranches include Molt rancher Jack Goggins, who in 2005 bid $1.76 million on the Scott Ranch near the Home Place ranch. That deal fell through, and last year James Stinehagen of Bridger and his company, Flying S. Cattle Co., paid $2.5 million for the Scott Ranch.
Two Virginia physicians may also bid.
In 2002, Dr. Nicholas Gemma and Dr. William Houck, his company Ash-Will Farms, and other investors claimed fraud and sued Leachman Cattle to recover $2 million they had invested. They remain creditors but will get paid from the Leachman ranch proceeds only after Farm Credit is paid off.
"We expect sometime next week they'll decide," said their local attorney, Chuck Hingle of the Holland & Hart law firm.
The sale of the ranches should cover the debt to the federal government.
Three years ago, the Hairpin was appraised at $1.16 million and the larger Home Ranch at $1.7 million. Since then, Montana land values, especially for large ranches, have fallen with the recession. But if these ranches sell for their 2006 appraisals, the $2.86 million would pay off Farmers Home, including four years of interest at $272 per day, and leave about $500,000 to pay off other debt.
Any bidders can attend the July 15 sale. However, the successful buyer will have less than an hour to present a bank draft for the full sales price.
Whoever ends up with the land, Jim Leachman, ex-wife Corinne Leachman of Mexico, their three sons and even other creditors have one year to come up with the money to redeem or buy the ranches back.
