Thompson Farms’ $2.6M estimate for damages stems from appraisals

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YANKTON — Jurors heard testimony outlining how Thompson Farms arrived at its request for $2.6 million in damages from Aurora County as both sides continued to clash in the fourth day of a trial at the Yankton County Courthouse.

Thompson Farms asked for $2.6 million from the county because of a 1998 zoning ordinance that essentially forced the multi-milliondollar dairy to close by limiting the number of animals allowed at an animal-feeding operation. The dairy had already invested a significant amount of money into expansion plans before the ordinance was put in place.

The trial to determine the damages owed to Thompson Farms began Thursday and is the latest in a legal battle that has already lasted 14 years. It was moved to Yankton County because of concerns the media’s coverage of the case would have influenced jurors in Aurora County.

This trial comes after a court ruling in 2009 found Aurora County’s restrictive ordinance was to blame for the downfall of the Thompsons’ farm, and a Davison County jury’s decision in January that said the county’s insurance provider did not have to pay any damages awarded in the case because the county failed to provide the insurer with a timely notice of the litigation.

James Dunlap, a Sioux Fallsbased real estate appraiser, testified for several hours Tuesday as an expert witness to explain and defend his conclusions about the effect the county’s ordinance limiting Thompson Farms to 1,050 head of cattle had on its value.

“It was designed as a 2,000-head dairy,” he said. “That was where it was ultimately going to go.”

With the restrictive zoning ordinance in place, Dunlap found the value of Thompson Farms to be $5.9 million, but without the ordinance he found the value to be $8.5 million — a difference of $2.6 million. The $8.5 million appraisal does not include an additional $3.3 million Dunlap said would have been needed to expand the dairy to 2,000 head of cattle. Though Dunlap’s appraisals were done more recently, both attempted to determine the value of Thompson Farms in 2001, when the farm was sold for $3.6 million.

Dick Tieszen, attorney for Aurora County, argued Dunlap’s assessment did not factor in Thompson Farms’ financial situation and management at the time. Earlier testimony revealed the dairy was in trouble with AgStar, its Mankato, Minn.-based lender.

The trial was delayed Tuesday afternoon to allow attorneys and Judge Bruce Anderson to discuss whether the jury should be allowed to consider the Thompsons’ management and the financial situation of their farm when determining what amount to award in damages.

“We don’t feel that the reason they didn’t proceed with expansion is because of the effect of the ordinance,” Tieszen said.

Instead, Tieszen said, the financial situation of Thompson Farms led to its failure.

“The ordinance is just a convenient way for them to claim damages in our view,” he said.

Thompson Farms attorney Mark Meierhenry disagreed and said it was clear the ordinance affected the farm.

“It was a completely irresponsible passing of an ordinance,” Meierhenry said.

Anderson eventually allowed the questions to be asked, but only if the jury was made aware that not all appraisals factor in the management and financial situation of the subject.

Earlier in the day, Mike Sypher, a dairy business consultant who worked with Thompson Farms to develop its expansion plans, gave his testimony.

When he began working with Thompson Farms, Sypher said the dairy only had around 200 head of cattle, but plans were soon developed to expand the operation to a 1,200-head facility.

“It was the latest as far as the knowledge at that time,” Sypher said of the facilities planned for Thompson Farms.

When the dairy’s initial plans for expansion were completed in 1998, Sypher said there was still no indication that Aurora County was planning to change the zoning ordinance. A letter from Sypher to the Aurora County Commission dated April 4, 1998, was entered into evidence and shows the commission was notified of Sypher’s work in helping to expand Thompson Farms.

During cross-examination by Roger Tellinghuisen, another attorney for Aurora County, Sypher admitted it was likely Thompson Farms “did not get better before they got bigger,” and did not have all the money on hand to fund its expansion.

Near the end of the day, the attorneys for Thompson Farms rested their case, and the county called its first witness: James Beatty, a Mitchell-based veterinarian who began working with Thompson Farms in August 2009.

He testified that, based on his observations at the time, the dairy was unorganized and dirty, and the herd was not being properly cared for.

“It was not acceptable,” Beatty said of the conditions at Thompson Farms, and added it would have affected the dairy’s milk production.

Doubling the size of the herd would not have helped Thompson Farms succeed, Beatty said.

“Problems don’t get better, they just magnify,” he said.

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