RULING EXPECTED BY JUNE 26 ON FLEMING BID FOR NEW TRIAL

JANIN FRIEND

CLEBURNE, Texas (FNS) -- A new judge is expected to rule by June 26 on whether Fleming Cos. will be granted a new trial to fight a $211 million damage award in the fraud and breach-of-contract case brought by David's Supermarkets.

In an unusual turn of events here, the presiding Texas judge, C.C. "Kit" Cooke, has recused himself from the civil fraud case and recommended that another judge be appointed for a new trial because of his failure to disclose past financial ties with David's owner, David Waldrip. Fleming said the relationship called into question the impartiality of the trial.

The judge's move doesn't ensure a new trial and the case could still be settled. But Cooke's recusal was hailed by Fleming, which would be less financially constrained if a new trial were granted and the bond to cover the judgment could be released.

Legal observers said the new judge's decision to grant a new trial will partially be contingent on how much and when

Fleming knew about the financial ties between Waldrip and Cooke. The presiding judge can have past dealings with one of the parties in a suit as long as it is disclosed, legal sources said.

Judge Cooke apologized to both companies and their attorneys for not being more careful and costing them so much trial time.

The judge's action is one of the latest developments in a legal battle that heated up earlier this year when Fleming went on trial in February for allegedly overcharging Grandview, Texas-based David's for grocery products under a cost-plus contract and almost forcing the 23-store supermarket chain into bankruptcy. In March, a Texas jury awarded a verdict of more than $200 million in the fraud and breach-of-contract case against the Oklahoma City-based grocery wholesaler and Fleming retired executive, James Stuard. That verdict was upheld by Cooke April 12 after mediation talks failed to reach a settlement.

However, in a surprise move May 10, Fleming filed a motion in the 18th Judicial Court in Cleburne, Texas, calling for a new trial on the grounds that Fleming uncovered evidence that Cooke had financial ties to Waldrip, and other court errors, including the allowance of prejudicial arguments by the plaintiff's counsel and admission of hearsay evidence. Three days later, Judge Cooke removed himself from the trial. "We are pleased with Judge Cooke's quick response to our motion for recusal and for his endorsement of Fleming's request for a new trial," said David Almond, Fleming vice president and general counsel. However, these "events do not guarantee that the judgment will be set aside and a new trial held. That decision will be up to the judge assigned to hear our motion."

Under Texas law, a new judge must hear and rule on the motion for a new trial by June 26 -- 75 days after the judgment was signed -- or the verdict will stand unless the case is settled out of court. A new judge was expected to be appointed this week after Judge Schraub returned from an out-of-town trip.

In Fleming's motion for a new trial, the company said Judge Cooke's filing for bankruptcy in 1989 reveals that he personally owed Waldrip $2,985 and that he owed $36,500 to the First National Bank of Cleburne, which was controlled by Waldrip and Randy Roden, a David's shareholder and key trial witness. In addition, Judge Cooke also lived in a house owned by the bank and personally owed $6,000 to J.D. Quisenberry, then an officer of the Waldrip-controlled bank, the motion said.

"We are shocked by the discovery of this new evidence, which reinforces our serious concerns about the fairness of the trial," Fleming Chief Executive Officer Robert E. Stauth said at a press conference announcing the request for a new trial.

However, others argue that Fleming knew about the ties. David's attorney Bill Sims at Vinson & Elkins in Dallas said the plaintiffs will argue that there are no grounds for a new trial, partly because Bob Sparks, a Fleming attorney in Cleburne, Texas, knew about the bankruptcy before the trial began. He called Fleming claims that they were unaware of past financial ties "hogwash."

Sparks couldn't be reached for comment.

Fleming spokeswoman Nancy Del Regno said Fleming attorney Sparks knew that Cooke had financial problems before the trial. "Sparks knew that he had gone through a bankruptcy," Del Regno said. But, he "was not privy to any details. He knew nothing about a direct relationship between the judge and the plaintiffs."

In addition, Sims also argues that financial ties between Judge Cooke and Waldrip were extinguished several years ago and maintained Fleming's other complaints about errors in the trial are without merit. "They don't deserve a new trial," he said.

David's owner Waldrip said he plans to pursue the breach-of-contract case as long as necessary and denied any current financial relationship with Judge Cooke. "It's old news," he said. "All of this was public record."