Jackson Jambalaya

For a collection of all Evans posts, see sidebar on right side of page. See below for a synopsis of the case.


For an audio recording of the hearing, listen to hearing here or click on the play button above.

Nutshell: Several banks victimized by the Evans brothers want to use the powers under Rule 2004 of the bankruptcy code to look at claims filed with MVT in the Evans case and investigate the relationship between Evans and MVT. MVT strongly objected. Judge said they were entitled to the information but couldn't go on a "fishing expedition."

The scrum continues between Mississippi Valley Title Insurance Company and several banks in the Evans case. A hearing was held Wednsday on a motion filed by Merchants & Farmers requesting a 2004 exam of Mississippi Valley Title. The motion asked that Mississippi Valley Title for any "surveys, plats, maps, diagrams, reports, title reports, or documents relating in any way to the ownership of any of the properties at issue in the lawsuit." However, M&F didnt' stop with asking for documents but also requested "Any analyses of claims made against Mississippi Valley Title Insurance Company and/or Old Republic National Title Insurance Company relating in any way to Jon Christopher Evans or his related entities." State Bank, Bank of Forest, Cadence Bank, Copiah Bank, and Bank of Yazoo joined in the motion.

Rule 2004(a) of the U.S. Bankruptcy Code states "On motion of any party in interest, the court may order the examination of any entity." Rules of Bankruptcy. MVT is the only party besides Chris or Charles Evans that has a true idea of the amount and number of claims, the properties involved, and the extent of any fraud that took place. The banks are thus attempting to use rule 2004 to learn exactly what is in MVT's hand as it adjudicates title insurance claims filed by banks victimized by the Evans brothers.

The hearing began with Judge Olack stating "every single person known to mankind has joined in (this motion)." David Clark, the attorney for MVT, repeatedly clashed with attorneys Jeff Rawlings (M&F) and Kristina Johnson (State Bank, Bank of Forest, Holmes County Bank) over how much information should be released to the banks. M&F's request for "Any manuals, guidelines, procedures, recommendations or other documents or things relating in any way the internal controls and procedures of Mississippi Valley Title Insurance Company or Old Republic National Title Insurance Company as to title policies issued by approved attorneys from January, 2003 to date" in particular drew his ire as he repeatedly accused Rawlings and Johnson of seeking information they didn't need. Copy of motion

Clark said Rawlings was "asking for the world" and Mississippi Valley was not about to give its competitors copies of its manuals. (The question thus must be asked that given the amount of alleged fraud committed by the Evans brothers, why exactly would a competitor want such information other than as an example of what not to do?) Clark claimed the request went "far beyond the scope of a 2004 exam" and objected to all requests for manuals and procedures. Clark accused Rawlings and the banks of attempting to conduct discovery under the guise of the 2004 exam.

Clark didn't state what the alleged discovery was for but it doesn't take a genius to figure out what he means: a potential action by the banks against Mississippi Valley Title for negligence or collusion and that the banks were using the 2004 exam as an excuse to conduct the discovery it would pursue in such a lawsuit and the fact they weren't interested "in things relating to their claims." At this point, it became obvious Mr. Henderson, the trustee who was participating via telephone, was in a tree stand and multitasking from a field afar as a specimen of wildlife made its presence known by quacking loudly.

Rawlings stepped up to bat and immediately started swinging at Clark's client. He said "I suspect they don't want to give us anything" and that MVT did not want to give them any documents. The M&F attorney said Mississippi Valley said only $45 million in claims were filed against it even though there were over $80 million in loans that were issued to the Evans brothers and that either the banks or the insurance company were going to have to eat the difference.

Rawlings said "they (the banks) want to know what they know and when did they know it" and accused Mississippi Valley Title of withholding important information from the banks who loaned money to Chris Evans. Rawlings demanded to know why MVT named Charles Evans "Agent of the Year" and "when did MVT audit Charles Evans". Mr. Rawlings also revealed Mississippi Valley Title has not paid any of their claims and sources have informed JJ many other banks have not received payment for their claims as well. Rawlings and Johnson repeately told the Court they wanted to know the relationship between Charles Evans and MVT. Johnson claimed MVT knew much more than the banks and wanted to protect their claims against any actions taken by MVT.

Judge Olack said he didn't want an "expensive fishing expedition" but the banks "had the right to determine what happened". Judge Olack said "they are entitled to some historical information and documentation about the relationship between Mississippi Valley Title, the debtor, and Charles Evans.... They need to fill the blanks in..." The Judge also said the banks were entitled to learn what the "supervision" of Charles Evans was. Judge Olack repeatedly used the word "entitled" in ruling that under Section 510(c) of the U.S. Bankruptcy Code, the banks could obtain this information. Code

Rawlings told the Court MVT had been in the "claims process for four months. They've got to know some things" and could not keep saying it "was not sure" about what happened. The lawyers for the banks said Mississippi Valley Title was "not talking" and refused to meet with all of the lenders." Clark appeared befuddled at times as he told the Court he didn't know what the banks wanted or why they needed the requested information. He repeatedly told the Court his client did not want to give out information on how its internal controls and auditing of "approved attorneys" such as Charles Evans to its competitors. It was a stark contrast to the sharp performance of Mississippi Valley Attorney Bill Brabec in the Yazoo City hearing in October. It also led one to wonder if the use of 2004 exams was why Mississippi Valley Title sought to keep the complaint against Charles Evans in state court.

Judge Olack ruled the 2004 exam will be limited to a reasonableness standard and that Mississippi Valley Title Insurance must provide the following to the banks:
1. List and policies from Mississippi Valley Title Insurance of the insured properties.
2. The status of each and an analysis of each lien as well.
3. An appraisal if one was made.
4. Any surveys made.
5. Any chancery court filings.

The Court ruled the banks had a right to know what was in the file for each loan and also had a right to examine the documents forming the basis for MVT's lawsuit against Charles Evans. The Court said it wasn't going to rule on the issue of MVT's manuals, internal controls and procedures at this time, but wanted to see how his order handled matters before he took that step.

That is the reporting of the hearing, now for some commentary as I'm attempting to keep the two separate. An interesting situation has developed in that several banks are lined up in a bankruptcy case on one side and Mississippi Valley Title on the other. Mississippi Valley Title is literally a Mississippi institution. Although Mississippi Valley Title has claims reserves of less than $40 million, the policies issued by MVT were jointly issued with its parent, Old Republic, which has substantially larger reserves. (Old Republic can easily cover the claims on this case.) However, as payment of the claims is the equivalent of MVT's claims reserves, the question then become at what point does Mississippi Valley Title become an albatross to Old Republic.

A company such as MVT is a drop in the bucket to a large multinational corporation such as Old Republic. The Citis and Chases shut down Mississipi Valley Titles all the time without even batting an eye. (I've seen it happen personally more than once.) The other dilemma for MVT is if it plays hardball and denies as many claims as possible, it then must return to those same banks for future business. It would be reasonable to expect any banks who saw their claims denied in this case or were sued by MVT to seek non-issuance of a policy (as happened to Bank of Forest) on an Evans property aren't going to be in a hurry to ask MVT to underwrite any more title insurance policies.

One rarely sees such a slugfest in Mississippi where so many companies that are literally considered historical institutions of a sort are going to battle. However, it's also not every day a title insurance company is at risk of paying tens of millions of dollar or a local bank is facing the possibility of eating five milion dollars if its title insurance claims are not paid.

Note: The Mississippi Business Journal also has a pretty good story about the hearing.


Synopsis of Evans case (This feature will be included with future posts on Evans case): Charles Evans, Jr. was an attorney approved by Mississippi Valley Title Insurance Company to provide title certificates to MVT and lenders showing a borrower had clear title to property. MVT filed a lawsuit in September accusing his brother of using over 30 LLC's to obtain fraudulent loans from over 30 banks in Mississippi. Chris Evans would allegedly use one company to purchase a large tract of prime commercial real estate in Madison and Desoto Counties. Another company owned by Evans would obtain a commercial real estate mortgage on a smaller section of the tract yet that borrowing company never obtained a deed showing ownership of the land from the other company. Thus the smaller tract was actually non-existed as the larger tract was never actually subdivided. Charles would allegedly provide a title certificate however showing the borrowing company owned the land even though it didn't. Over 80 loans for nearly $50 million were issued by Mississippi banks to companies owned by Chris Evans for lands those companies either did not own. MVT has testified federal authorities are currently investigating the case. Chris Evans filed Chapter 7 bankruptcy on October 26, which stopped the Mississippi Valley Title's lawsuit against him as federal bankruptcy law stays most state civil court proceedings once a bankruptcy petition is filed. Mississippi Valley Title testified 65 title insurance claims for approximately $41 million have been filed by banks affected by the Evans case.