Jackson Jambalaya

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Did Mississippi Valley Title Insurance Company bury a little exclusion in the insured closing protection letters* it issued to some of the banks in the Evans Case? JJ has obtained an insured closing protection letter Mississippi Valley issued to one of the banks that obtained a policy from Mississippi Valley Title for a loan it issued to Chris Evans. The letter is two pages long, near the end of the second page, the letter states:

"However, in no instance shall the company be liable hereunder unless notice of claim in writing is received by the Company at its principal office 90 days from the date of discovery of the loss. Furthermore and notwithstanding any other limitations set forth in this paragraph, in no instance shall the company be liable hereunder unless notice of claim in writing is received by the company at its principal office one (1) year from the date of closing."

It appears Mississippi Valley Title is notifying the bank that if claims are discovered more than a year after closing, the insurance company is not responsible for paying any claims. This could create huge problems for the banks involved in the Evans case as the banks have filed over $40 million in claims with Mississippi Valley Title. A substantial portion of these claims were on loans made more than a year before the fraud was discovered by Holmes County Bank and Mississippi Valley Title. Earlier post with itemized list and dates of loans. The key issue is how many banks received an insured closing protection letter from Mississippi Valley Title when they issued a loan to Chris Evans and is the exclusion valid.

If this is indeed an exclusion, it is probably extended to three years as Then-Commissioner George Dale issued a letter on 2006 on this very issue:
"The Commissioner has become aware of a provision in some insurance policies that is causing confusion regarding the statue of limitations period for a policy holder to file a legal action against company. Some policyholders are concerned that this provision is limiting their ability to bring a legal action against their insurance company to one year instead of the statutory three year period. In an effort to clarify this and remove any confusion or misunderstanding regarding the statute of limitations period to file a legal action against an insurance company, I am hereby issuing the following directive.

Insurance companies should be aware that Mississippi Code Ann. section 15-1-49 prescribes a general limitations period of three years next after the cause of such action has accrued. Case law has held that this statute applies to insurance policies. Furthermore, Mississippi Code section 15-1-5 states that the statute of limitations period provided by law may not be changed in any way whatsoever by contract between the parties, and any provision which so changes the statute of limitations shall be null and void." 2006 Directive

The one-year period is probably extended by law to three years. However, there were many loans issued to Chris Evans before 2006. 48 loans were issued between 2003 and 2005 to Chris Evans on properties in Madison and Desoto Counties. It will be interesting to see how many policies have such language and how it will be used by Mississippi Valley Title Insurance Company.

*Definition of insured closing protection letter:
"An insured closing protection letter is issued by a title insurance company to a lender and meant to "specifically apply to escrow closing activities and services performed for title underwriters by approved attorneys or agents who are not employees of the title companies; as a general rule they are not issued on behalf of independent closers over whom the title company has no control. (An “Approved Attorney” is defined in the standard forms of CPLs as “an attorney upon whose certification of title the title insurance company issues title insurance”; an “Issuing Agent” is defined as “an agent authorized to issue title insurance for the title insurance company”). These letters are standardized indemnity agreements given to individually named lenders and recite the specific conditions under, and the extent to which, title insurers will accept liability for the acts or omissions of such parties." Definition of a closing protection letter by First American, a title insurance company.

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.