Wednesday, December 30, 2009

Evans update: MVT refuses to issue policy on Evans loan, Bank of Forest charges it with conspiracy

For a collection of all posts on the Evans case, see sidebar on right side of page. Synopsis of case is at the bottom of this post.

Mississippi Valley Title Insurance Company filed suit on September 25, 2009 against the Bank of Forest in Madison County Circuit Court in an attempt to cancel a title insurance police issued on a loan connected to the Evans case. Copy of complaint

Mississippi Valley Title was a victim of Charles Evans
MVT immediately began distancing itself from Evans in the complaint. The insurance company stated it received "an application and certificate of title from Charles H. Evans regarding a certain parcel of land". MVT claimed Evans "was not a title agent for MVT. Rather, Evans was an approved attorney for purposes of providing certification of title on certain property" and that "as an approved attorney, Evans owed Plaintiffs a duty of reasonable care to accurately reflect the true status of legal title to the Subject Property."

The Bank of Forest approved a $450,000 loan to White Oaks Investment Company, LLC, which was owned by Chris Evans. The subject property was owned by G&B Investments. The property was supposed to be transferred to White Oaks at closing. MVT issued a title insurance commitment to the Bank of Forest (a copy is included in the complaint.).

MVT claims it learned after issuing the policy that G&B didn't own the land and that another Evans-owned company, Town Park of Madison, LLC, owned the property and that the land was the collateral for a $3,037,264 issued by Merchants and Farmers Bank. MVT then accuses the Bank of Forest of disbursing the $450,00 before "completing the requirements of the title commitment", the requirements in the title commitment "have not been met by the Bank of Forest", and that the insurance company has not received a premium payment for the title insurance policy. MVT then states "due to the Bank of Forest's failure to comply with the conditions" required to issue a title insurance policy, Mississippi Valley Title "have not issued a title insurance policy to the Bank of Forest for the subject property."

MVT asked the Court for a declaratory judgement on whether it was required to issue a title insurance policy to the Bank of Forest. MVT also charged Charles Evans with a count of professional negligence and asked for damages (including interest) against the attorney.

Bank of Forest: Not so fast, my friend.
Bank of Forest fired back with a withering barrage of accusations against Mississippi Valley Title. Bank of Forest states it made a contract with Mississippi Valley Title for a "correct title opinion and for a title insurance commitment and policy". While Mississippi Valley Title claims Charles Evans was not an agent of the insurance company, the Bank of Forest includes his agent number: 525241. Copy of answer

Three questions should be asked of MVT:
1. Are agent numbers issued to agents only or approved attorneys as well?
2. Did Charles Evans receive any commissions from the issuance of title insurance policies based on his title certificates?
3. Who selected Charles Evans and ordered the title work? Chris Evans? Mississippi Valley Title? The Bank of Forest? Considering the fact it is Charles Evans-provided title certificates and Mississippi Valley Title Insurance policies are the common denominators in the Evans loans, it is probably safe to say the Bank of Forest did not select MVT or Charles Evans.

The Bank of Forest goes further and argues that "on or about August 20, 2009, the Title Insurance Companies knew or should have known that there was reason to suspect the validity of title work performed by Charles Evans" and that "despite this knowledge, the Title Insurance Companies failed to suspend Charles Evans' Agent number". Its response states Mississippi Valley Title "represented to the Bank" that G&B owned the subject property and that the bank would not have issued the loan if it had been aware of this fact.

The defendant doesn't play around and charges Mississippi Valley Title "had actual or constructive knowledge in advance of the loan closing that the title work of Charles Evans.. was suspect and that their representations in the Commitment for Title Insurance were false but failed to notify the Bank" before the loan was issued to Chris Evans and that MVT is "responsible" for the title certificate provided by Charles Evans and any of his "misrepresentations".

The bank also addresses the premium issue. It states it deposited the premium into the trust account of Charles Evans and that MVT failed to issue an insured closing protection letter. The bank also accuses MVT of not fully disclosing to the bank the nature of the "problem" with the property and the loan when it contacted the bank in September. The bank claims it tried to contact Brad Jones of MVT about the issuance of the title insurance policy. Instead of receiving a phone call from Mr. Jones, the bank instead was contacted by Gene Berry, an attorney for Mississippi Valley Title about a title problem on another loan issued to White Oaks and that he "did not address" their questions about the title insurance policy for this loan and that the next day, MVT filed its lawsuit against the Bank of Forest. The bank again tried to pay the premium, in effect paying it twice but MVT refused payment.

The Bank of Forest requested the Court order Mississippi Valley Title to issue a title insurance policy for the loan, pay the Bank of Forest for the amount of the balance of the loan ($452680), including interest, attorneys fees, and late charges, and punitive damages. The Bank also charges Mississippi Valley Title with committing Civil Conspiracy ("either directly or through their agent Charles Evans). The parties are currently arguing in various motions and responses over which court has jurisdiction of this matter.

Exhibit 1: Title commitment, Exhibit 2: Copy of note, Exhibit 3: Copy of loan check, Exhibit 4: Letter to MVT demanding performance
Exhibit 5: Bank of Forest's defense and counterclaim
Exhibit 6: Motion for expedited referral to bankrupcty court, Exhibit 7: Response in opposition to motion
Exhibit 9

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.


Anonymous said...

So Fish, how does all this leave MVT and it's ability to secure insurance for MVT? Will the MVT underwriters and insurers still pay for all of this mess? Obviously this is all above my head but it looks like MVT could loose the ability to do any buisness whatsoever.

Anonymous said...

re above: Additionally, do you have a guess as to how long it will take to resolve the various issues at play here? I would say years and more.

Anonymous said...

One thing a banker said years ago, "MVT will pay your claim just as soon as the Supreme Court says they have to." I took it then as the voice of experience and will be interested if it holds true in this instance.

Does anybody know if ANY of the banks' claims have been paid yet?

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