Wednesday, March 3, 2010

Britton & Koontz tries to make Mississippi Valley Title honor its policy

For a collection of all posts on the Evans case, see sidebar on the right.

Natchez bank Britton & Koontz responded to Mississippi Valley's attempt to avoid honoring its title insurance policy in Madison County Circuit Court. JJ reported on January 7, 2010:

"The Evans case continues to heat up as Britton & Koontz Bank (Natchez) filed a lawsuit on December 22, 2009 against Mississippi Valley Title Insurance Company seeking to enforce a title insurance policy it purchased from Mississippi Valley Title and recover related costs. Britton & Koontz bought the policy for a loan it issued to Chris Evans. Mississippi Valley Title responded with a Motion to Compel Arbitration, citing an arbitration clause in the insurance policy. Copy of complaint

B&K granted a mortgage for $904,000 to Brashear Heath, LLC, a company owned by Chris Evans on May 2, 2008. Deed of Trust. The bank argues the policy covered fraud and that it filed the claim pursuant to the notice provisions in the policy. Apparently Brashear Heath never owned the property that was the subject of the loan even though (and this is a familiar story) Charles Evans certified Brashear Heath owned the land. The Natchez bank first filed a claim with the insurance company, sent a demand letter to Mississippi Valley Title seeking payment of its claim after the thirty day payment period passed, (Copy of letter is on page 16 of complaint.), and then filed suit in December after Mississippi Valley Title did not pay the claim.

Mississippi Valley Title answered with a Motion to Compel Arbitration on January 4, 2010. The defendant cited a clause in the thirteenth paragraph of the title insurance policy. The clause cited states: "Either the company or the insured may demand that the claim or controversy shall be submitted to arbitration..." (See page 10 of the complaint for a copy of the policy.). Motion to Compel Arbitration, Memo in support of Motion to Compel Arbitration."
Earlier post

John Corlew, attorney for B&K, filed his response on February 19. Mr. Corlew claimed the arbitration language was never approved by the bank and it is not a "valid agreement". The response states the clause can not be enforced because well, the forum cited by MVT to be used for arbitration no longer exists.

The arbitration rules cited by the policy states "disputes administered in accordance with Title Insurance Arbitration Rules are administered by the National Arbitration Forum." However, the forum is no longer accepting new disputes pursuant to a consent decree with the Attorney General of Minnesota. Legal Times reported last July in its blog:
"The National Arbitration Forum announced Sunday that it would stop doing business in consumer arbitration by the end of this week, as part of a settlement with the attorney general of Minnesota. The settlement came less than a week after the attorney general there filed suit in state court accusing the Forum of deceptive trade practices by failing to disclose its interests in debt collection while claiming to be a neutral arbiter between consumers and corporations." Article

It is a fundamental rule of contract law that ambiguities in contracts are to be construed against the draftor. Since Mississippi Valley Title is the party citing the arbitration language it drafted, one can imagine a court is not going to be too sympathetic with MVT trying to use an arbitration forum that no longer exists for their purposes. However, the judge could order the parties to select another arbitration panel to meet the purposes of the contract as well. Since the "alleged" Evans fraud was discovered last summer, Mississippi Valley Title Insurance has not paid a single claim to any of the victimized banks even though 65 claims have been filed. This case just keeps getting more interesting and interesting.

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...

MVT needs to be out of business, but they will come out smelling like a rose. It's all in who you know in MS. The banks should protest and never use them again.......but that's not happening!

Anonymous said...

With the current state of Mississippi's bar and judiciary [with the singularly notable exceptions of Federal Bankruptcy Judge Olack and Retired Circuit Judge Lackey], the banks trying to fight MVT are the sheep of MVT's pasture. In years past, there would not have even been a whimper about this kind of activity.

And already the new Insurance Commissioner has said what great companies that MVT and OR both are, so this fight ain't over 'til it's over - but regardless of the outcome, this SHOULD BE an eye-opening education for those who don't often deal with MVT or title insurance in general.

I wonder if on future claims involving banks, MVT could use the defense that the banks using MVT from now on were "contributorily negligent" for knowingly using MVT in the first place after the spectacle of the Evans affair has played out in such a nasty way! :-P

Kingfish said...

The banks can't really fight while they have pending claims with MVT. It is my understanding they can't act adversely to their interests or something like that and someone feel free to correct me if I'm wrong, which I probably am.

Anonymous said...

Past CEO of MVT Cossar told the guys playing cards in the corner not to worry, that MVT would prevail in all this. I for one believe him!

He also said that they recently gave him a corner office and a Cadillac for his years of valuable service.

The fix is in!

Anonymous said...

Sorry, for clarification, he told the guys playing cards in the corner of the 19th hole at the Country Club of Jackson the information related above at 8:40.

Anonymous said...

He must not have gotten the memo to MVT employees about no talking about the Evans case.

Kingfish said...

Supposedly MVT peeps are spinning the story that THEY want to do the right thing and settle the claims but its the folks in Minnehaha that are playing hardball.

Anonymous said...

When the truth is probably exactly the opposite!

Can you spell b-a-d-f-a-i-t-h?

Some banks have seen this before!

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