For a collection of all Evans posts, please see sidebar on right side of page. Synopsis of case is at the bottom of the post.
Trustee seeks to cancel all actions in state court
Bankruptcy Trustee Derek Henderson and Mississippi Valley Title traded blows over the weekend. Mr. Henderson filed a complaint in U.S. Bankruptcy Court in the Evans case against Mississippi Valley Title and all of the banks in the Evans case. The trustee asked the court to nullify any actions taken in state courts that determined who the true lien-holders of each tract of Evans-owned property were and "liquidate" the claims of each defendant that has "asserted" a claim "relating to each tract."
There have been quite a few actions filed in the Madison and Desoto county chancery courts seeking rulings on which lenders have the first lien on each property. Most of the lawsuits filed were submitted by attorneys Gene Barry and Todd Burwell (of Robbie Bell fame) that are typically associated with Mississippi Valley Title. Over twenty actions seeking declaratory relief have been filed in Madison County alone.
Mississippi Valley Title must have met with its lawyers over the weekend because a response was filed yesterday. Copy of response MVT asked the Court to "permit" Mr. Henderson to "execute" the conveyances already ordered by state courts. Copy of Complaint
Impact of Evans case on Earnings
JJ reviewed the 2009 second quarter, 2009 third quarter, and 2008 annual statement for Mississippi Valley Title as well as the 2009 third quarter earnings statement for its parent, Old Republic. It should be remembered MVT stated in the bankruptcy court that claims of $41 million were submitted to it by policyholders in the Evans case.
The earnings statements reveal the following:
1. MVT had claims reserves of $35,380,452 as of September 30. (P.4, Known and Statutory Claims reserves were combined.) 3rd Quarter Earnings Statement
2. MVT had claims reserves of $35,657,424 at the end of 2008. Apparently Mississippi Valley Title did nothing to shore up its claims reserves in the same quarter it became aware of its potential liability due to the Evans case. 2008 annual statement, (2nd quarter was $34,314,931, 2nd Quarter Earnings Statement
3. Old Republic has over $14 billion in assets as of September 30. 3rd Quarter Earnings
Statement
4. Old Republic's Title Insurance Division reported:
- Pretax operating income of $4 million in the third quarter.
- a $9.7 million loss in the third quarter last year.
- a profit of $600,000 for the entire year
- a $27 million loss for the first three quarters of 2008.
Old Republic reported an overall loss of $46 million for the third quarter and $116 million for the year ending September 30. That was an improvement as on September 30, 2008, Old Republic reported a loss of $431 million for the year.
If Mississippi Valley Title/Old Republic thus paid the $41 million in claims it stated in court filings were submitted by policyholders, the insurance company would probably see its entire profits for the title insurance division effectively wiped out although it would come out of the claims reserves. The question still remains: will Old Republic pay claims out of its own reserves, pay them first out of MVT's, or will it play hardball and fight every claim as it is doing with Britton & Koontz? The question thus must also be asked what the future of Mississippi Valley Title will be at Old Republic if the insurer pays $41 million in claims. One can imagine the insurer re-examining the um, nature of that relationship.
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. Click Here to Read More..
