Augustus C. Epps, Jr., Esquire (VSB No. 13254)

Jennifer M. McLemore, Esquire (VSB No. 47164)

Margaret X. Yang, Esquire (VSB No. 88596)

CHRISTIAN & BARTON, LLP

909 East Main Street, Suite 1200

Richmond, Virginia 23219-3095

Telephone: (804) 697-4100

Facsimile: (804) 697-6112

Jeffrey R. Waxman, Esquire (admitted pro hac vice)

Eric J. Monzo, Esquire (admitted pro hac vice)

MORRIS JAMES LLP

500 Delaware Avenue, Suite 1500

Wilmington, Delaware 19801

Telephone: (302) 888-6800

Facsimile: (302) 571-1750

Counsel to Debtors and Debtors-in-Possession

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

In re: )

) Chapter 11

Morris | Schneider | Wittstadt Va., PLLC, a )

Virginia professional limited liability ) Case No. 15-33370-KLP

company, et al., )

) (Joint Administration Pending)

Debtors.1)

)

)

Morris | Schneider | Wittstadt, LLC, )

)

Plaintiff, )

)

v. ) Adv. Proc. No. 15-

)

James A. Pritchard, III, Nathan Hardwick, IV, )

Roy Adams, Alliance of Financial Professionals, )

LLC, and Divot Holdings, LLC, )

)

Defendants. )

)

VERIFIED COMPLAINT FOR PRELIMINARY AND FINAL INJUNCTIONS

Plaintiff, Morris | Schneider | Wittstadt, LLC (the “MSW”), by and through its 

undersigned counsel, brings this Verified Complaint against James A. Pritchard, III, Nathan 

 

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The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification 

number, are: Morris | Schneider | Wittstadt Va., PLLC (1651), Morris | Schneider | Wittstadt, PLLC (1589), 

Wittstadt Title & Escrow Company, L.L.C. (3831), Morris | Schneider | Wittstadt, LLC (1589), MSWLAW, Inc. 

(6994), Teays Valley Trustees, LLC (9830), and York Trustee Services, LLC (8058). 

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Hardwick, IV, Roy Adams, Alliance of Financial Professionals, LLC, and Divot Holdings, LLC,

(collectively, the “Defendants”) seeking preliminary and final injunctions.

PARTIES

1. James A. Pritchard, III is an individual with a residential address of 415 Parson 

Circle, Maysville, Georgia 30058.

2. Nathan Hardwick, IV, is an individual with a residential address of 88 West Paces 

Ferry Road, #1820, Atlanta, Georgia 30305. 

3. Roy Adams is an individual with a service address of 11400 Atlantis Place, 

Suite 100, Alpharetta, Georgia 30022.

4. Alliance of Financial Professionals, LLC is a Limited Liability Company, with its 

principal place of business at 11400 Atlantis Place, Suite 100, Alpharetta, Georgia 30022.

5. Divot Holdings, LLC is a Limited Liability Company with its principal place of 

business of 88 West Paces Ferry Road #1820, Atlanta, Georgia 30326.

JURISDICTION AND VENUE

6. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 

1334(b). 

7. Venue is this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

PRELIMINARY STATEMENT

A. The Pritchard Litigation

1. As noted in the Wittstadt Declaration, attached to the Emergency Motion of the 

Debtors and Debtors-in-Possession Pursuant to Sections 105(A), 362, and 541(A) of the 

Bankruptcy Code for Entry of an Order Staying All Actions in the Case of Pritchard v. Morris | 

Schneider | Wittstadt Va., PLLC filed July 10, 2015 in bankruptcy case no. 15-33370 (a copy is 

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attached hereto as Exhibit A) Nathan Hardwick, IV (“Mr. Hardwick”), then a manager of MSW 

and the majority shareholder of MSWLAW, Inc.,2directly or indirectly caused that the firm to 

“over disburse” to Mr. Hardwick more than $20,000,000 from the firm’s escrow accounts for his 

personal use (including payments remitted directly to casinos and on account of private jets for 

the personal use of Mr. Hardwick, his girlfriend and family). 

2. In late-July and early-August of 2014, it came to light that there was an issue with 

respect to certain financials of the firm’s bank accounts. Mr. Hardwick represented that the 

amounts of his “over disbursements” did not exceed $6.5 mil., and he pledged that he would 

personally return the money to the firm. Notwithstanding the express direction that Mr. 

Hardwick was not authorized to borrow the money necessary to repay the “over disbursement” 

by pledging firm assets, Mr. Hardwick did just that. On August 4, 2014, Mr. Hardwick, through 

his personal company, Divot Holdings, LLC (“Divot Holdings”), borrowed $2 mil. from James 

Pritchard (“Mr. Pritchard”) at a rate of 15%. Further, Mr. Hardwick allegedly caused MSW to 

guarantee the Pritchard loan. 

3. As a result of Mr. Hardwick’s allegedly causing MSW to guarantee the loan from 

Mr. Pritchard, Mr. Pritchard commenced the Pritchard Litigation in the Fulton County Superior 

Court. On November 10, 2014, MSW filed a cross-claim against Mr. Hardwick and Divot 

asserting claims for contribution and indemnity and attorneys’ fees and litigation expense for 

their role with the loan transaction with the unauthorized guaranty allegedly given to Mr. 

Pritchard (the “Cross Claims”). Copies of the Cross-Claims are attached hereto as Exhibit B.

4. On March 4, 2015, MSW filed a third party complaint (the “Third Party 

Complaint”) in the Pritchard Litigation against Roy Anthony Adams (“Mr. Adams”) and the 

 

2 MSWLAW, Inc., one of the Debtors, is the sole member of MSW.

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Alliance of Financial Professionals, LLC (the “Alliance,” and together with Mr. Adams, the 

“Third Party Defendants”) alleging, among other things, that Mr. Adams was an outside 

accountant at Alliance that was engaged by MSW to act on its behalf in connection with the 

investigation of escrow account shortages. At the same time, Mr. Adams was acting on behalf of 

Mr. Hardwick, Divot Holdings, and Mr. Pritchard to MSW’s detriment. Further, in the Third 

Party Complaint, MSW alleged that Mr. Adams engineered and enabled the loan transaction 

while knowing that Mr. Hardwick had no authority to provide a guaranty of such obligations by 

MSW and concealing from MSW’s other principals that Mr. Hardwick was purporting to bind 

the firm as a surety for the loan from Mr. Pritchard. Based upon the allegations set forth in the 

Third Party Complaint, MSW asserted claims for contribution and indemnification, accounting 

malpractice and professional negligence, breach of fiduciary duties, fraud and breach of contract 

against the Third Party Defendants (collectively, the “Third Party Claims”). A copy of the Third 

Party Complaint is attached hereto as Exhibit C.

5. On May 12, 2015, the Third Party Defendants filed an answer to the Third Party 

Complaint.

6. On June 10, 2015, the Fulton County Superior Court entered an order and 

judgment on Mr. Pritchard’s motion for partial summary judgment solely as to defendant MSW. 

Specifically, the Court granted judgment for Mr. Pritchard against MSW in the amount 

$2,616,454.19, including all outstanding principal, interest and fees, with interest and fees 

accruing at the rate of $1,134.24 per day. The deadline to appeal the judgment was July 9, 2015. 

On July 2, 2015, the Debtors filed a notice of appeal of the Court’s June 10, 2015 Order. On 

July 6, 2015, MSW filed a suggestion of bankruptcy with the Fulton County Superior Court.

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7. In the meantime, the litigation of the Third Party Claims and Cross-Claims 

between and among MSW, Mr. Hardwick, Divot, and the Third Party Defendants continues. On 

the Petition Date, the Cross-Claims and Third Party Claims were in the midst of discovery. 

These Third Party Claims – and the attendant discovery - have been contentious. In addition, 

Mr. Hardwick seeks extensive discovery in connection with the Cross-Claims. Prior to the 

Petition Date, MSW, Mr. Hardwick, Divot and the Third Party Defendants each served discovery 

upon each other, and there has already been at least one discovery-related issue that has been 

brought before the Fulton County Superior Court. Meanwhile, written and deposition discovery 

is continuing and extensive document collection, review and production has been demanded by 

Mr. Hardwick, Divot, and the Third Party Defendants.

8. The electronic discovery demands made by Mr. Hardwick, Divot, and the Third 

Party Defendants are extensive. Specifically, on or about June 24, 2015, MSW and the ThirdParty Defendants conducted a discovery conference with respect to a protocol for electronic 

discovery for which the Third Party Defendants provided to the Debtors a list of approximately 

224 proposed search terms (and all of the derivations therefrom) from 6 custodians. 

Additionally, the Third Party Defendants also seeks documents from every current and former 

employee at MSW which include an additional 12 search terms and all derivations therefrom. 

All told, MSW estimates that the documents requested by the Third Party Defendants will 

require 13.5 TB of data3to be filtered down, with 20% of that amount to be processed and 

 

3

To put that into context, NASA estimates that the Hubble Space Telescope archive from its launch in 1990 

“contains more than 100 Terabytes, and Hubble science data processing generates about 10 Terabytes of new 

archive data per year.” http://www.nasa.gov/mission_pages/hubble/story/index.html. In other words, the amount of 

data to be filtered from the searches of the Debtors’ computers is more than a year of new archive data from the 

Hubble Space Telescope, and the amount of data to be processed and hosted as part of the Third Party Defendants’ 

discovery request is estimated to be 2.7 TB of data, which is approximately four months of new Hubble archive 

data. Unfortunately, the Debtors do not have NASA’s budget.

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hosted. Between June 24 and July 1, 2015, the Debtors obtained proposals from four vendors for 

the collection and the hosting of the requested electronic data. The estimates received by MSW 

by the vendors were (i) $1,011,609.60; (ii) between $877,500 and $889,885; (iii) between 

$4,060,000 and $6,930,000; and (iv) $950,060. A copy of Mr. Holley’s letter to counsel for the 

Third Party Defendants, and the request for terms to be search from each custodian is attached 

hereto as Exhibit D.

9. In addition, Mr. Hardwick served 42 requests for production of documents on 

MSW, purporting to demand broad production of documents and defining the “Relevant Period” 

as January 1, 2009 to the present. On July 7, 2015, after attempting unsuccessfully to obtain an 

extension of time to serve written responses to Mr. Hardwick’s document requests, MSW served 

objections and written responses to Mr. Hardwick’s requests in an abundance of caution to 

preserve the objections belonging to debtor MSW. 

10. Most immediately, the depositions for Fredrick Boynton and Bobbie Christian 

(two former employees of MSW) are scheduled to be held on July 14, 2015 at 10:00 a.m., and 

11:30 a.m., respectively. 

B. The Debtors’ Postpetition Efforts

11. Since filing their Petitions, the Debtors have, among other things, been required to 

address Mr. Pritchard’s postpetition garnishment of all assets in the Debtors’ bank accounts at 

Sun Trust Bank,

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prepare for and attend the “first day” hearings before this Court, and finalize 

orders after the “first day” hearing. Additionally, the Debtors have conferred with counsel for 

Amegy Bank, counsel for Atlantic Bonding Company, counsel for Alex Cooper Auctioneers, and 

counsel for Michael Moekler, the Assignee for Butler & Hosch, P.A (the “Assignee”), to attempt 

 

4

The garnishment has since been lifted and the funds from the operating accounts unfrozen.

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to schedule a meeting to discuss a process toward resolution of the issue of ownership of 

approximately $1.45 mil. currently held in trust. Additionally, the Debtors are attempting to 

work with Fidelity National Title Company to resolve a significant number of issues that require 

prompt attention. 

12. Even after the immediate flurry of activity following the bankruptcy filing, the 

Debtors are aware that the immediate schedule of the Debtors’ managers and other remaining 

employees is full. Specifically, in addition to meeting with Amegy Bank, Atlantic Bonding, 

Alex Cooper Auctioneers, for Michael Moekler, the Assignee, and Fidelity National Title 

Company, the Debtors have other immediate obligations. The Debtors have to prepare for and 

attend the initial debtor interview with the United States Trustee that is scheduled for July 13, 

2015. The Debtors are attempting to work to ensure that all client files have been removed from 

the leaseholds that they are currently seeking to reject and transfer such files as directed by the 

clients. The Debtors also need to continue prepare their creditor matrix and their schedules and 

statements of financial affairs, and they need to prepare for and attend an initial debtor interview, 

meeting of the creditors, and the omnibus hearing scheduled before this Court on July 31, 2015. 

The Debtors also anticipate that a creditors committee will be appointed, and the committee will 

want to meet with the Debtors’ managers to learn the underlying facts of this case and get an idea 

of the bigger picture in these cases. 

13. As more fully set forth in the Wittstadt Declaration, as of the Petition Date, the 

Debtors have just 36 employees including 5 attorneys and 31 staff members. Accordingly, while 

the Debtors feel fortunate that the remaining personnel have worked tirelessly to assist the 

Debtors in preparing for the filing of the petitions, the Debtors realize that there filing of the 

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bankruptcy petitions was not the end, but the beginning of a process that will require an “all 

hands” effort, including Mark and Rod Wittstadt, in particular.

14. With all of that in mind, on two instances, William Holley (“Mr. Holley”), 

counsel for the Debtors in the Pritchard Litigation, twice reached out to all counsel in the 

Pritchard Litigation requesting a consensual stay of all activity in connection with the estates’ 

Third Party Claims. Specifically, on Tuesday, July 7, 2015, Mr. Holley informed all counsel in 

the Pritchard Litigation that MSW filed a petition for relief under Chapter 11 of title 11 in the 

United States Bankruptcy Court for the Eastern District of Virginia (Richmond Division), and 

proposed that, “to avoid any misunderstanding, conserve expense, and provide certainty to the 

state court, . . . the parties file a written stipulation in the case informing the court as to the 

application of the stay to the litigation unless and until the Bankruptcy Court orders otherwise. If 

this is acceptable, we will prepare and circulate a proposed stipulation for your consideration, 

execution and filing.” The only response that Mr. Holley received to his July 7 email was from 

Mr. Lefkow, counsel for Mr. Adams and the Alliance, who stated that his clients would not agree 

to stipulate to a stay.

15. On Wednesday, July 8, 2015, Mr. Holley again inquired whether the parties 

would agree to a stay of this matter for 60 days. In his July 8 email, Mr. Holley, specifically 

informed the parties that the Debtors have immediate obligations in these bankruptcy cases and

that are occupying significant resources, including participating in an interview with the Office 

of the United States Trustee (which is scheduled for July 13), and meeting with certain of the 

bankruptcy estates' creditor constituencies to address issues of immediate importance to the

estates and their creditors. Copies of Mr. Holley’s July 7 and July 8, 2015 emails are attached 

hereto as Exhibit E.

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COUNT I - CLAIM FOR INJUNCTIVE RELIEF

16. Allegations asserted in paragraph 1 – 15 are incorporated as if set forth herein.

17. In the Pritchard Action MSW has asserted the Cross-Claims against 

Mr. Hardwick and Divot (the "Cross-Claim Defendants") and MSW has asserted the Third Party 

Claims against Mr. Adams and The Alliance (the Third Party Defendants").

18. The Cross-Claims and Third Party Claims are assets of MSW's bankruptcy estate.

19. The claims asserted by Mr. Pritchard against MSW and the Cross-Claims and 

Third Party Claims are all interrelated and are based upon a common nucleus of operative facts

20. Mr. Pritchard, the Cross-Claim Defendants, and the Third Party Defendants have 

each sought discovery from MSW in the Pritchard Action, including depositions, written 

discovery, and electronic discovery.

21. Among other things, Mr. Hardwick has sought information from MSW which, if 

read literally, would include every document related to every foreclosure and real estate 

transaction by MSW in the last six and a half years. 

22. Mr. Hardwick has made demand for documents relating to every transfer to the 

sole member of MSW, the four managers of MSW, LandCastle Title LLC, and two of the 

Debtors' former employees during the last six and a half years.

23. Mr. Pritchard, the Cross-Claim Defendants, and the Third Party Defendants have 

issued notices of deposition which include, in the aggregate, 112 topics.

24. Mr. Adams has issued a subpoena for deposition for Fred Boynton, a former 

attorney at MSW, and Bobbie Christian, a former employee of MSW which are scheduled for 

July 14, 2015.

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25. In the subpoenas issued to Mr. Boynton and Ms. Christian, Mr. Adams sought the 

production of privileged documents. 

26. The subject matters of the subpoenas to Mr. Boynton and Ms. Christian relate to 

allegations against Mark Wittstadt, one of the managers of MSW.

27. Counsel for Mr. Pritchard, the Cross-Claim Defendants, and the Third Party 

Defendants will each be in attendance at the depositions and have an opportunity to ask 

questions of Mr. Boynton and Ms. Christian.

28. Allowing the discovery in the Pritchard Action to go forward would cause 

significant and immediate hardship to MSW because it would require that MSW devote 

significant resources to the Pritchard Action at a time when it cannot afford the significant time 

or money necessary to respond to the discovery.

29. Delaying all discovery in the Pritchard Action would not cause prejudice or cause 

any hardship to the Cross-Claim Defendants or the Third Party Defendants.

WHEREFORE, Morris | Schneider | Wittstadt Va., PLLC respectfully requests that the 

Court enter an order, a copy of which is attached hereto, granting a temporary restraining order 

and, thereafter, temporary and permanent injunctions against the continuation of the Civil Action 

by the Defendants or any of them and that the Court grant Morris | Schneider | Wittstadt, LLC

such other relief as it may deem appropriate.

Dated: July 13, 2015 By: /s/ Jennifer M. McLemore

Augustus C. Epps, Jr., Esquire (VSB No. 13254)

Jennifer M. McLemore, Esquire (VSB No. 47164)

Margaret X. Yang, Esquire (VSB No. 88596)

CHRISTIAN & BARTON, LLP

909 East Main Street, Suite 1200

Richmond, Virginia 23219-3095

Telephone: (804) 697-4100

Facsimile: (804) 697-6112

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-andJeffrey R. Waxman, Esquire (admitted pro hac vice)

Eric J. Monzo, Esquire (admitted pro hac vice)

MORRIS JAMES LLP

500 Delaware Avenue, Suite 1500

Wilmington, Delaware 19801

Telephone: (302) 888-6800

Facsimile: (302) 571-1750

Proposed Counsel to Debtors and 

Debtors-in-Possession

VERIFICATION

I, Mark H. Wittstadt, on behalf of the Morris | Schneider | Wittstadt, LLC, being duly 

authorized to do so, have read the foregoing Verified Complaint for a Preliminary and Final 

Injunctions and affirm under penalty of perjury that the factual allegations contained therein are 

true and correct to the best of my knowledge, information and belief. 

Dated July 13, 2015

/s/ Mark H. Wittstadt

Mark H. Wittstadt, Executive Managing Partner of 

Morris | Schneider | Wittstadt, LLC

1786078

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