Source: https://www.scribd.com/document/40190765/090310-Bank-of-Forest-Cross-Claim-p-25
Timestamp: 2018-03-17 15:48:21
Document Index: 334837482

Matched Legal Cases: ['§ 510', 'arts 61', 'arts 62', '§ 157', '§ 157', '§ 11']

090310 Bank of Forest Cross Claim p.25 | Title Insurance | Complaint
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IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF MISSISSIPPI In Re Case No. 09-03763-NPO JON CHRISTOPHER EVANS Debtors, __________________________________ G&B INVESTMENTS, INC. V. DEREK A. HENDERSON, TRUSTEE FOR THE BANKRUPTCY ESTATE OF JOHN CHRISTOPER EVANS, ET AL. ANSWER, DEFENSES. COUNTERCLAIM AND CROSS CLAIMS OF BANK OF FOREST Defendant, Bank of Forest, files this its Answer and Defenses to the First Amended Complaint and its Counterclaim against Plaintiff, G&B Investments, Inc. FIRST DEFENSE Plaintiff’s Complaint fails to state a cause of action against Bank of Forest and should be dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. SECOND DEFENSE Plaintiff’s claims against Bank of Forest are barred by waiver and/or estoppel. THIRD DEFENSE Plaintiff’s claims against Bank of Forest are barred by accord and satisfaction. FOURTH DEFENSE Plaintiff’s claims against Bank of Forest are barred for failure to plead fraud with particularity. PLAINTIFF ADV. PRO. NO. 10-00040-NPO
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FIFTH DEFENSE Plaintiff’s claims against Bank of Forest are barred by parole evidence. SIXTH DEFENSE Plaintiff’s claims against Bank of Forest are barred by statute of frauds. SEVENTH DEFENSE Plaintiff’s claims against Bank of Forest are barred by assumption of the risk. EIGHTH DEFENSE Plaintiff’s alleged injuries, if any, are the result of Plaintiff’s own actions or inactions. NINTH DEFENSE Plaintiff’s claims against Bank of Forest are barred by payment. TENTH DEFENSE Plaintiff’s claims against Bank of Forest are barred by release. ELEVENTH DEFENSE Plaintiff’s alleged injuries, if any, were caused by third parties for whom the Bank of Forest is not responsible. TWELFTH DEFENSE To the extent applicable, Bank of Forest asserts as a defense any and all equitable maxims. THIRTEENTH DEFENSE To the extent applicable, Bank of Forest adopts and asserts all defenses raised by any offer defendant in this case, to the extent such defenses are not inconsistent with Bank of Forest’s denial of liability to Plaintiff and Bank of Forest’s claim regarding the property which is the subject of 2
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FOURTEENTH DEFENSE - Answer Bank of Forest denies each and every allegation contained in the First Amended Complaint except that which is specifically admitted below. Further, responding paragraph by paragraph, Bank of Forest states the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Admitted. Admitted. Denied. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted. Admitted, that this is a core proceeding. 3
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Bank of Forest has insufficient information or knowledge to admit the allegations of
Paragraph 17 of the First Amended Complaint and therefore it denies the same. 18. Bank of Forest has insufficient information or knowledge to admit the allegations of
Paragraph 18 of the First Amended Complaint and therefore it denies the same. 19. Bank of Forest has insufficient information or knowledge to admit the allegations of
Paragraph 19 of the First Amended Complaint and therefore it denies the same, except to admit that Jon Christopher Evans, Charles Evans and companies owned or operated by them were involved in a conspiracy to defraud others, including Bank of Forest. 20. Bank of Forest has insufficient information or knowledge to admit the allegations of
Paragraph 20 of the First Amended Complaint and therefore it denies the same, except to admit, upon information and belief, that Hanover executed a Promissory Note and Deed of Trust in favor of G&B and that said documents will speak for themselves when properly authenticated. 21. Bank of Forest has insufficient information or knowledge to admit the allegations of
Paragraph 21 of the First Amended Complaint and therefore it denies the same. 22. Bank of Forest denies the allegations of Paragraph 22 or has insufficient information
or knowledge to admit the allegations of Paragraph 22 and therefore denies the same, except to admit that Defendant White Oaks Investment Company, LLC executed one or more Deeds of Trust in favor of Bank of Forest and that said Deed of Trust or Deeds of Trust when properly authenticated will speak for themselves and that Defendants Mississippi Valley Title Insurance Company and/or Old Republic National Title Insurance Company issued one or more lenders title insurance policies to Bank of Forest and such policy or policies will speak for themselves when properly authenticated. 23. The allegations of Paragraph 23 of the First Amended Complaint do not refer or relate 4
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to Bank of Forest and therefore no answer is required by the Bank of Forest. However, to the extent the allegations of Paragraph 23 of the First Amended Complaint attempt to impose liability on Bank of Forest or challenges Bank of Forest’s interest in property secured by any Deeds of Trust in its favor executed by Defendant White Oaks Investment Company, LLC, these allegations are denied. 24. Bank of Forest admits that this Court should determine the validity, priority and extent
of liens on the property which is the subject of this case pursuant to Rule 7001(2) of the Federal Rules of Bankruptcy Procedure. However, Bank of Forest denies that Plaintiff is entitled to any of the relief requested by it in subparagraphs a through g of Paragraph 24 of the First Amended Complaint. 25. The allegations of Paragraph 25 of the First Amended Complaint do not refer or relate
to Bank of Forest and therefore no answer is required by the Bank of Forest. However, to the extent the allegations of Paragraph 25 of the First Amended Complaint attempt to impose liability on Bank of Forest or challenges Bank of Forest’s interest in property secured by any Deeds of Trust in its favor executed by Defendant White Oaks Investment Company, LLC, those allegations are denied. And now, having answered the allegations of the First Amended Complaint by Plaintiff, G&B Investments, Inc., and having asserted its defenses to the same, Bank of Forest requests that all claims asserted by Plaintiff against Bank of Forest be dismissed with prejudice. COUNTERCLAIM OF BANK OF FOREST AGAINST G&B INVESTMENTS, INC. Comes now Bank of Forest and files this Counterclaim against G&B Investments, Inc. and would show unto the Court the following: 1. On July 21, 2008, White Oaks Investment Company, LLC executed a note and deed
of trust in favor of Bank of Forest to evidence and secure a loan in the amount of One Million Two
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Hundred Ninety Six Thousand Five Hundred Dollars ($1,296,500.00). These documents are attached as Exhibits 6 and 7 to the Trustee’s Answer to First Amended Complaint herein. On July 22, 2008, these loan proceeds from the Bank of Forest were deposited to the Charles H. Evans Trust Account at BankPlus. See Exhibit 10 to the Trustee’s Answer to First Amended Complaint. On July 23, 2008, the transaction whereby G&B Investments, Inc. conveyed to Hanover Investments, LLC the real property which is the subject of its First Amended Complaint herein, and which included the properties pledged to Bank of Forest pursuant to the deed of trust referenced hereinabove and attached to the Trustee’s Answer to First Amended Complaint as Exhibit 7. As described in the Trustee’s Answer to First Amended Complaint in paragraph 63, the loan proceeds of Bank of Forest in the amount of One Million Two Hundred Ninety Six Thousand Five Hundred Dollars ($1,296,500.00) were wired to the trust account of Watkins & Eager for the closing with G&B and paid to G&B at closing. If G&B is successful in setting aside the transaction with Hanover Investments in accordance with its claim for relief in the First Amended Complaint, as the Trustee pleads alternatively in his Answer to the First Amended Complaint, G&B is legally responsible for a refund of the purchase price paid by Hanover in the amount of Five Million Dollars ($5,000,000.00), including specifically the loan proceeds from the Bank of Forest in the amount of One Million Two Hundred Ninety Six Thousand Five Hundred Dollars ($1,296,500.00) which should be repaid to Bank of Forest. In addition to receiving the loan proceeds back, G&B should be required to respond for prejudgment interest at the same rate of interest stated in the deed of trust to Bank of Forest securing its loan, and to all other damages remedies therein stated, including recovery of its reasonable attorneys fees and expenses in the process of collection of its deed of trust indebtedness. WHEREFORE, Bank of Forest asserts this its Counterclaim against G&B Investments, Inc. 6
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and demands damages therefrom in the amount of One Million Two Hundred Ninety Six Thousand Five Hundred Dollars ($1,296,500.00) together with prejudgment interest from and after July 22, 2008 at the interest rate stated in the deed of trust from Hanover Investments, Inc. to Bank of Forest with respect to its loan thereto of that date; all expenses associated with collection of that indebtedness, including expenses of litigation, attorneys fees and costs of this proceeding. BANK OF FOREST’S ANSWER AND AFFIRMATIVE DEFENSES TO DEREK A. HENDERSON, TRUSTEE’S CROSSCLAIM Bank of Forest (“BOF”) hereby files its Answer and Affirmative Defenses in Response to Derek A. Henderson, Trustee’s Crossclaim (“Henderson Crossclaim”) [Dkt. #31] in the abovereferenced adversary proceeding filed by Derek A. Henderson, Chapter 7 Trustee for the bankruptcy estate of Jon Christopher Evans (“Chris Evans”) and White Oaks Investments Company, LLC (“White Oaks”) and the jointly administered related Chapter 7 cases (“Trustee Henderson”). In support thereof, BOF states the following: ANSWER BOF hereby answers the Henderson Crossclaim as follows: AFFIRMATIVE DEFENSES First Defense The Henderson Crossclaim fails to state a claim upon which relief can be granted against BOF. Second Defense The alleged claims raised in the Henderson Crossclaim as against BOF are the result, in whole or in part, of the inappropriate and/or fraudulent actions and/or inaction of Mississippi Valley Title Insurance Company (“MVT”) and/or Old Republic National Title Insurance Company (“OR”) 7
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(collectively, the “Title Insurance Companies”), Chris Evans, Charles H. Evans, Jr. and/or White Oaks. BOF hereby asserts all equitable defenses available, including but not limited to, contributory negligence, unclean hands, estoppel, failure of consideration, fraud, illegality, laches, payment, statute of frauds, constructive trust, equitable lien, and/or waiver. Third Defense Each and every cause of action alleged in the Henderson Crossclaim as against BOF is the result of MVT and/or OR engaging in acts and a course of conduct which render them In Pari Delicto and/or contributorily negligent such that the Title Insurance Companies’ claims related to Tract 4 should be adjudicated equitably subordinated under 11 U.S.C. § 510(c). Fourth Defense Without waiving the foregoing defenses, BOF hereby answers the Henderson Crossclaim filed by the Trustee Henderson, paragraph by paragraph, as follows: Jurisdiction and Parties 1. Paragraph 45 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 2. Paragraph 46 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 3. 4. 5. BOF admits the allegations of paragraph 47 of the Henderson Crossclaim. BOF admits the allegations of paragraph 48 of the Henderson Crossclaim. BOF admits the allegations of paragraph 49 of the Henderson Crossclaim. 8
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BOF admits the allegations of paragraph 50 of the Henderson Crossclaim. BOF admits the allegations of paragraph 51 of the Henderson Crossclaim. BOF admits the allegations of paragraph 52 of the Henderson Crossclaim. BOF admits the allegations of paragraph 53 of the Henderson Crossclaim. BOF admits the allegations of paragraph 54 of the Henderson Crossclaim. BOF admits the allegations of paragraph 55 of the Henderson Crossclaim. BOF admits the allegations of paragraph 56 of the Henderson Crossclaim. Summary of Facts
Upon information and belief, BOF admits the allegations of paragraph 57 of the
Henderson Crossclaim. 14. Upon information and belief, BOF admits the allegations of paragraph 58 of the
Henderson Crossclaim. 15. Upon information and belief, BOF admits the allegations of paragraph 59 of the
Henderson Crossclaim. 16. BOF admits that Trustee Henderson has identified the parcels of property within
Tract 4 as stated in paragraph 60 of the Henderson Crossclaim but is without knowledge or information sufficient to form a belief as to the accuracy of said identification at this time. 17. Significant portions of paragraph 61 (including subparts 61.1 – 61.29) of the
Henderson Crossclaim are not directed to BOF and therefore no response by BOF is required. In the event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph except that BOF admits those portions of subparagraphs 61.3, 61.4, 61.7, 61.12, 61.13, 61.17 which are directly applicable to 9
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BOF and admits subparagraphs 61.21, 61.22, and 61.23. 18. Significant portions of paragraph 62 (including subparts 62.1 – 62.7) of the
Henderson Crossclaim are not directed to BOF and therefore no response by BOF is required. In the event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph except that BOF admits those portions of subparagraphs 62.4, 62.5, 62.6 which are directly applicable to BOF. 19. Paragraph 63 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph except that BOF admits it loaned $1,296,500.00 to White Oaks on or abut July 23, 2008. 20. Paragraph 64 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 21. 22. BOF admits the allegations of paragraph 65 of the Henderson Crossclaim. BOF is without knowledge or information sufficient to form a belief as to the truth
of the allegations contained in paragraph 66 of the Henderson Crossclaim. 23. BOF is without knowledge or information sufficient to form a belief as to the truth
of the allegations contained in paragraph 67 of the Henderson Crossclaim. 24. BOF is without knowledge or information sufficient to form a belief as to the truth
of the allegations contained in paragraph 68. Count One – Determine Extent and Validity of Liens/Parcel T-1
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In response to paragraph 69 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 68 of the Henderson Crossclaim.
Parcel T-1 26. Paragraph 70 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 27. Paragraph 71 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 28. Paragraph 72 of the Henderson Crossclaim calls for no response from BOF. In
the event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Two – Determine Extent and Validity of Liens/Parcel T-2 29. In response to paragraph 73 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 72 of the Henderson Crossclaim. Parcel T-2 30. Paragraph 74 calls for no response from BOF. In the event a response is required,
BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 31. Paragraph 75 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief
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as to the truth of the allegations contained in said paragraph. 32. Paragraph 76 of the Henderson Crossclaim calls for no response from BOF. In
the event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Three – Determine Extent and Validity of Liens/Parcel T-3 33. In response to paragraph 77 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 76 of the Henderson Crossclaim. Parcel T-3 34. Portions of paragraph 78 of the Henderson Crossclaim call for no response from
BOF. In the event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said portions of paragraph 78. BOF admits the third, fourth and fifth sentences of paragraph 78 of the Henderson Crossclaim. 35. 36. BOF admits the allegations of paragraph 79 of the Henderson Crossclaim. BOF admits the allegations of paragraph 80 of the Henderson Crossclaim and
affirmatively asserts that, based on information and belief, BOF is unsecured of record as to certain portions of Tract 4 (tracts 4A, 4B and 4E also referred to herein as Parcels T-3, T-4 and T-5) since said tracts were pledged to BOF as security by White Oaks Investment Company, LLC, which is not the record owner of the property. BOF has submitted insurance claims against the Title Insurance Companies for, among other things, a complete failure of title on said property. Count Four – Determine Extent and Validity of Liens/Parcel T -4 37. In response to paragraph 81 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 80 of the Henderson Crossclaim.
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Parcel T-4 38. 39. 40. BOF admits paragraph 82 of the Henderson Crossclaim. BOF admits paragraph 83 of the Henderson Crossclaim. BOF admits paragraph 84 of the Henderson Crossclaim. Count Five – Determine Extent and Validity of Liens/Parcel T-5 1. In response to paragraph 85 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 84 of the Henderson Crossclaim. Parcel T-5 2. 3. 4. BOF admits paragraph 86 of the Henderson Crossclaim. BOF admits paragraph 87 of the Henderson Crossclaim. BOF admits paragraph 88 of the Henderson Crossclaim. Count Six – Determine Extent and Validity of Liens/Parcel T-6 5. In response to paragraph 89 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 88 of the Henderson Crossclaim. Parcel T-6 6. Paragraph 90 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 7. Paragraph 91 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph.
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Paragraph 92 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Seven – Determine Deed of Trust Invalid and Void Foreclosure 9. In response to paragraph 93 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 92 of the Henderson Crossclaim. 10. Paragraph 94 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 11. Paragraph 95 of the Henderson Crossclaim calls for no response from BOF. In the
event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Eight – Voidable Preference Transfers 12. In response to paragraph 96 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 95 of the Henderson Crossclaim. 13. BOF admits that Trustee Henderson seeks the relief set forth in the allegations
contained in paragraph 97 of the Henderson Crossclaim. It is unclear from the Henderson Crossclaim whether this Count is directed to BOF. To the extent applicable to BOF, BOF will respond upon said clarification and determination as appropriate. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 14. BOF admits that Trustee Henderson seeks the relief set forth in the allegations 14
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contained in paragraph 98 of the Henderson Crossclaim. It is unclear from the Henderson Crossclaim whether this Count is directed to BOF. To the extent applicable to BOF, BOF will respond upon said clarification and determination as appropriate. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Nine – Fraudulent Transfers 15. In response to paragraph 99 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 98 of the Henderson Crossclaim. 16. BOF admits that Trustee Henderson seeks the relief set forth in the allegations
contained in paragraph 100 of the Henderson Crossclaim. It is unclear from the Henderson Crossclaim whether this Count is directed to BOF. To the extent applicable to BOF, BOF will respond upon said clarification and determination as appropriate. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 17. BOF admits that Trustee Henderson seeks the relief set forth in the allegations
contained in paragraph 101 of the Henderson Crossclaim. It is unclear from the Henderson Crossclaim whether this Count is directed to BOF. To the extent applicable to BOF, BOF will respond upon said clarification and determination as appropriate. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Ten – Liability of Transferee
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In response to paragraph 102 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 101 of the Henderson Crossclaim. 19. BOF admits that Trustee Henderson seeks the relief set forth in the allegations
contained in paragraph 103 of the Henderson Crossclaim. It is unclear from the Henderson Crossclaim whether this Count is directed to BOF. To the extent applicable to BOF, BOF will respond upon said clarification and determination as appropriate. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Eleven – Disallow Claims 20. In response to paragraph 104 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 103 of the Henderson Crossclaim. 21. BOF admits that Trustee Henderson seeks the relief set forth in the allegations
contained in paragraph 105 of the Henderson Crossclaim. It is unclear from the Henderson Crossclaim whether this Count is directed to BOF. To the extent applicable to BOF, BOF will respond upon said clarification and determination as appropriate. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. Count Twelve – Void All Contracts and Transactions as Fraud 22. In response to paragraph 106 of the Henderson Crossclaim, BOF incorporates herein
its answers to paragraphs 1 – 105 of the Henderson Crossclaim. 23. Portions of paragraph 107 of the Henderson Crossclaim are not directed to BOF and
therefore do not require a response from BOF. In the event a response is required at this time, BOF 16
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is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. BOF admits that if the relief sought in said paragraph is granted as applicable to BOF that the loan proceeds funded by BOF on Tract 4 should be returned to BOF but denies that such relief, if granted, would compensate BOF in full for its losses related to the White Oaks loan transactions. 24. Portions of paragraph 108 of the Henderson Crossclaim are not directed to BOF and
therefore do not require a response from BOF. In the event a response is required at this time, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. BOF admits that if the relief sought in said paragraph is granted as applicable to BOF that the loan proceeds funded by BOF on Tract 4 should be returned to BOF but denies that such relief, if granted, would compensate BOF in full for its losses related to the White Oaks loan transactions. 25. The Third Party Complaint at paragraphs 109 – 122 of the Henderson Crossclaim does
not call for a response from BOF. In the event a response is required, BOF is without knowledge or information sufficient to form a belief as to the truth of the allegations contained in said paragraph. 26. BOF admits that Trustee Henderson seeks the relief stated in the final, unnumbered
paragraph of the Henderson Crossclaim beginning with “WHEREFORE” and all subparts thereof, including but not limited to subparts (A) through (P) thereof, and responds to subparagraphs (A) – (B), (F) – (G) and (N) – (O) by stating that said relief requested does not apply to BOF and therefore no response is required, responds to subparagraphs (C) – (E) by admitting BOF does not have a properly recorded lien and therefore is unsecured per record title, and responds to subparagraphs (H) – (L) and 17
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(P) by stating that appropriate responses will be served when it appears that said requests for relief are directed to BOF and responds to subparagraph (M) by stating that, in the event said relief is granted, BOF would not be fully compensated for its losses related to the White Oaks loans. BOF denies all allegations of the Henderson Crossclaim unless specifically admitted herein. WHEREFORE, BOF answers the Henderson Crossclaim and requests the Court to determine the extent, validity and/or priority of its lien interests on Parcels T-3, T-4 and T-5, and/or grant BOF such other and/or further relief as the Court deems just and appropriate. BANK OF FOREST’S CROSSCLAIMS AGAINST DEFENDANTS MISSISSIPPI VALLEY TITLE INSURANCE COMPANY, OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, STEPHEN SMITH, TRUSTEE FOR BANKRUPTCY ESTATE OF CHARLES H. EVANS, JR., and DEREK A. HENDERSON, TRUSTEE FOR BANKRUPTCY ESTATES OF JON CHRISTOPHER EVANS AND WHITE OAKS INVESTMENT COMPANY Bank of Forest (“BOF”), having answered the First Amended Complaint filed by G & B and the Crossclaim filed by the Henderson Trustee, now asserts Crossclaims against Mississippi Valley Title Insurance Company (“MVT”) and Old Republic National Title Insurance Company (“OR”) (collectively the “Title Insurance Companies”), Derek Henderson, Trustee (“Trustee Henderson”) for the bankruptcy estates of Jon Christopher Evans (“Chris Evans”) and White Oaks Investment Company (“White Oaks”), and Stephen Smith, Trustee (“Trustee Smith”) for the bankruptcy estate of Charles H. Evans, Jr. (“Charles Evans”), pursuant to Fed. R. Civ. Proc. 13(g) as incorporated by Fed. R. Bankr. Proc. 7013. In support thereof, BOF states the following: PARTIES 1. Mississippi. BOF is a Mississippi banking corporation with its principal place of business in
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MVT is a Defendant in the First Amended Complaint in this action and therefore may
be served with this crossclaim pursuant to Fed. R. Civ. Proc. 5(b)(1) as incorporated by Fed. R. Bankr. Proc. 7005. 3. Old Republic is a Defendant in the First Amended Complaint in this action and
therefore may be served with this crossclaim pursuant to Fed. R. Civ. Proc. 5(b)(1) as incorporated by Fed. R. Bankr. Proc. 7005. 4. Stephen Smith, Chapter 7 Trustee for the bankruptcy estate of Charles H. Evans, Jr.,
is an original defendant in the First Amended Complaint in this action and therefore may be served with this crossclaim pursuant to Fed. R. Civ. Proc. 5(b)(1) as incorporated by Fed. R. Bankr. Proc. 7005. 5. Derek A. Henderson, Chapter 7 Trustee for the bankruptcy estate of Chris Evans and
White Oaks, is an original defendant in the First Amended Complaint in this action and therefore may be served with the crossclaim pursuant to Fed. R. Civ. Proc 5(b)(1) as incorporated by Fed. R. Bankr. Proc. 7005. JURISDICTION 6. This Court has jurisdiction of this matter pursuant to, but not limited to, 28
U.S.C.§§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157.
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FACTS 1. As part of two (2) separate loan transactions, a 2008 loan to White Oaks (“2008 White
Oaks loan”) and a 2009 loan to White Oaks (“2009 White Oaks loan”) described below, BOF contracted for correct title opinions and for title insurance commitments and policies from the Title Insurance Companies. Prior to the consummation of the loans, the Title Insurance Companies agreed to perform or engage the performance of an accurate title search on the property to be pledged as collateral to BOF as consideration for loaning the purchase money to White Oaks for both loans. 2. In addition, as described more specifically herein, BOF requested a correct statement
of title and that a title insurance policy be issued from the Title Insurance Companies insuring title to the property which White Oaks was purchasing and pledging to BOF as collateral. 3. Prior to the consummation of the loans, Charles Evans, an agent of the Title Insurance
Companies represented to BOF that he, performed a title search on the property to be pledged as collateral to BOF as consideration for loaning money to White Oaks. 4. As part of these transactions, the Title Insurance Companies’ “Agent, No. 525241”,
Charles Evans, a licensed attorney in the State of Mississippi since 1980, either performed or represented that he performed the title searches and represented that at the conclusion of the loan transactions, title to the property securing the loans would be transferred to and vested in White Oaks and that White Oaks could give BOF a valid deed of trust on the property. These representations included that the properties securing the White Oaks loans were unencumbered and BOF would have a valid first lien on the property securing the loans after closing. 5. In making the loans, BOF relied on the representations that BOF would and did have
a valid and enforceable first lien deed of trust on the property to be insured by the Title Insurance
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Companies. Had BOF known the true state of the title to the property, BOF would not have approved the loans to White Oaks. 6. On July 21, 2008, White Oaks executed loan documents in favor of BOF in the
principal amount of $1,296,500.00 to purchase certain real property more specifically described therein, but which have been generally referred to in these related cases as Tracts 4A and 4B but which are designated by Trustee Henderson in this adversary proceeding as T-4 and T-5. True and correct copies of the 2008 White Oaks loan documents are attached hereto as composite Exhibit “A.” 7. BOF obtained a commitment for title insurance and a title insurance policy
(“Policy”) for the 2008 White Oaks loan from the Title Insurance Companies. A true and correct copy of the Policy is attached as Exhibit “B.” 8. Unbeknownst to BOF, but known to Charles Evans, Chris Evans, White Oaks and
either on actual or constrictive notice to the Title Insurance Companies, title was not vested as represented to BOF. 9. At all relevant times during the 2008 White Oaks loan transaction, Charles Evans
acted as the agent and/or representative of the Title Insurance Companies. 10. Charles Evans never intended to record, and did not record, executed warranty deeds
transferring record ownership of the property to White Oaks. Accordingly, White Oaks, did not have valid title to the property pledged to BOF and BOF does not have a valid, first lien on the property of record. 11. Likewise, in the 2009 White Oaks loan transaction, Charles Evans, a licensed attorney
in the State of Mississippi since 1980, acting on behalf of or at the request of the Title Insurance Companies, as “Agent #: #525241” either performed or represented that he performed the title 21
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search, and represented to BOF that the title to the property was vested in G & B Investments, Inc. (“G & B”), Plaintiff in this adversary proceeding. BOF was told that the property was to be transferred by G & B to White Oaks at the closing of the purchase and loan transaction. This representation was materially false. 12. At all relevant times, the Title Insurance Companies knew or should have known that
there was reason to suspect the validity of title work performed by and/or applications for title commitments and/or title insurance policies submitted by Charles Evans. Despite this knowledge, the Title Insurance Companies failed to suspend Charles Evans “Agent #: 525241” from involvement in the issuance of commitments for title insurance or title policies by or on behalf of the Title Insurance Companies. 13. On or about August 26, 2009, the Title Insurance Companies, by and through Charles
Evans “Agent #:525241” issued a Commitment for Title Insurance to BOF. A true and correct copy of the Commitment for Title Insurance is attached as Exhibit “C.” 14. On August 27, 2009, White Oaks executed loan documents in favor of BOF in the
principal amount of $450,000.00 to purchase certain real property more specifically described therein but generally referred to in the related Chapter 7 cases as Tract 4E but referred to in this adversary proceeding by Trustee Henderson as Parcel T-3. True and correct copies of the 2009 White Oaks loan documents are attached hereto as composite Exhibit “D.” The 2008 White Oaks loan documents and the 2009 White Oaks loan documents are collectively referred to as the “White Oaks Loan Documents.” 15. At all relevant times during the 2009 White Oaks loan transaction, Charles Evans
acted as the agent and/or representative of the Title Insurance Companies. 22
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The Title Insurance Companies, in Schedule A of Exhibit “_____” hereto, represented
to BOF that fee simple title to the property described in the Commitment for Title Insurance was vested in G & B. These representations were material in that the loan proceeds were the purchase money for the transfer of the property from G & B to White Oaks. In fact, but unbeknownst to BOF, the title to the property was not vested in G & B. 17. BOF relied on the representations by the Title Insurance Companies in the
Commitment for Title Insurance and the title work submitted by Charles Evans on behalf of and/or as a representative of the Title Insurance Companies. These representations included specifically and materially that title was vested in G & B. In reasonable and justifiable reliance on the state of title as described by Charles Evans and the Title Insurance Companies, BOF closed the 2009 White Oaks loan transaction and authorized the disbursement of the loan proceeds in the amount of $450,000.00 for the purchase of property by White Oaks from G & B. Charles Evans was responsible for, among other things, obtaining and recording the transfer documents on the property for which he had previously performed the title work as well as obtaining the issuance of the Commitment for Title Insurance by the Title Insurance Companies in his capacity as “Agent #: 525241.” 18. The Title Insurance Companies had actual or constructive knowledge in advance of
the loan closing on the White Oaks loans that the title work of Charles Evans was suspect, likely incorrect and that their representations in the Commitment for Title Insurance were false but failed to notify BOF before the loan closing in time to preclude disbursement by BOF of the loan proceeds to White Oaks. 19. The Title Insurance Companies are responsible for the misrepresentations, actions
and/or omissions and all resulting damages caused by their agent and representative, Charles Evans, 23
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who prepared the title opinion, obtained the issuance of the Commitment for Title Insurance on behalf of the Title Insurance Companies as “Agent #: 525241” or otherwise, and who subsequently delivered it to Bank. 20. In any event, the Title Insurance Companies are responsible for all misrepresentations
made and omissions in the Commitment for Title Insurance, attached as Exhibit “C,” including but not limited to the misrepresentation that the property offered as collateral to BOF was owned in fee simple by G & B. 21. On August 27, 2009, the loan from BOF to White Oaks was closed and BOF
authorized the disbursement of the loan proceeds in the amount of $450,000.00 in check No. 009319 payable to White Oaks to purchase the property from G & B. According to the check presented for payment to BOF, the loan proceeds were deposited into the “Evans Trust Account.” A true and correct copy of this check is attached hereto as Exhibit “E.” The loan proceeds included the amount owed to the Title Insurance Companies for the title insurance policy premium. The Title Insurance Companies failed to offer or to provide an insured closing protection letter to BOF in connection with the closing. 22. Had BOF known the property was not in fact owned as represented and would not be
transferred as a purchase money transfer to White Oaks as represented and reported to BOF, BOF would not have agreed to extend credit to White Oaks and would not have disbursed the loan proceeds. 23. Charles Evans as “Agent #: 525241” or otherwise failed to obtain and/or record the
Warranty Deed vesting title in White Oaks at the closings. Charles Evans was acting as the agent and/or representative of White Oaks and/or the Title Insurance Companies in all actions taken or 24
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omitted, including but not limited to, preparing the statement of title, drafting the transfer documents, recording (or not) the instruments in connection with the promised transfer of title and BOF’s Deed of Trust, and in satisfying the requirements of the Commitment for Title Insurance, including the payment of the premium for the title insurance policies. The Title Insurance Companies billed Charles Evans for title insurance premiums thereby indicating their expectation that Charles Evans would collect the premiums on behalf of the Title Insurance Companies. 24. On or about September 8, 2009, shortly after the 2009 White Oaks loan closing and
the disbursement of the loan proceeds, MVT contacted BOF to inquire whether the loan proceeds had been disbursed, and advised BOF that MVT had discovered a “problem” with Charles Evans and the title to the property which served as collateral under the White Oaks Loan Documents. MVT refused to describe specifically the problem or to advise BOF that the Title Insurance Companies intended to refuse to issue the title insurance policy on the Commitment for Title Insurance for the 2009 White Oaks loan. 25. On September 14, 2009, BOF inquired of Charles Evans “Agent #: 525241” as to the
status of BOF’s recorded Deed of Trust and the issuance of the title policy. On September 18, 2009, the Deed of Trust was recorded. On September 21, 2009, BOF contacted Brad Jones of MVT to inquire on the status of the title insurance policy issuance but Mr. Jones was unavailable. On September 22, 2009, Mr. Gene Berry, an attorney for the Title Insurance Companies contacted BOF, regarding an apparent title problem on the 2008 White Oaks loan by BOF to White Oaks for which the Title Insurance Companies had already issued a policy. Mr. Berry refused to address the inquiries of BOF regarding the issuance of the title insurance policy on the Commitment for Title Insurance and the 2009 White Oaks loan transaction.
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On September 23, 2009, the Title Insurance Companies filed suit against BOF in the
Circuit Court of Madison County, Mississippi seeking a judgment that they could refuse to issue the title policy bargained for by BOF on the 2009 White Oaks loan, and claiming that certain conditions had not been satisfied for the issuance of the title policy. Those alleged conditions included the purported lack of a recorded Deed of Trust, which had actually already been recorded on September 18, 2009, and failure to pay the premium which had been previously remitted by BOF to Charles Evans who collected said premiums on behalf of the Title Insurance Companies. 27. BOF has made demand upon the Title Insurance Companies and submitted a claim
under the Policy for the 2008 White Oaks loan transaction and on the 2009 White Oaks loan transaction on November 13, 2009, true and correct copies of which are attached hereto as composite Exhibit “F.” However, the Title Insurance Companies have neither paid BOF the value of the property nor cured the title deficiencies. This delay has caused BOF substantial harm by having to monitor and participate actively in over forty Chapter 7 cases and prosecute or defend multiple related civil cases. 28. On October 2, 2009, BOF again tendered the premium payment for the policy directly
to the Title Insurance Companies which it believed had previously been remitted by Charles Evans through the loan proceeds as well as identifying the duly recorded Deed of Trust on the 2009 White Oaks loan from White Oaks to BOF’s trustee which, as stated, had actually already been recorded on September 18, 2009, prior to the Circuit Court suit being filed by the Title Insurance Companies. A copy of the correspondence tendering the documents is attached as Exhibit “G.” The Title Insurance Companies, however, refused to accept this premium payment, returning it to BOF’s counsel, and have failed to either amend or dismiss the Complaint they filed against BOF despite
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BOF’s correspondence and tender of evidence that their allegations were erroneous. The Circuit Court Complaint was removed to Federal District Court by BOF, where the Title Insurance Companies improperly challenged jurisdiction for months. This action has now been referred to this Court and consolidated in this adversary proceeding. 29. All alleged conditions precedent to the issuance of the title policy on the 2009 White
Oaks loan are either: (1) satisfied; (2) were at all relevant times in the control of the Title Insurance Companies and/or their agents and representatives; or (3) not an applicable condition precedent. The failure of any conditions required by the terms of the Commitment for the Title Insurance are the responsibility of or were caused by, the Title Insurance Companies, and/or Charles Evans who knew or should have known that the conditions could not be satisfied, including specifically that fee simple title was not vested in G & B (the supposed grantor as represented to BOF). 30. The condition precedent imposed by the Title Insurance Companies to have a duly
recorded warranty deed from G & B to White Oaks was an impossibility, a fact which the Title Insurance Companies knew or should have known at the time the Title Insurance Companies issued the Commitment for Title Insurance through their agent and/or representative Charles Evans “Agent #: 525241”. Additionally, the alleged condition precedent for a contractor’s affidavit is clearly inapplicable as the property at issue is raw land and no construction was contemplated or planned during the statutory period for liens. 31. Because any conditions precedent to the issuance of the title policy by the Title
Insurance Companies which were not satisfied have at all relevant times been the responsibility of or in the control of the Title Insurance Companies and/or their agent, or the subject and/or result of
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their own misrepresentations, the Title Insurance Companies cannot legitimately require BOF to meet these conditions. 32. Despite meeting all of the conditions of the Commitment for Title Insurance that were
within BOF’s control, the Title Insurance Companies have wholly failed and refused to issue the title insurance policy on the 2009 White Oaks loans and/or to amend their Circuit Court Complaint to dismiss BOF. On both White Oaks loan, the title Insurance Companies have otherwise failed and/or refused to act in good faith toward BOF and/or to provide an adequate, timely and/or appropriate cure under the Commitment and/or issued Policy. As such, the Title Insurance Companies have committed intentional wrongs against BOF, acted maliciously and/or with reckless disregard of BOF’s rights. CROSSCLAIM AGAINST MISSISSIPPI VALLEY TITLE INSURANCE COMPANY AND OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY BOF asserts its Crossclaims against the Title Insurance Companies as follows: COUNT I - NEGLIGENT MISREPRESENTATION 1. 2. BOF incorporates by reference paragraphs 1 through 32 of its Crossclaim. The Title Insurance Companies and Charles Evans negligently misrepresented to BOF
the true state of the title on the property which was pledged as collateral for the loan from BOF on both White Oaks loans. These misrepresentations were of material facts. 3. 4. BOF reasonably and justifiably relied on these representations. As a result of these negligent misrepresentations, BOF has suffered damages by
loaning a substantial sum of monies. 5. As a proximate result of the actions and misrepresentations of the Title Insurance
Companies, Charles Evans as their “Agent #: 525241” or otherwise, BOF has suffered damages in 28
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the amount of the loan proceeds in White Oaks loan transactions plus all consequential damages, including attorneys’ fees and BOF is entitled to a judgment against the Title Insurance Companies for same. COUNT II - INTENTIONAL MISREPRESENTATION AND FRAUD 6. 7. BOF incorporates by reference paragraphs 1 through 5 of its Crossclaim. The Title Insurance Companies and Charles Evans intentionally misrepresented to
BOF the true state of the title of the property which was pledged as collateral by White Oaks to BOF. 8. The Title Insurance Companies and Charles Evans took the actions, and made the
representations and/or omissions complained of herein with the intent to defraud and/or misrepresent material facts to BOF, with the intention that BOF rely on such actions, misrepresentations and/or omissions. Alternatively, such actions, misrepresentations and/or omissions were made by the Title Insurance Companies and Charles Evans in reckless disregard for the rights of BOF. 9. The Title Insurance Companies and Charles Evans owed BOF a duty to conduct the
title examination, issue and honor the Commitment for Title Insurance and title policies in good faith. 10. The Title Insurance Companies and Charles Evans falsely reported that there were no
liens upon the property to be pledged as collateral to BOF in both loans, falsely represented that title was vested in or would be transferred to White Oaks in the White Oaks loans and falsely represented and promised insured title as additional protection for the loan from BOF to White Oaks in the 2009 White Oaks loan. The Title Insurance Companies and Charles Evans knew or should have known at the time these representations were made that these, as well as other, material facts were false. 11. BOF did, in fact, reasonably and justifiably rely on the Title Insurance Companies
actions, misrepresentations and/or omissions complained of herein by closing the loans to White
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Oaks, such reliance caused BOF to be induced into lending money based on false pretenses and has resulted in BOF making a loan for property title to which was not vested as represented. These misrepresentations have rendered BOF effectively unsecured as a matter of record title, absent equitable relief from an appropriate court. 12. As a result of the intentional and fraudulent actions, misrepresentations, and/or
omissions described herein, BOF has suffered damages in the amount of the loan proceeds on the White Oaks loans and all consequential damages incurred, including attorneys’ fees. 13. To the extent the Title Insurance Companies had no actual knowledge of false
representations made by Charles Evans “Agent #: 525241,” the Title Insurance Companies had constructive knowledge and notice of same and enabled such fraud to be committed by holding Charles Evans out to the public as an approved attorney, attorney agent or otherwise as their representative and knew that lenders such as BOF would reasonably and justifiably rely on the accuracy of the title work performed and presented in the form of a Commitment for Title Insurance and title policies. As such the Title Insurance Companies were in the best position to prevent the loss to BOF and all losses of BOF caused by these misrepresentations should be borne by the Title Insurance Companies who enabled the fraud to be committed. BOF is entitled to a judgment against the Title Insurance Companies for same.
COUNT III – NEGLIGENT HIRING AND RETENTION OF AGENT 14. 15. BOF incorporates by reference paragraphs 1 through 13 of its Crossclaim. At all relevant times, Charles Evans was an agent, approved attorney, or
representative of the Title Insurance Companies.
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At all relevant times, Charles Evans held himself out as an agent and/or
representative of the Title Insurance Companies. 17. The Title Insurance Companies have a duty to hire, supervise, audit, or otherwise ensure
that its agents, representatives and/or approved attorneys, including Charles Evans, perform their duties to the Title Insurance Companies’ insureds with competency and with good faith. 18. The Title Insurance Companies breached their duties to properly hire, supervise and
retain competent agents, representatives and/or approved attorneys. The Title Insurance Companies knew or should have known and/or had constructive knowledge that Charles Evans was not performing title work, including but not limited to, giving title opinions, preparing title documents, transferring title and recording deeds and deeds of trust and issuing or causing issuance of title commitments and/or title policies in good faith, or, alternatively, that he was performing such duties incompetently or fraudulently. 19. BOF was harmed by the incompetence, unfitness, and/or bad faith performance of
Charles Evans performing title work, transferring documents, recording (or not) documents and giving inaccurate statements of title, and by the Title Insurance Companies breach of its duties to properly hire, audit, and supervise its agents, representatives and/or approved attorneys. 20. As a proximate result of the actions and/or omissions of the Title Insurance Companies,
BOF has suffered damages in the amount of the loan proceeds for both loans to White Oaks plus all consequential damages, including attorneys’ fees, and BOF is entitled to a judgment against the Title Insurance Companies for same. COUNT IV - BREACH OF CONTRACT – TITLE COMMITTMENT 21. BOF incorporates by reference paragraphs 1 through 20 of its Crossclaim.
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BOF contracted for an accurate statement of title from the Title Insurance
Companies by and through Charles Evans. The Title Insurance Companies issued a Commitment of Title Insurance to BOF based on a statement of title by Charles Evans, “Agent #: 525214.” 23. The statement of title was materially false. Nevertheless, the Commitment for Title
Insurance was issued by the Title Insurance Companies. BOF has fully complied with its obligations and conditions precedent within its control under the Commitment of Title Insurance such that the title policy should be issued in BOF’s favor on the 2009 White Oaks loan and the Title Insurance Companies should be required to honor the terms thereof. 24. The Title Insurance Companies breached their obligations to provide BOF an accurate
statement of title. The Title Insurance Companies have additionally refused to issue the title policy to BOF in breach of their obligations under the Commitment of Title Insurance or the 2009 White Oaks loan. 25. The Title Insurance Companies have no legitimate or arguable reason or justification
for their refusal to issue the title policy to BOF. 26. The Title Insurance Companies are in breach of contract for refusing to issue and
honor a title policy and to provide coverage thereunder for BOF’s losses as a result of their own fundamental breach to provide an accurate statement of title. The Title Insurance Companies are in violation of their responsibilities and promises to insure title as they represented title to be. 27. The Title Insurance Companies’ actions and refusal to honor the Commitment for
Title Insurance and issue the title policy results from an intentional wrong, insult, or abuse as well as from such malice and gross negligence or reckless disregard sufficient to constitute an independent
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and intentional tort. The Title Insurance Companies have breached their contracts to BOF in bad faith. 28. BOF has been damaged as a proximate result in the amount of the loan proceeds
plus all consequential damages including attorneys’ fees and is entitled to a judgment against the Title Insurance Companies for same. COUNT V - BREACH OF CONTRACT – TITLE POLICY 1. 2. BOF incorporates by reference paragraphs 1 through 28 of its Crossclaim. BOF contracted for an accurate statement of title and title insurance Policy from the
Title Insurance Companies by and through Charles Evans as a representative of the Title Insurance Companies. 3. The statement of title provided by the Title Insurance Companies was materially false.
BOF has fully complied with its obligations and conditions precedent within its control under the title Policy and the Title Insurance Companies should be required to honor the terms thereof. 4. The Title Insurance Companies are in breach of contract for refusing to honor the Policy
and to provide coverage thereunder for BOF’s losses as a result of their own fundamental breach to provide an accurate statement of title. The Title Insurance Companies are in violation of their responsibilities and promises to insure title as they represented title to be. 5. Although BOF has repeatedly asked the Title Insurance Companies for either payment
or an explanation of whether, and if so how, the Title Insurance Companies intend to cure BOF’s title deficiencies, the Title Insurance Companies have not adequately responded. The Title Insurance Companies have neither paid under the Policy nor cured BOF’s title deficiencies of which public records indicate the Title Insurance Companies have had actual knowledge at least more than one year.
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Moreover, the Title Insurance Companies have never made any proposal which would actually cure the deficiencies in BOF’s title. Nevertheless, the Title Insurance Companies have refused to pay BOF’s claim. 6. The Title Insurance Companies have no legitimate or arguable reason or justification for
their refusal to pay BOF’s insurance claim under the Policy. 7. The Title Insurance Companies’ actions and refusal to honor the Policy results from an
intentional wrong, insult, or abuse as well as from such malice and gross negligence or reckless disregard sufficient to constitute an independent and intentional tort. The Title Insurance Companies have breached their contract to BOF in bad faith. 8. BOF has been damaged as a proximate result in the amount of the loan proceeds on the
2008 White Oaks loan plus all consequential damages including attorneys’ fees and is entitled to a judgment against the Title Insurance Companies for same. COUNT VI - PROMISSORY ESTOPPEL – 2008 WHITE OAKS LOAN 9. 10. BOF incorporates by reference paragraphs 1 through 8 of its Crossclaim. The Title Insurance Companies and Charles Evans as representatives of the Title
Insurance Companies promised that title would be accurately reported and that title insurance would be issued to protect BOF’s interest in the loan transaction with White Oaks. 11. Despite their own actions, inactions, misrepresentations and/or omissions or those of
“Agent #: 525241” Charles Evans, the Title Insurance Companies have not however, responded specifically to BOF in response to its insurance claims, including answering why the Title Insurance Companies should be excused from having to comply with their contractual obligation since it is indisputable that the Title Insurance Companies have known about the existence of BOF’s claims under
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the Policies since August, 2009, which claims are clearly covered under the terms of the Policies for a complete failure of title. 12. Because these misrepresentations and/or omissions were made by or are attributable to
the Title Insurance Companies, they cannot now rely on their own misrepresentations and actions to avoid the contractual obligations they owe to BOF under the Policies and applicable law. 13. Accordingly, the Title Insurance Companies should be estopped from relying upon their
own misrepresentations and actions in order to avoid their contractual obligations. 14. The White Oaks Loan Documents were not executed and the loan proceeds were not
disbursed until after BOF obtained a statement of title consistent with industry standards. BOF reasonably and justifiably relied upon the representations and conduct of the Title Insurance Companies and Charles Evans as authorized representative of the Title Insurance Companies. As a result of that reliance, BOF has suffered damages in the amount of the 2008 White Oaks loan proceeds plus all consequential damages, including attorneys’ fees. 15. BOF is entitled to a judgment against the Title Insurance Companies enforcing the Policy
and mandating the Title Insurance Companies to honor the Policy. COUNT VII - PROMISSORY ESTOPPEL – 2009 WHITE OAKS LOAN 16. 17. BOF incorporates by reference paragraphs 1 through 15 of its Crossclaim. The Title Insurance Companies and Charles Evans promised that title would be
accurately reported and that title insurance would be issued to protect BOF’s interest in the loan transactions with White Oaks . 18. Despite their own actions, inactions, misrepresentations and/or omissions or those of
“Agent #: 525241” Charles Evans, the Title Insurance Companies have, however, taken the position
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that the alleged conditions of the Commitment for Title Insurance should excuse the Title Insurance Companies from having to comply with their contractual obligations. 19. Because these misrepresentations and/or omissions were made by or are attributable
to the Title Insurance Companies, they cannot now rely on their own misrepresentations and actions to avoid the contractual obligations they owe to BOF under the Commitment for Title Insurance and applicable law. 20. Accordingly, the Title Insurance Companies should be estopped from relying upon
their own misrepresentations and actions in order to avoid their contractual commitments. 21. The Loan Documents were not executed and the loan proceeds were not disbursed
until after BOF obtained the Commitment for Title Insurance consistent with industry standards. BOF reasonably and justifiably relied upon the representations and conduct of the Title Insurance Companies and Charles Evans. As a result of that reliance, BOF has suffered damages in the amount of the 2009 White Oaks loan proceeds plus all consequential damages including attorneys’ fees. 22. BOF is entitled to a judgment against the Title Insurance Companies enforcing the
Commitment and mandating the Title Insurance Companies to issue and honor the title policy. COUNT VIII – BREACH OF OBLIGATION OF GOOD FAITH AND FAIR DEALING IN CLAIMS HANDLING 23. 24. BOF incorporates by reference paragraphs 1 through 22 of its Crossclaim. The Title Insurance Companies are liable to BOF for bad faith, for their breach of the
covenant of good faith and fair dealing, bad faith breach of contract for refusal to honor the Policy and
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Commitment without any arguable or legitimate reason, and for their intentional and/or negligent misrepresentation and fraud in issuing the Policy and Commitment. 25. Mississippi law requires insurance carriers such as the Title Insurance Companies to treat
its insureds with honesty, fairness, and with due regard for the interest of the insured. The law requires the Title Insurance Companies to act toward its insureds with the utmost good faith and fair dealing. The Title Insurance Companies have breached these duties to BOF in refusing to honor the Commitment and Policy under the terms for which they promised to insure the state of the title as the Title Insurance Companies represented. There has been a complete failure of title on both White Oaks loans of which the Title Insurance Companies have had actual knowledge since August, 2009. Yet, the Title Insurance Companies have refused not only to pay BOF’s claims but have also failed to provide BOF with any specific response to its claims or requests for information regarding the Title Insurance Companies intentions as to same. Moreover, as to the 2009 White Oaks loan, the Title Insurance Companies had knowledge in time to prevent BOF’s losses on the 2009 White Oaks loan but failed to provide BOF with notice of same and, instead, allowed said loan to close on the Commitment and the loan proceeds to be disbursed, and then sued BOF in Circuit Court to refuse to issue a policy which would have insured against BOF’s losses . The Title Insurance Companies’ conduct constitutes a breach of good faith and fair dealing including but not limited to the handling of BOF’s claims under the Policy and/or Commitment. 26. The Title Insurance Companies have breached these duties for their own financial gain
and profit, without any arguable or legitimate reason for failing to honor their Commitment for Title Insurance and/or Policy. The Title Insurance Companies have taken these actions under circumstances over which they had control and a responsibility to prevent, and in a climate described by the Title
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Insurance Companies “as a pattern of deceitful and fraudulent actions” which they allege Charles Evans “Agent #: 525241” conducted in violation of “fiduciary duties to refrain from injuring . . . the banks and to accurately report the true state of the title.” 27. All contracts under Mississippi law carry with them the duty to engage in contractual
obligations in good faith and with fair dealing. Moreover, the Title Insurance Companies have exclusive control over evaluation, processing, denial and payment of claims. Mississippi law requires the Title Insurance Companies to use the degree of care in handling claims that a man of ordinary care and diligence would exercise in the management of his own business. The Title Insurance Companies have breached their duties of good faith and fair dealing to BOF. The actions of the Title Insurance Companies are so egregious as to give rise to extra-contractual damages. 28. The Title Insurance Companies actions are so egregious as to constitute intentional and
willful conduct, gross negligence or reckless disregard for the rights of BOF as their insured, amounting to an independent tort. 29. As a result, the Title Insurance Companies are responsible for all actual, compensatory,
extra-contractual and consequential damages, including specifically attorneys’ fees and prejudgment interest, that have been suffered by BOF. 30. BOF is entitled to a judgment for the aforementioned damages and for punitive damages
against the Title Insurance Companies. COUNT IX – EXTENT AND VALIDITY OF LIEN AGAINST PROPERTY 31. 32. BOF incorporates by reference paragraphs 1 through 30 of its Crossclaim. White Oaks is in default under its respective Loan Documents. The amount due and
owing under the 2008 White Oaks loan as of the date of said debtor’s petition was $1,353,168.11 plus 38
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accrued interest, attorneys’ fees and late charges. The amount due and owing under the 2009 White Oaks loan as of the date of White Oaks petition was $484,994.14 plus accrued interest, attorneys’ fees and late charges for a total prepetition indebtedness of White Oaks to BOF of $1,838.162.25. 33. White Oaks is in Chapter 7 bankruptcy and has ceased payment on the indebtedness
owed to BOF under the respective White Oaks Loan Documents. Chris Evans, as guarantor, is also in Chapter 7 bankruptcy. 34. As a result of the title issues described herein, BOF is not in a position to foreclose on
its collateral to collect on the indebtedness due to BOF under the respective Loan Documents and cannot reasonably expect payment on the guaranty of Chris Evans. 35. BOF is entitled to a judgment declaring that its interest in the property is unsecured of
record title and that all conditions to the payment by the Title Insurance Companies on BOF’s Policy and Commitment claims have been satisfied. 36. In addition, BOF is entitled to a judgment against the Title Insurance Companies
liquidating its claims under the White Oaks Loan Documents. COUNT X – BAD FAITH 1. 2. BOF incorporates by reference paragraphs 1 through 36 of its Crossclaim. The Title Insurance Companies are liable to BOF as its insurers for bad faith, for its
breach of the covenant of good faith and fair dealing, bad faith breach of contract for refusal to issue the title Policy and to honor the Commitment for Title Insurance on the 2009 White Oaks loan without any arguable or legitimate reason, and for their intentional and/or negligent misrepresentation and fraud in issuing the original Title Policy in the 2008 White Oaks loan and Commitment for Title Insurance in the 2009 White Oaks loan. 39
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Mississippi law requires insurance carriers such as the Title Insurance Companies to
treat its insureds with honesty, fairness, and with due regard for the interest of the insured. The law requires the Title Insurance Companies to act toward its insureds with the utmost good faith and fair dealing. The Title Insurance Companies have breached these duties to BOF in refusing to issue the title insurance policy which they promised to issue and failing to honor the Policy actually issued. 4. The Title Insurance Companies have breached these duties for their own financial gain
and profit, without any arguable or legitimate reason for failing to honor their Commitment for Title Insurance and Policy. The Title Insurance Companies have taken these actions under circumstances over which they had control and responsibility to prevent and in a climate described by the Title Insurance Companies “as a pattern of deceitful and fraudulent actions” which they allege Charles Evans “Agent #: 525241” conducted in violation of “fiduciary duties to refrain from injuring . . . the banks and to accurately report the true state of the title.” 5. All contracts under Mississippi law carry with them the duty to engage in contractual
obligations in good faith and with fair dealing. The Title Insurance Companies have breached their duties of good faith and fair dealing to BOF. 6. The Title Insurance Companies actions were taken with malice and in bad faith and
are so egregious as to constitute intentional and willful conduct, gross negligence or reckless disregard for the rights of BOF as their insured, amounting to an independent tort. 7. As a result, the Title Insurance Companies are responsible for all actual,
compensatory, and consequential damages, including specifically attorneys’ fees and prejudgment interest, that have been suffered by BOF.
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BOF is entitled to a judgment for the aforementioned damages and for punitive
damages against the Title Insurance Companies. COUNT XI – VIOLATION OF LITIGATION ACCOUNTABLITY ACT OF 1988 9. 10. BOF incorporates by reference paragraphs 1 through 8 of its Crossclaim. The Title Insurance Companies commenced the Complaint in the Circuit Court of
Madison County, Mississippi, bringing claims against BOF which were frivolous, groundless in fact and law and/or vexatious, and which were interposed for delay or harassment, to unnecessarily expand the proceedings, or for other improper reasons and therefore without substantial justification within the meaning of Miss. Code Ann. § 11-55-5(1). This Complaint has been consolidated in the current adversary proceeding and has not been dismissed as against BOF by the Title Insurance Companies. 11. BOF has suffered damages as a result of the Title Insurance Companies’
commencement of their Complaint and continuation thereof after BOF informed them that the alleged conditions precedent to the issuance of the title policy had either been met, were inapplicable, within their own control, or were the result of the Title Insurance Companies’ own misrepresentations and/or actions. 12. BOF is entitled to a judgment against the Title Insurance Companies for all attorneys’
fees and costs incurred in the defense and prosecution of issues related to the issuance of the title insurance policy on the 2009 White Oaks loan in an amount to be determined at trial. COUNT XII – CIVIL CONSPIRACY 13. BOF incorporates by reference paragraphs 1 through 12 of its Crossclaim.
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The Title Insurance Companies either directly or through their agent(s), Charles
Evans, whether as an attorney, or in his capacity as “Agent #: 525241” for the Title Insurance Companies or otherwise, White Oaks, and/or Chris Evans conspired together, whether all of them or in some combination thereof, for the purpose of accomplishing an unlawful purpose and/or a lawful purpose unlawfully to accomplish the receipt of substantial sums of money as purchase money loan proceeds from BOF or other financial gain under the false representations and pretenses of the purchase of real estate that never occurred. 15. As a proximate result, BOF has suffered damages in the amount of the White Oaks
loan proceeds plus all consequential damages including attorneys’ fees. 16. BOF is entitled to a judgment against the Title Insurance Companies, Charles Evans,
Chris Evans, and/or White Oaks, as applicable, jointly and severally for actual and punitive damages in an amount to be proven at trial.
COUNT XIII – ATTORNEYS’ FEES 17. 18. BOF incorporates by reference paragraphs 1 through 16 of its Crossclaim. Pursuant to Fed. R. Bankr. Proc. 7008(b), BOF is entitled to the recovery of its
attorneys’ fees against the Title Insurance Companies in any judgment awarded in BOF’s favor against them.
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RELIEF REQUESTED AGAINST THE TITLE INSURANCE COMPANIES 19. BOF incorporates by reference paragraphs 1 through 18 of its Crossclaim. BOF
seeks a judgment in its favor against the Title Insurance Companies jointly and severally for the following relief under all Counts of the Crossclaim herein in amounts to be proven at trial: A. Specific performance of their promise to issue the title insurance policy for that property
described in Schedule “A” of the Commitment for Title Insurance, attached hereto as Exhibit “C” on the 2009 White Oaks loan and to honor the Policy issued on the 2008 White Oaks loan transaction; B. Consequential and actual damages, including but limited to, damages in the amount of
the outstanding loan balances as a result of the loans to White Oaks, including interest, attorneys’ fees and other costs associated with collection of these debts; C. Oaks; D. E. F. G. H. Attorneys’ fees in the defense and prosecution of this and other related actions; Prejudgment interest at the highest applicable rate; Punitive damages in an amount to be determined at trial; All costs and attorneys’ fees recoverable under the Litigation Accountability Act; and Post-judgment interest at the highest rate applicable. All late fees, penalties and other expenses associated with the loans from BOF to White
CROSSCLAIMS AGAINST STEPHEN SMITH, AS TRUSTEE FOR BANK RUPTCY ESTATE OF CHARLES EVANS, JR . AND DEREK A. HENDERSON, AS TRUSTEE FOR BANKRUPTCY ESTATES OF WHITE OAKS INVESTMENTS COMPANY AND JON CHRISTOPHER EVANS BOF files this Crossclaim against the estates of Charles Evans, White Oaks and Chris Evans, stating as follows:
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BOF incorporates by reference its allegations contained in paragraphs 1 through 19
of its Crossclaim. COUNT I - NEGLIGENT MISREPRESENTATION 21. White Oaks and Chris Evans misrepresented to BOF their intentions in the White
Oaks loan transactions. Charles Evans negligently misrepresented to BOF the true state of title of the property which was pledged as collateral for the loans to White Oaks from BOF. The facts misrepresented were material facts. 22. Instead, Charles Evans, Chris Evans and/or White Oaks falsely reported that there
were no liens upon the property pledged as collateral to BOF under the Loan Documents and to which title was to be insured in connection with the loan by BOF to White Oaks, falsely represented title would be vested in White Oaks after the closings of the White Oaks loans which they knew or should have known was false at the time they made the representations to BOF. 23. Charles Evans, Chris Evans and White Oaks, are all in Chapter 7 bankruptcy. The
Title Insurance Companies have refused to issue the title policy on the 2009 White Oaks loan and to refused to honor the title Policy on the 2008 White Oaks loan as a result of their own allegations against Charles Evans, Chris Evans, and White Oaks leaving BOF with no immediate source of recovery. 24. BOF reasonably and justifiably relied on the representations of Charles Evans,
Chris Evans and/or White Oaks. 25. As a result of the negligent misrepresentation of material facts, BOF has suffered
damages by making two loans for property, title to which was not vested as represented. As a proximate result, BOF appears of record title to be an unsecured creditor, absent judicial relief
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otherwise, and has suffered damages in the amount of the White Oaks loan proceeds plus all consequential damages including attorneys’ fees. COUNT II - INTENTIONAL MISREPRESENTATION AND FRAUD 26. 27. BOF incorporates by reference paragraphs 1 through 25 of its Crossclaim. Charles Evans, White Oaks and Chris Evans intentionally misrepresented to BOF the
true state of title of the property which was pledged as collateral for each of the loans from BOF to White Oaks. The facts misrepresented were material facts. 28. Charles Evans, Chris Evans and/or White Oaks took the actions and made the
representations and/or omissions complained of herein with the intent to defraud and/or misrepresent material facts to BOF and with the intention that BOF rely on such actions, representations and/or omissions. Alternatively, such actions, representations and/or omissions were made by Charles Evans, Chris Evans and/or White Oaks in reckless disregard for the rights of BOF. 29. Charles Evans owed BOF a duty to conduct the title examination in good faith as a
known and intended third party beneficiary of same. 30. Instead, Charles Evans falsely reported that there were no liens upon the property
pledged as collateral to BOF in the White Oaks loans, falsely represented that title would be in White Oaks after the loan closings. Charles Evans, Chris Evans and/or White Oaks knew or should have known that these facts were false at the time they made the representations to BOF in both loan transactions. 31. BOF did, in fact, reasonably and justifiably rely on the actions, representations and/or
omissions of Charles Evans, Chris Evans and/or White Oaks complained of herein by extending credit and closing the loans to White Oaks. Such reliance caused BOF to be induced into lending
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money based on false pretenses and resulted in BOF making loans for property in which BOF is effectively unsecured as a matter of record title absent relief from an appropriate court. 32. As a proximate result of the intentional and fraudulent misrepresentations and/or
omissions of Charles Evans, Chris Evans and/or White Oaks, BOF has suffered damages in the amount of the White Oaks loan proceeds, plus all consequential damages including attorneys’ fees and punitive damages. COUNT III - BREACH OF PROFESSIONAL OBLIGATION /PROFESSIONAL NEGLIGENCE 33. 34. BOF incorporates by reference paragraphs 1 through 32 of its Crossclaim. Charles Evans owes the duties all attorneys owe to known third party beneficiaries
of his legal work to perform services correctly. Charles Evans was retained by White Oaks and/or the Title Insurance Companies to perform services in connection with the proposed purchase of property by White Oaks, including a title search for the purpose of establishing and insuring title to the property to be pledged as collateral. Clear title to the property vested in White Oaks was required under the terms of the loan by BOF to White Oaks and was to be insured by the Title Insurance Companies as such upon the closing of the purchase and loan transactions. 35. As a known condition of each loan from BOF to White Oaks, White Oaks was to
obtain fee simple title to the property and grant BOF a first priority deed of trust as a purchase money loan. 36. Charles Evans was responsible whether separately and/or as agent for the Title
Insurance Companies for determining the accurate state of title for said loans and to ensure for purposes of the issuance of a commitment for title insurance and a subsequent title insurance policy that BOF’s conditions for such loans were met. In connection therewith, Charles Evans represented 46
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that White Oaks would have clear title to the property after the loan closings, which would be properly pledged to BOF under a first priority deed of trust as collateral for each of the two loans to White Oaks. 37. Charles Evans owed duties to BOF as a known third party beneficiary of his title
examination, through him as “Agent #: 525241” for the Title Insurance Companies, and subsequent title commitments and policies. Charles Evans whether as an attorney, agent or representative for the Title Insurance Companies, or otherwise, breached his duty of reasonable professional care by misrepresenting who owned the property, the state of the title, by misrepresenting that the property was not encumbered and by misrepresenting that White Oaks would be vested as record owner after the loan closings. 38. Charles Evans, “Agent: #525241” for the Title Insurance Companies, also breached
his duty of reasonable professional care by failing to perform the conditions precedent to the issuance of the title policy in the Commitment for Title Insurance on the 2009 White Oaks loan. 39. As a result of the negligent professional conduct of Charles Evans, BOF has been
proximately damaged in the amount of the White Oaks loan proceeds plus all consequential damages including attorneys’ fees. COUNT IV – CIVIL CONSPIRACY 1. 2. BOF incorporates by reference paragraphs 1 through 39of its Crossclaim. The Title Insurance Companies either directly or through their agent(s), Charles
Evans, whether as an attorney, or in his capacity as “Agent #: 525241” for the Title Insurance Companies or otherwise, Chris Evans and White Oaks conspired together, whether all of them or in some combination thereof, for the purpose of accomplishing an unlawful purpose and/or a lawful
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purpose unlawfully to accomplish the receipt of substantial sums of money as purchase money loan proceeds from BOF or other financial gain under the false representations and pretenses of the purchase of real estate that never occurred. 3. As a proximate result, BOF has suffered damages in the amount of the loan proceeds
of both White Oaks loans plus all consequential damages including attorneys’ fees. 4. BOF is entitled to a judgment against the Title Insurance Companies, Charles Evans,
Chris Evans, and White Oaks jointly and severally for actual and punitive damages in an amount to be proven at trial. COUNT V – ATTORNEYS’ FEES 5. 6. BOF incorporates by reference paragraphs 1 through 4 of its Crossclaim. Pursuant to Fed. R. Bankr. Proc. 7008(b), BOF is entitled to the recovery of its
attorneys’ fees against the estates of White Oaks, Chris Evans, and Charles Evans, and Trustee Henderson and Trustee Smith respectively, in any judgment awarded in BOF’s favor. RELIEF REQUESTED AGAINST CHARLES EVANS, CHRIS EVANS, AND WHITE OAKS ESTATES 7. BOF incorporates by reference paragraphs 1 through 6 of its Crossclaim. BOF seeks
a judgment in favor of BOF against the estates of Charles Evans, Chris Evans and/or White Oaks, and Trustee Henderson and Trustee Smith, under all Counts of its Crossclaim for the following relief: A. Consequential and actual damages, including but not limited to, damages in the amount
of the outstanding loan balances from BOF to White Oaks, including interest, attorneys’ fees and other costs associated with collection of this debt; B. White Oaks; 48 All late fees, penalties and other expenses associated with the debt owed to BOF by
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Attorneys’ fees in the defense and prosecution of this action and related actions; Prejudgment interest at the highest applicable rate; Punitive damages in an amount to be determined at trial; and Post-judgment interest at the highest applicable rate.
WHEREFORE, BOF asserts its Crossclaims against the Title Insurance Companies and against the respective estates of Charles Evans, Chris Evans and White Oaks and Trustees, and requests a judgment against each of them as stated herein and that said judgment be binding on all parties hereto as said claims arise out of the same transaction or occurrence, or series of same, that is the subject of the original action and because the First Amended Complaint and Crossclaims have questions of law and fact in common to all parties. Alternatively, BOF requests such other and/or further relief as the Court deems just and appropriate.
CROSS-CLAIM OF BANK OF FOREST FOR DECLARATORY RELIEF, REFORMATION, EQUITABLE LIEN AND FOR OTHER EQUITABLE RELIEF AS TO WHITE OAKS DEED OF TRUST JULY 21, 2008
COMES NOW Bank of Forest and files this Cross-Claim for Declaratory Relief, Reformation, Equitable Lien and for Other Equitable Relief against Derek A. Henderson, the duly appointed Chapter 7 Trustee for the bankruptcy estates of Hanover Investments, LLC, and White Oaks Investment Company, LLC, and would show unto the Court the following: 1. By Warranty Deed dated July 23 2008, G&B Investments, Inc., a Mississippi
corporation, conveyed fee simple title to Hanover Investments, LLC, in a parcel of real property located in Madison County, Mississippi, and more particularly described in the Warranty Deed, a copy of which is attached the G&B Amended Complaint as Exhibit “A”. 49
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White Oaks Investment Company, LLC, on July 21, 2008, executed and delivered a
Deed of Trust in favor of Bank of Forest on two 2.2505 acre tracts described in the Deed of Trust (“Subject Property”). The Deed of Trust was given to secure an indebtedness in the sum of $1,296,500.00. The Deed of Trust was filed of record in the offices of the Chancery Clerk of Madison County, Mississippi, on September 17, 2008, at 11:10 a.m., and recorded at Deed of Trust Book 2354, at Page 0391, a true and correct copy of which is attached hereto as Exhibit “A.” 3. Through error, omission, mistake, or deliberate act of fraud, the Subject Property was
not conveyed by Hanover Investments, LLC, to White Oaks Investment Company, LLC. 4. The transaction, including deeds, should be reformed and the Subject Property conveyed
to White Oaks Investment Company, LLC, as was the original intention of the parties to the transaction. The Court should declare that Bank of Forest has a first priority lien on the Subject Property. The reformation of this transaction will fulfill the intent of the parties. 5. Hanover Investments, LLC, should be ordered to execute a Warranty Deed conveying
the Subject Property to White Oaks Investment Company, LLC or the Court should transfer legal title to White Oaks Investment Company, LLC. 6. In the alternative, the proceeds of the subject loan and Deed of Trust may have been used
to satisfy and pay off other prior valid liens and Deeds of Trust on the Subject Property. 7. Plaintiff is subrogated to the rights, titles and liens of all prior Deeds of Trust or other
liens it paid off. 8. In the alternative, Plaintiff is entitled to an equitable lien on the Subject Property under
Mississippi law. 9. In the alternative, Plaintiff is entitled to a constructive trust on the Subject Property.
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To avoid unjust enrichment a constructive trust should be placed on the Subject Property
in favor of Plaintiff. WHEREFORE, PREMISES CONSIDERED, Plaintiff respectfully requests that the Court grant it the relief requested herein, including: (a) (b) a Judgment finding that Plaintiff has a valid first priority lien on the Subject Property; that the transaction be reformed to include the interest of Hanover Investments, LLC,
in the Subject Property; (c) that Hanover Investments, LLC, be required to execute a Warranty Deed of the Subject
Property to White Oaks Investment Company, LLC, or the Court should transfer legal title to the Subject Property to White Oaks Investment Company, LLC; (d) that Plaintiff is subrogated to all rights, titles and liens of any prior Deeds of Trust or any
other liens paid off with the funds from the subject Deed of Trust; (e) (f) (g) and (h) All other relief to which Plaintiff may be entitled in the premises. Plaintiff is entitled to an equitable lien on the Subject Property; Plaintiff is entitled to a constructive trust on the Subject Property; Plaintiff is entitled to full and complete restitution under principles of law and equity;
CROSS-CLAIM OF BANK OF FOREST FOR DECLARATORY RELIEF, REFORMATION, EQUITABLE LIEN AND FOR OTHER EQUITABLE RELIEF AS TO WHITE OAKS DEED OF TRUST AUGUST 27, 2009
COMES NOW Bank of Forest and files this Cross-Claim for Declaratory Relief, Reformation, Equitable Lien and for Other Equitable Relief against Merchants & Farmers Bank and Derek A. Henderson, the duly appointed Chapter 7 Trustee for the bankruptcy estates of Hanover Investments, 51
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LLC, Town Park of Madison, LLC and White Oaks Investment Company, LLC, would show unto the Court the following: 1. On or about August 27, 2009, White Oaks Investment Company LLC (“White Oaks”)
executed and delivered a deed of trust in favor of Bank of Forest on a 5.541 acre tract of land described in that deed of trust, a copy of which is attached hereto as Exhibit “D”. The property subject to that deed of trust is the same as tract 1 described in Exhibit “H” hereto, a deed of trust from Town Park of Madison, LLC to Merchants & Farmers Bank. As to that 5.541 acre tract, and its deed of trust, Bank of Forest is and was a bona fide mortgagee for value without notice of any claim by any other person to a security interest therein. 2. That through mistake, inadvertence or deliberate act of fraud, Hanover Investments, LLC
did not convey the 5.541 acre tract to White Oaks; that, on information and belief, the proceeds of the loan secured by the deed of trust in favor of Bank of Forest with respect to the subject 5.541 acre tract were used by Hanover and/or White Oaks in such a manner that, at law and in equity, the Court should compel conveyance of the subject 5.541 acre tract from Hanover to White Oaks and/or judicially recognize that legal title to the subject property be vested in White Oaks at the time of the execution of its deed of trust to Bank of Forest. 3. That the Court adjudicate in all respects that Bank of Forest holds a good and valid
security interest in and to the 5.541 acre tract, at law and/or in equity, in accordance with the terms and conditions stated in the deed of trust in favor of Bank of Forest attached as Exhibit “D” hereto, which has priority over any other claims with respect thereto. 4. Alternatively, Bank of Forest has an equitable lien with respect to that property, which
constitutes a first priority lien with respect to same.
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The proceeds of the loan secured by the deed of trust in favor of Bank of Forest may
have been used to satisfy and pay off other liens and deeds of trust on the 5.541 acre tract and, if so, and to that extent, Bank of Forest should be subrogated to the rights, titles and liens of all such prior deeds of trust and liens. Bank of Forest, to avoid unjust enrichment, is entitled to a constructive trust with respect to the 5.541 acre tract. 6. With respect to Town Park of Madison, LLC , Bank of Forest asserts that its claims with
respect to the 5.541 acre tract are superior to any claims of Town Park of Madison, LLC in the premises, including the deed of trust attached as Exhibit “H.” 7. With respect to Town Park of Madison, LLC and Hanover Investments, LLC, Bank of
Forest would show that on the date that Merchants & Farmers Bank filed its Complaint for Declaratory Relief, Reformation, Equitable Lien, and Other Equitable Relief in the Chancery Court of Madison County, Mississippi, Hanover Investments, LLC and Town Park of Madison, LLC engaged in a transaction whereby Tracts 1 and 2 of the property described in the deed of trust in favor of Merchants & Farmers Bank was deeded from Hanover Investments, LLC to Town Park of Madison, LLC. To the extent to which that conveyance, a copy of which is attached hereto as Exhibit “I”, purports to convey the 5.541 acre tract described therein as tract 1, the Bank of Forest asserts that the conveyance is invalid and should be held void and of no effect with respect to the security interest alleged herein in favor of Bank of Forest in and to the 5.541 acre tract. 8. Alternatively, the Court should marshal the property subject to the deeds of trust in
favor of Bank of Forest and Merchants & Farmers Bank so that security is provided equitably to each, taking into consideration all security available to each with respect to their loans, the amounts loaned by each; the remaining balances and due and payable; and other equitable considerations.
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WHEREFORE, by way of Cross-Claim, Bank of Forest prays that (1) the Court order Hanover to execute a deed conveying the 5.541 acre tract herein to White
Oaks and/or adjudge that White Oaks was the lawful owner, at law and in equity, of that property on the date of its deed of trust to Bank of Forest; that Bank of Forest be adjudged to have a good and valid first priority lien on the subject 5.541 acre tract, at law and/or in equity; (2) the claims of all other parties with respect to that tract be removed as a cloud on the title
secured by the deed of trust in favor of Bank of Forest; that Bank of Forest has an equitable lien in and to the 5.541 acre tract with priority over any claim of any other party; (3) (4) Bank of Forest is entitled to a constructive trust with respect to the 5.541 acre tract; Bank of Forest be subrogated to any liens and/or deeds of trust which may have been
paid with proceeds of the deed of trust in favor of Bank of Forest secured by the 5.541 acre tract; that the Court marshal the assets subject to the deeds of trust in favor of Bank of Forest and Merchants & Farmers Bank; (5) the Bank of Forest be subrogated to any prior deeds of trusts or liens paid with the
proceeds of loans secured by deeds of trust on the subject 5.541 acre tract in favor of the Bank of Forest; (6) that Bank of Forest be adjudged to have a constructive trust on the 5.541 acre tract; and
that the Court adjudicate that the deed executed by Hanover Investments, LLC to Town Park of Madison, LLC attached hereto as Exhibit “I" be declared void and of no effect; and (7) the Court award such other appropriate and equitable relief to which it may find the
parties entitled.
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Respectfully submitted, this the 3rd day of September, 2010. BANK OF FOREST
/s/ John G. Corlew John G. Corlew Its Attorney
OF COUNSEL: John G. Corlew (MSB# 6526) Kathy K. Smith (MSB# 10350) CORLEW MUNFORD & SMITH PLLC 4450 Old Canton Road, Suite 111 (39211) Post Office Box 16807 Jackson, MS 39236-6807 Telephone: 601-366-1106 Facsimile: 601-366-1052
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G. Todd Burwell 618 Crescent Blvd.; Suite 200 Ridgeland, MS 39157 Telephone: 601-427-4470 ONLY AS TO ANSWER AND DEFENSES TO G&B FIRST AMENDED COMPLAINT AND CROSS CLAIMS FOR EQUITABLE RELIEF AS TO WHITE OAKS DEEDS OF TRUST OF JULY 21, 2008 AND AUGUST 29, 2009 Kristina M. Johnson Janet D. McMurtray WATKINS LUDLAM WINTER & STENNIS, P.A. 190 East Capitol Street; Suite 800 Post Office Box 427 Jackson, MS 39205-0427 Telephone: 601-949-4785 Facsimile: 601-949-4804 ONLY AS TO ANSWER AND DEFENSES AS TO TRUSTEE’S CROSSCLAIM, CROSS CLAIMS AGAINST MISSISSIPPI VALLEY TITLE INSURANCE COMPANY AND OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY AND CROSS CLAIMS AGAINST STEPHEN SMITH AS TRUSTEE FOR BANKRUPTCYESTATE OF CHARLES EVANS, JR. AND DEREK A. HENDERSON, AS TRUSTEE FOR BANKRUPTCY ESTATES OF WHITE OAKS INVESTMENTS COMPANY AND JON CHRISTOPHER EVANS
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I hereby certify that on September 3, 2010, I electronically filed the foregoing with the Clerk of the Court using the ECF system which sent notification of such filing to the parties set forth in the Electronic Mail Notice List as of the date hereof, including the following: R. Michael Bolen, Esq. USTPRegion05.JA.ECF@usdoj.gov Derek A. Henderson, Trustee d_henderson@bellsouth.net M. Scott Jones, Esq. scott.jones@arlaw.com Gene D. Berry, Esq. genedberry@berryfirm.net William C. Brabec, Esq. bill.brabec@arlaw.com G. Todd Burwell, Esq. tburwell@gtbpa.com John G. Corlew, Esq. jcorlew@cmslawyers.com Michael V. Cory, Esq. mc@dmc-law.net Tylvestor O. Goss, Esq. bankruptcy@dgwlaw.com John G. Holaday, Esq. john@msattys.com Lucy Elizabeth Johnson, Esq. bankruptcy@msattys.com Michael S. Macinnis, Esq. mikems@bellsouth.net
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Richard A. Montague, Esq. rmontague@wellsmoore.com Jeff D. Rawlings, Esq. rrm_h@bellsouth.net Kathy K. Smith, Esq. ksmith@cmslawyers.com Jeffrey K. Tyree, Esq. jktyree@hjglawfirm.com DATED: September 3, 2010.
/s/ John G. Corlew JOHN G. CORLEW
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