090310 bank of forest cross claim p.25

8/8/2019 090310 Bank of Forest Cross Claim p.25

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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 EVANSDebtors,

__________________________________

G&B INVESTMENTS, INC. PLAINTIFF

V. ADV. PRO. NO. 10-00040-NPO

DEREK A. HENDERSON, TRUSTEE FOR THE

BANKRUPTCY ESTATE OF JOHN CHRISTOPER

EVANS, ET AL. DEFENDANTS

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

Plaintiffs 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

Plaintiffs claims against Bank of Forest are barred by waiver and/or estoppel.

THIRD DEFENSE

Plaintiffs claims against Bank of Forest are barred by accord and satisfaction.

FOURTH DEFENSE

Plaintiffs claims against Bank of Forest are barred for failure to plead fraud with

particularity.

Case 10-00040-NPO Doc 66 Filed 09/03/10 Entered 09/03/10 18:06:32 Desc MainDocument Page 1 of 58


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FIFTH DEFENSE

Plaintiffs claims against Bank of Forest are barred by parole evidence.

SIXTH DEFENSE

Plaintiffs claims against Bank of Forest are barred by statute of frauds.

SEVENTH DEFENSE

Plaintiffs claims against Bank of Forest are barred by assumption of the risk.

EIGHTH DEFENSE

Plaintiffs alleged injuries, if any, are the result of Plaintiffs own actions or inactions.

NINTH DEFENSE

Plaintiffs claims against Bank of Forest are barred by payment.

TENTH DEFENSE

Plaintiffs claims against Bank of Forest are barred by release.

ELEVENTH DEFENSE

Plaintiffs 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 Forests denial

of liability to Plaintiff and Bank of Forests claim regarding the property which is the subject of

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this case.

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. Admitted.

2. Admitted.

3. Denied.

4. Admitted.

5. Admitted.

6. Admitted.

7. Admitted.

8. Admitted.

9. Admitted.

10. Admitted.

11. Admitted.

12. Admitted.

13. Admitted.

14. Admitted.

15. Admitted.

16. Admitted, that this is a core proceeding.

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17. 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.




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.


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.



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

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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 Forests 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 Forests 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 Trustees 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 Trustees 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

Trustees Answer to First Amended Complaint as Exhibit 7. As described in the Trustees 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.

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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 FORESTS ANSWER AND AFFIRMATIVE DEFENSES

TO DEREK A. HENDERSON, TRUSTEES CROSSCLAIM

Bank of Forest (BOF) hereby files its Answer and Affirmative Defenses in Response to

Derek A. Henderson, Trustees Crossclaim (Henderson Crossclaim) [Dkt. #31] in the above-

referenced 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)

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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.




3. BOF admits the allegations of paragraph 47 of the Henderson Crossclaim.



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Summary of Facts

13. Upon information and belief, BOF admits the allegations of paragraph 57 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

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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


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.



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.





22. 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.


of the allegations contained in paragraph 67 of the Henderson Crossclaim.


of the allegations contained in paragraph 68.

Count One Determine Extent and Validity of Liens/Parcel T-1

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25. 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







28. Paragraph 72 of the Henderson Crossclaim calls for no response from BOF. In


belief as to the truth of the allegations contained in said paragraph.

Count Two Determine Extent and Validity of Liens/Parcel T-2



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.



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32. Paragraph 76 of the Henderson Crossclaim calls for no response from BOF. In


belief as to the truth of the allegations contained in said paragraph.

Count Three Determine Extent and Validity of Liens/Parcel T-3



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.


36. 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



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Parcel T-4

38. BOF admits paragraph 82 of the Henderson Crossclaim.



Count Five Determine Extent and Validity of Liens/Parcel T-5



Parcel T-5




Count Six Determine Extent and Validity of Liens/Parcel T-6



Parcel T-6







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Count Seven Determine Deed of Trust Invalid and Void Foreclosure









Count Eight Voidable Preference Transfers



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.


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Count Nine Fraudulent Transfers















Count Ten Liability of Transferee

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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




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


contained in said paragraph.

Count Twelve Void All Contracts and Transactions as Fraud



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

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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


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

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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 FORESTS 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. BOF is a Mississippi banking corporation with its principal place of business in

Mississippi.

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2. 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

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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.

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16. 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,

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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

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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 BOFs 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 BOFs 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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26. 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 BOFs 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 BOFs

counsel, and have failed to either amend or dismiss the Complaint they filed against BOF despite

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BOFs 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 contractors 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 BOFs 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

BOFs rights.

CROSSCLAIMAGAINSTMISSISSIPPIVALLEYTITLEINSURANCE

COMPANYANDOLDREPUBLICNATIONALTITLEINSURANCECOMPANY

BOF asserts its Crossclaims against the Title Insurance Companies as follows:

COUNTI-NEGLIGENT MISREPRESENTATION

1. BOF incorporates by reference paragraphs 1 through 32 of its Crossclaim.

2. 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. BOF reasonably and justifiably relied on these representations.

4. 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

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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.

COUNTII-INTENTIONAL MISREPRESENTATION AND FRAUD


7. 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


15. At all relevant times, Charles Evans was an agent, approved attorney, or

representative of the Title Insurance Companies.

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16. 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.

COUNTIV-BREACHOFCONTRACTTITLE COMMITTMENT


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22. 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 BOFs 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 BOFs 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.

COUNTV-BREACHOFCONTRACTTITLEPOLICY


2. 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 BOFs 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 BOFs title

deficiencies, the Title Insurance Companies have not adequately responded. The Title Insurance

Companies have neither paid under the Policy nor cured BOFs 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 BOFs title. Nevertheless, the Title Insurance Companies have refused to pay BOFs

claim.

6. The Title Insurance Companies have no legitimate or arguable reason or justification for

their refusal to pay BOFs 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.

COUNTVI-PROMISSORYESTOPPEL2008WHITEOAKSLOAN


10. 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 BOFs 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 BOFs 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.

COUNTVII-PROMISSORYESTOPPEL2009WHITEOAKSLOAN


17. The Title Insurance Companies and Charles Evans promised that title would be

accurately reported and that title insurance would be issued to protect BOFs 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.

COUNTVIIIBREACHOFOBLIGATIONOFGOODFAITHAND

FAIR DEALING IN CLAIMS HANDLING


24. 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 BOFs 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 BOFs 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 BOFs losses . The Title Insurance Companies conduct constitutes a

breach of good faith and fair dealing including but not limited to the handling of BOFs 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.

COUNTIXEXTENTANDVALIDITYOFLIENAGAINSTPROPERTY


32. 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 debtors petition was $1,353,168.11 plus

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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 BOFs 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.

COUNTXBADFAITH


2. 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.

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3. 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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14. 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


18. 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 BOFs favor

against them.

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RELIEFREQUESTEDAGAINSTTHETITLEINSURANCECOMPANIES

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. All late fees, penalties and other expenses associated with the loans from BOF to White

Oaks;

D. Attorneys fees in the defense and prosecution of this and other related actions;

E. Prejudgment interest at the highest applicable rate;

F. Punitive damages in an amount to be determined at trial;

G. All costs and attorneys fees recoverable under the Litigation Accountability Act; and

H. Post-judgment interest at the highest rate applicable.

CROSSCLAIMSAGAINSTSTEPHENSMITH,ASTRUSTEEFORBANKRUPTCY

ESTATEOFCHARLESEVANS,JR.ANDDEREKA.HENDERSON,ASTRUSTEEFOR

BANKRUPTCYESTATESOFWHITEOAKSINVESTMENTSCOMPANYANDJON

CHRISTOPHEREVANS

BOF files this Crossclaim against the estates of Charles Evans, White Oaks and Chris Evans,

stating as follows:

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20. BOF incorporates by reference its allegations contained in paragraphs 1 through 19

of its Crossclaim.

COUNTI-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.

COUNTII-INTENTIONAL MISREPRESENTATION AND FRAUD


27. 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.

COUNTIII-BREACH OF PROFESSIONAL

OBLIGATION/PROFESSIONAL NEGLIGENCE


34. 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 t