First Alliance Bank v. Mississippi Valley Title Ins. Co. (In re Evans)
| Decision Date | 22 June 2012 |
| Docket Number | ADV. PROC. NO. 10-00005-NPO,CASE NO. 09-03763-NPO |
| Parties | In re: JON CHRISTOPHER EVANS, DEBTOR. JOINTLY ADMINISTERED WITH RELATED CASES FIRST ALLIANCE BANK, FIRST STATE BANK, FIRST SECURITY BANK, AND PATRIOT BANK CROSS-PLAINTIFFS v. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY AND OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY CROSS-DEFENDANTS |
| Court | United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Mississippi |
CHAPTER
ON CROSS-CLAIMS OF FIRST STATE BANK,
FIRST ALLIANCE BANK, AND PATRIOT BANK
AGAINST MISSISSIPPI VALLEY TITLE INSURANCE COMPANY
AND OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY
RELATED TO THE WOODGREEN PROPERTY—PHASE ONE: LIABILITY
This matter came before the Court on February 21-22, 2012, for the liability phase ("Phase One")1 of the trial (the "Woodgreen Trial") on the cross-claims of (1) First State Bank ("First State"), (2) First Alliance Bank ("First Alliance"), and (3) Patriot Bank ("Patriot") against Mississippi Valley Title Insurance Company and Old Republic National Title Insurance Company (the "Title Companies") in the above-referenced adversary proceeding (the "Adversary"). Patriot, First State,and First Alliance are together referred to as the "Woodgreen Banks." At the Woodgreen Trial,2 William C. Brabec and M. Scott Jones represented the Title Companies; William Liston, III and W. Lawrence Deas represented the Woodgreen Banks.
The relevant pleadings in the Adversary, in the order in which they were filed, are: Crossclaim of Patriot Bank (Adv. Dkt. 177)3 filed by Patriot; Crossclaim of First Alliance Bank (Adv. Dkt. 178) filed by First Alliance; Amended Crossclaim of First State Bank (Adv. Dkt.188) filed by First State; Mississippi Valley Title Insurance Company and Old Republic National Title Insurance Company's Amended Answer and Affirmative Defenses to First Alliance Bank's Cross-Claim (Adv. Dkt. 212) filed by the Title Companies; Mississippi Valley Title Insurance Company and Old Republic National Title Insurance Company's Amended Answer and Affirmative Defenses to First State Bank's Amended Cross-Claim (Adv. Dkt. 213) filed by the Title Companies; and Mississippi Valley Title Insurance Company and Old Republic National Title Insurance Company's Amended Answer and Affirmative Defenses to Patriot Bank's Cross-Claim (Adv. Dkt. 217) filed by the Title Companies. Having considered the evidence presented at the Woodgreen Trial, as well as the post-trial submissions, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052:
TABLE OF CONTENTS
CONCLUSION............................................................... 51
This Court has jurisdiction over the parties and the subject matter of this proceeding pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(K) and (O).4 Notice of the Woodgreen Trial was proper under the circumstances.
After bilking numerous lenders, in Mississippi and elsewhere, for untold millions, Jon Christopher Evans ("Chris Evans") and his brother, Charles H. Evans, Jr. ("Charles Evans"), (together, the "Evans Brothers"), pled guilty on January 18, 2011, to conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h) and bank fraud in violation of 18 U.S.C. § 1344. See United States v. Evans, No. 3:10-CR-00118 (S.D. Miss. 2010). On December 19, 2011, Chris Evans was sentenced to 168 months in prison, and Charles Evans was sentenced to 240 months. As a component of the criminal proceedings, a judgment in the amount of $18,594,221.58 was imposed against each of the Evans Brothers under criminal forfeiture law, 18 U.S.C. § 981(a)(1)(C) and§ 982(a)(2)(A). This introduction provides an overview of their Ponzi5 scheme in order to set the stage for a description of the claims held by the Woodgreen Banks.
Chris Evans, as president of the Woodgreen Development Corporation LLC ("Woodgreen Development"), purchased twenty-three acres of commercial real estate in Southaven, DeSoto County, Mississippi, in 2004. This property is referred to as the "Woodgreen Property." All claims asserted in the Adversary involve transactions related to the Woodgreen Property, although the Evans Brothers did not limit their fraudulent scheme to one parcel of land. Indeed, property located elsewhere in Mississippi,6 and even in at least one other state, have been the subject of contested matters and other adversary proceedings involving the Evans Brothers.
Both of the Evans Brothers were licensed to practice law in Mississippi during the relevant time period. Because Charles Evans was on the list of attorneys "approved" by the Title Companies, he was able to procure title insurance commitments and/or title insurance policies based on false applications. His brother, Chris Evans, induced lenders to make loans in the names of companies that he formed for this purpose. To secure the loans, these companies, which are referred to as the "Related Entities," granted deeds of trust on property that they did not actually own or that they never actually acquired, or that was already encumbered by other liens, all unbeknownst to the lenders. Charles Evans, of course, performed most of the closings on the real estate transactions himself. The scheme ended in early September 2009, when the Title Companies removed Charles Evans from their list of "approved" attorneys after discovering the fraud.
On October 26, 2009, Chris Evans filed a voluntary petition under chapter 7 of the United States Bankruptcy Code in Case No. 09-03763-NPO. Derek A. Henderson was appointed the chapter 7 trustee ("Trustee Henderson").
During the next few months, from November 12, 2009, until January 14, 2010, Chris Evans filed voluntary petitions for relief under chapter 7 on behalf of the Related Entities. Trustee Henderson was appointed the chapter 7 trustee for each of these Related Entities. In a series of orders, the Court consolidated the bankruptcy cases of the Related Entities for joint administration with the main bankruptcy case of Chris Evans (Bankr. Dkt. 161, 298 & 513). These cases, which are referred to as the "Related Cases," are listed below in the order in which their petitions for relief were filed:
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