G & B Investments, Inc. v. Henderson (In Re Evans)
460 B.R. 848
Bankr. S.D. Miss.2011Background
- Fraudulent scheme by the Evans Brothers triggered cross-claims against Mississippi Valley Title and Old Republic Title (the Title Companies), Bank of Forest (BOF), and Heritage arising from Tract IV in Madison County, Mississippi.
- G&B owned Tract IV; Hanover later purchased it with funds borrowed from M&F, BOF, and Heritage; several parcels (T-1 through T-6) were created and conveyed via related transactions.
- Charles Evans and Jon Evans (both attorneys) used their positions to obtain title commitments and title insurance on properties they did not own, enabling a pattern of fraud impacting lenders and title policies.
- Foreclosures and transfers affected Parcels T-1 to T-6, with various deeds and liens recorded or attempted, some of which were invalid or misrepresented.
- Pretrial settlements substantially resolved many claims; Phase One focused on liability and uncontested damages, with Phase Two to determine contested damages and attorneys’ fees.
- The court conducted findings of fact and conclusions of law on BOF’s tort claims (fraud, misrepresentation), contract claims (2008 BOF Policy), and Heritage’s contract and bad-faith claims, ultimately ruling on liability and uncontested damages in Phase One.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to search and disclose title defects before issuing a title commitment | BOF contends Title Companies owed a duty to search and disclose defects. | Title Companies rely on no such duty under Mississippi law; commitment is not a title opinion. | No duty found; no liability for pre-commitment defects based on absence of statutory/precedent duty. |
| Whether Schedule A’s ownership statement constitutes fraud given Condition 4 disclaimer | BOF relied on Schedule A as title status; misrepresentation. | Condition 4 disclaimer negates misrepresentation liability; commitment is not title opinion. | Disclaimer defeats fraudulent misrepresentation claim; no clear and convincing evidence of intent to deceive. |
| Imputing Evans' fraud to Title Companies via agency or adverse-interest theories | BOF seeks imputed liability through agency or apparent agency of Evans. | No actual/appparent authority; Evans acted adversely to Title Companies; adverse-interest exception applies. | No imputed liability; Evans acted adversarially; adverse-interest and dual-agency defenses defeat imputation. |
| 2008 BOF Policy—cure of title defects and damages payable | BOF seeks additional damages beyond cure; policy should indemnify losses. | Once cured, liability limited by the policy; no further payable losses. | Limitation and cure provisions control; no further monetary liability for cured defects. |
| Ambiguity of Heritage’s Maximum Payment Provision and bad-faith claims | Heritage argues ambiguity in value definition; seeks full indemnity. | Provision unambiguous or construed against insurer; value by appraised fair market value. | Maximum Payment Provision is ambiguous; construed in Heritage’s favor as to reasonable expectations; bad-faith claim not established. |
Key Cases Cited
- Hazlehurst Lumber Co. v. Mississippi Forestry Commission, 983 So.2d 309 (Miss. 2008) (disclaimers shield contrary liability where contract governs)
- Brown v. Hartford Ins. Co., 606 So.2d 122 (Miss. 1992) (contract interpretation; reading contract as a whole; ambiguity favors insured)
- Biloxi Casino Belle, Inc. v. First American Title Ins. Co., 368 F.3d 491 (5th Cir. 2004) (ambiguity and insurer liability in title insurance context; Biloxi Casino Belle discusses drafting and ambiguity)
- Lane v. Oustalet, 873 So.2d 92 (Miss. 2004) (dual agency concepts; imputation of knowledge varies with agency structure)
- Securities Service, Inc. v. Transamerica Title Insurance Co., 583 P.2d 1217 (Wash. App. 1978) (measures damages for title defects; indemnity principles under title policies)