Attorney: Small-claims victims deserve day in court

A Springfield attorney contacted by several people with smaller claims against Guaranty Title Co. said he’s considering legal action on the group’s behalf against the defunct Nixa-based title agency.

Bryan Wade, a business litigation attorney with newly merged Husch Blackwell Sanders LLP, said former Guaranty Title Co. customers who lost a few thousand dollars when the company closed its doors in June shouldn’t have to forgo the loss because of cost-prohibitive legal fees.

“People have called just exploring what options they might have, and there have been enough of those persons that have called that suggest there might be an opportunity for them to band together and prosecute their claims,” Wade said.

“My personal feeling is it doesn’t seem fair that these people who have smaller claims wouldn’t get a voice in the proceedings, so that’s why I’m interested in helping them if I can.”

Guaranty Title’s underwriter, Virginia-based LandAmerica Financial Group, pulled the plug on its agent last summer after evidence of an alleged check-kiting scheme surfaced.

LandAmerica filed suit against Guaranty Title in Christian County after its auditors found at least $5.1 million missing from the agency’s escrow accounts at area banks.

The money belonged to developers, banks and construction contractors as well as homebuyers and sellers who found themselves out of luck when Guaranty Title was shut down.

The agency – co-owned by Rick Burton, Kathy Allen and Stephanie Gray – had at least nine regional offices that employed some 45 people.

According to court records, Allen has admitted to a “scheme of commingling and transferring funds between and among different banks and multiple accounts to replenish shortages and to also mask shortages.” However, no arrests have been made or charges filed in connection to the alleged fraud.

Some parties, primarily businesses and individuals with larger claims, have intervened in the LandAmerica suit in hopes of recouping their losses from the underwriter or its extinct agent. Many of those with smaller claims have been anxiously watching from the sidelines, debating whether to hire an attorney and enter the fray.

Nearly a dozen potential clients have contacted Wade, who said “some seem much more committed than others.” He said the claims include money tied to real-estate closings, construction loan disbursal and 1031 exchange transactions, which allow buyers and sellers to defer capital gains taxes on investment properties.

“It runs the gamut of real-estate transactions in this one mess,” Wade said.

If he proceeds with a suit on the group’s behalf, Wade said he wouldn’t require advance or hourly legal fees as is customary for commercial litigation. He said he would only receive payment if he successfully recovers all or part of his clients’ losses.

Nixa resident Wally Schrock – one of Wade’s potential clients – said he’s talked to some home builders and developers with smaller claims who can’t afford to proceed unless an attorney takes the case on a contingency basis.

“That’s really the only way we can do it,” Schrock said. “It just wouldn’t pay off for a guy that has a $2,300 or $3,000 or even a $10,000 claim. But we feel like we’ve been taken, and basically, I’ve had money stolen from me. So we feel like we have a good case on that front.”

Wade said he would recommend that his clients intervene in the pending Christian County litigation.

In January, a judge ordered LandAmerica to turn over internal documents subpoenaed by Rodney Nichols, a Springfield attorney with Carnahan, Evans, Cantwell & Brown, who represents former Guaranty Title customer Branson Hills Development Co.

Among the documents sought by Nichols are four audit reports by the underwriter dating back to April 2005.

Nichols, who plans to petition the judge for a jury trial, said he’s already begun deposing employees at LandAmerica and its subsidiaries, Commonwealth Land Title and Transnation Title and Escrow, as well as those with the Missouri Department of Insurance, Financial Institutions and Professional Registration.

DIFP is still actively investigating Guaranty Title and LandAmerica, said spokeswoman Emily Kampeter.

“These investigations are complex,” she said. “There’s a lot of information to collect, a lot of accounts that were affected. We’re trying to get to the bottom of what actually happened.”

Once the investigation is complete, DIFP will make its findings available to local and federal prosecutors who will determine whether to file criminal charges, Kampeter said.

A formal complaint DIFP filed against Guaranty Title’s owners in December is scheduled to go before the Administrative Hearing Commission at 9 a.m. June 11 in Jefferson City.

The complaint alleges that the owners, who stand to lose their insurance producer licenses, failed to uphold their fiduciary responsibility to LandAmerica, disbursed money from escrow accounts without corresponding deposits, and improperly withheld premiums paid by Missouri consumers.[[In-content Ad]]