Almost three years after its demise, the ghost of LandAmerica lurches on.
A new lawsuit filed last week in federal court is going after 21 former executives and directors of the bankrupt company — including some big Richmond names — and is seeking to recover $365 million for the bankruptcy estate.
The suit alleges that certain officers and directors of LandAmerica Financial Group and its subsidiary LandAmerica 1031 Exchange Services breached their fiduciary duty and caused the companies to suffer massive financial losses. Those losses ultimately led to LandAmerica imploding in late 2008 and filing for Chapter 11 bankruptcy.
The suit was filed by the trustee overseeing the LandAmerica Financial Group Liquidation Trust in U.S. Bankruptcy Court in Richmond.
Among the defendants are former LandAmerica CEO Ted Chandler, former Virginia Commonwealth University President Eugene Trani, former banker Robert Norfleet Jr. and former LandAmerica chief legal officer Michelle Gluck, who is now general counsel at the Federal Reserve Bank of Richmond.
“[LandAmerica Financial Group] met its demise because the LFG and [LandAmerica 1031 Exchange Services] directors and officers failed to properly inform themselves and failed to consider and implement any timely action to mitigate the effects of the LES liquidity crisis,” the suit alleges. “These failures caused LFG and its stakeholders to incur hundreds of millions of dollars in damages.”
At its height, LandAmerica was the third largest title insurance underwriter in the United States. It was toppled when the market for auction rate securities froze in February 2008. Much of the company’s fortunes were tied up in such securities.
“And yet, for at least seven months thereafter, the directors and officers of LFG and LES remained ostrich-like, with their heads buried in the sand, as the crisis worsened through neglect and unexamined missteps,” the suit says.
“When LFG’s officers and directors finally awoke from their slumber, the alternatives available to address the crisis had severely diminished or were lost entirely.”
The suit is seeking $365 million in damages on seven counts.
The plaintiff in the case is trustee Bruce Matson.
Jeff Sabin, an attorney with Bingham McCutchen who is representing the plaintiff, had no comment on the suit.
Buddy Allen and Robert Best of LeClairRyan are also representing the trustee.
The 21 defendants are being representing by various attorneys from across the country.
Two attorneys representing 17 of the defendants issued a prepared statement on Thursday.
Saul Pilchen of Skadden, Arps, Slate, Meagher & Flom and Scott Fredericksen of Foley & Lardner in Washington contend that the lawsuit has no merit.
“The LFG Trustee’s complaint seeks unfairly and inappropriately to judge the conduct of our clients with the benefit of hindsight, and turns a blind eye toward much of what actually occurred,” they said.
“The named LFG officers and directors acted in complete and informed good faith, served the best interests of shareholders and customers, and exercised prudent and well-informed business judgment throughout the process.”
The remaining defense attorneys working the case either would not comment or did not respond to calls by press time.
Attorneys who have seen the case agree that part of the purpose of the suit is to trigger insurance policies that protect executives and directors in such instances.
“There is substantial amount of insurance that is available, and there’s a hope to recover additional assets from that,” said Tom Ebel, a bankruptcy attorney with Sands Anderson, which has represented 20 claimants in the LandAmerica bankruptcy.
However, the insurance coverage won’t come close to covering the $365 million that the suit is seeking. The potential insurance payout is more likely in the range of $60 million to $80 million, according to several local attorneys familiar with the case.
The question that remains is whether the named executives and directors could even come close to covering the remaining damages, should the court rule against them.
“I don’t know many former directors or officers of LandAmerica that have pockets that deep,” Page said.
The 21 defendants named in the suit:
Janet A. Alpert
Gale K. Caruso
Theodore L. Chandler Jr.
Michael Dinkins
Charles H. Foster Jr.
John P. McCann
Dianne M. Neal
Robert F. Norfleet Jr.
Robert T. Skunda
Julious P. Smith Jr.
Thomas G. Snead Jr.
Eugene P. Trani
Marshall B. Wishnack
G. William Evans
Michelle H. Gluck
Pamela K. Saylors
Jeffrey C. Selby
Christine R. Vlahcevic
Stephen Connor
Brent Allen
Ronald B. Ramos
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
Almost three years after its demise, the ghost of LandAmerica lurches on.
A new lawsuit filed last week in federal court is going after 21 former executives and directors of the bankrupt company — including some big Richmond names — and is seeking to recover $365 million for the bankruptcy estate.
The suit alleges that certain officers and directors of LandAmerica Financial Group and its subsidiary LandAmerica 1031 Exchange Services breached their fiduciary duty and caused the companies to suffer massive financial losses. Those losses ultimately led to LandAmerica imploding in late 2008 and filing for Chapter 11 bankruptcy.
The suit was filed by the trustee overseeing the LandAmerica Financial Group Liquidation Trust in U.S. Bankruptcy Court in Richmond.
Among the defendants are former LandAmerica CEO Ted Chandler, former Virginia Commonwealth University President Eugene Trani, former banker Robert Norfleet Jr. and former LandAmerica chief legal officer Michelle Gluck, who is now general counsel at the Federal Reserve Bank of Richmond.
“[LandAmerica Financial Group] met its demise because the LFG and [LandAmerica 1031 Exchange Services] directors and officers failed to properly inform themselves and failed to consider and implement any timely action to mitigate the effects of the LES liquidity crisis,” the suit alleges. “These failures caused LFG and its stakeholders to incur hundreds of millions of dollars in damages.”
At its height, LandAmerica was the third largest title insurance underwriter in the United States. It was toppled when the market for auction rate securities froze in February 2008. Much of the company’s fortunes were tied up in such securities.
“And yet, for at least seven months thereafter, the directors and officers of LFG and LES remained ostrich-like, with their heads buried in the sand, as the crisis worsened through neglect and unexamined missteps,” the suit says.
“When LFG’s officers and directors finally awoke from their slumber, the alternatives available to address the crisis had severely diminished or were lost entirely.”
The suit is seeking $365 million in damages on seven counts.
The plaintiff in the case is trustee Bruce Matson.
Jeff Sabin, an attorney with Bingham McCutchen who is representing the plaintiff, had no comment on the suit.
Buddy Allen and Robert Best of LeClairRyan are also representing the trustee.
The 21 defendants are being representing by various attorneys from across the country.
Two attorneys representing 17 of the defendants issued a prepared statement on Thursday.
Saul Pilchen of Skadden, Arps, Slate, Meagher & Flom and Scott Fredericksen of Foley & Lardner in Washington contend that the lawsuit has no merit.
“The LFG Trustee’s complaint seeks unfairly and inappropriately to judge the conduct of our clients with the benefit of hindsight, and turns a blind eye toward much of what actually occurred,” they said.
“The named LFG officers and directors acted in complete and informed good faith, served the best interests of shareholders and customers, and exercised prudent and well-informed business judgment throughout the process.”
The remaining defense attorneys working the case either would not comment or did not respond to calls by press time.
Attorneys who have seen the case agree that part of the purpose of the suit is to trigger insurance policies that protect executives and directors in such instances.
“There is substantial amount of insurance that is available, and there’s a hope to recover additional assets from that,” said Tom Ebel, a bankruptcy attorney with Sands Anderson, which has represented 20 claimants in the LandAmerica bankruptcy.
However, the insurance coverage won’t come close to covering the $365 million that the suit is seeking. The potential insurance payout is more likely in the range of $60 million to $80 million, according to several local attorneys familiar with the case.
The question that remains is whether the named executives and directors could even come close to covering the remaining damages, should the court rule against them.
“I don’t know many former directors or officers of LandAmerica that have pockets that deep,” Page said.
The 21 defendants named in the suit:
Janet A. Alpert
Gale K. Caruso
Theodore L. Chandler Jr.
Michael Dinkins
Charles H. Foster Jr.
John P. McCann
Dianne M. Neal
Robert F. Norfleet Jr.
Robert T. Skunda
Julious P. Smith Jr.
Thomas G. Snead Jr.
Eugene P. Trani
Marshall B. Wishnack
G. William Evans
Michelle H. Gluck
Pamela K. Saylors
Jeffrey C. Selby
Christine R. Vlahcevic
Stephen Connor
Brent Allen
Ronald B. Ramos
Michael Schwartz is a BizSense reporter. Please send news tips to [email protected].
I fully agree with this lawsuit. I worked at LandAmerica for 4 years and I worked at Lawyers Title (before it was named LandAmerica) for 13 years. Previous executives (before Jan Alpert, etc) really cared about the company and ran it how it should have been run. All of the recent previous execs only cared about what they could get out of it. They knew what was going on the whole time but went along with “business as usual”, not caring at all for the employees or the company. I hope the lawsuit gets all it can out of the… Read more »
“I don’t know many former directors or officers of LandAmerica that have pockets that deep,” Page said.
Are you kidding me?! Mabe their pockets arn’t but I bet their Swiss back accounts are.
Let’s see apx 3 Mil divided by 21 = $142,857.14
The top three probably bring this much home each week. Last I saw, TLC Jr. was on two or three board of directors and I bet he has a nice nest egg that he took with him from LandAm.
I don’t see how LandAmerica could’ve allowed people to place their hard earned money with them once they knew they were going to go bankrupt. Mr. Chandler used to come to the Greater Richmond Chamber of Commerce meetings and talk about the “core values” of LandAmerica. What kind of values or ethics does he or any of the other 21 executives have allowing people to invest with them knowing that their company was going to file for bankruptcy only a few days later? Mr. Chandler, where were your “core values” then??? What if one of those investors was your mother?… Read more »
What a pity that Richmond has lost so many well-known companies that had their headquarters in Richmond: Lawyers Title, A. H. Robins, Reynolds Metals, James River Paper, etc. Corporate greed is ruining America.
Ted Chandler should be thrown in jail. Period.
What I don’t get is how these executives like Mr. Chander feel they deserve millions ($5.4 million) when they were the cause of the demise of LandAmerica. Why didn’t he or Ronald Ramos contact SunTrust or Citigroup in February and demand the liquidation of these auction rate securities? Why did they wait so long and do nothing but watch the ship sink and try to plug holes with cash from the holding company? It doesn’t make sense. And finally, why did an attorney from SunTrust have to explain to the Chief Legal Officer, Michelle Gluck, that it might look bad… Read more »
In my mind a bankruptcy involving a large title company shouldn’t be surprising. I say that because the title insurance business in Virginia – even on its most respectable day – is about nothing other than greed. In preparing a tax return last year I noticed that a client had paid $1,900 for a title policy on a $210,000 house. I suspect the closing attorney got 60 to 70% of the premium. In other states, rates for title policies are regulated as low as $2 per $1,000 of loan amount, but yet the legislature in this state will not act.… Read more »
It seems that in every organization, public or private, the highers up get the benefits even when their responsibilities result in failure.
Does anyone know what has happenened in the siut? Were any money judgements entetred?Were there any indictments?
They shafted me big time too. I bought Title Insurance, then when neighbors blocked my right of way, Land America/Lawyers Title, said woops looks like someone dropped the ball, we will get a Lawyer to look into it, so it went on until they filed Bankruptcy, then the Lawyer dropped the case or more less put it on hold, due to no one was getting paid. So also they hire a surveyor to come survey the right of way, plot it, and draw it on a piece of paper, no metal pins put on no where. So the Surveyor didn’t… Read more »
My company was bought out by LandAm several years before the bankruptcy and it was all downhill from there. Like Barbara’s comment above, it felt like going from a family atmosphere where we all worked together to get things done, and get them done correctly to the higher ups not caring at all. In some cases they even flat out lied to our faces. Quality control went down the tubes and I heard from fellow employees the higher ups were pushing through closings that had no business being disbursed. That was when I knew the end was nigh. We also… Read more »