RIPLEY - A Jackson County bank is alleging an attorney and his law firm are partially responsible for the bank's inability to recoup its losses on two loans totaling almost $500,000.

On March 18, Traders Bank of Ravenswood filed a lawsuit in Jackson Circuit Court against West Virginia Bankers Title, Investors Title Insurance Company, Eric J. Holmes and the law offices of Harris and Holmes. In their complaint, filed with the assistance of Charleston attorney Jim Lees, Traders alleges all the defendants contributed to a defective title being used by a Jackson County business, Polaris of Ripley, for collateral on two loans on which it has since defaulted.

An all-terrain vehicle dealership, Polaris is also named as a co-defendant in the lawsuit.

According to court records, Polaris came to the bank Traders succeeded by merger, Citizens First Bank, about a loan. The date that Citizens and Traders merged is not stated.

However, Traders loaned Polaris $397,472.77 on March 24, 2006 using a half-acre tract of land in Fairplain as collateral. The land, records show, was sold to Polaris on April 2, 2004 by Guy N. Sayre Jr. and his wife, Libby, for $100,000.

The decision to grant the loan was partially based on a title opinion Holmes issued Traders on March 15, 2006.

Records show nine months later, Polaris approached Traders for another loan of $100,000 using the property as collateral. Again, after receiving a title opinion from Holmes on Dec. 13, 2006, Traders granted the loan on Jan. 30, 2007.

The day after it was granted the second loan, Polaris purchased title insurance for the face amount from Investors, who is insured through West Virginia Bankers Title. Holmes, records show, handled the transaction.

Though is does not say exactly when, Traders' suit alleges that Polaris defaulted on the two loans last year. In October, they approached Robert D. Fisher, a Ripley attorney, to begin foreclosure proceedings.

In conducting his research, found a defect in the property's title. According to the lawsuit, the property was conveyed to the Sayres on Oct. 22, 2002, by Ronald Lane, Inc. with " a right of first refusal as reserved unto the grantor, its successors and assigns."

No reference was made to a release on the refusal when the Sayres sold the property to Polaris 18 months later or when Holmes issued his two title opinions. When contacted by Fisher about a release, Lane refused.

Thereafter, Fisher informed Investors it would be making a claim for the full amount of the policy. However, both Investors and West Virginia Bankers Title, located in Chapel Hill, N.C., and Whitehall, respectfully, have failed to pay Traders.

In its suit, Traders makes a claim of breach of contract against Investors and West Virginia Bankers Title and negligence against Holmes and Harris and Holmes. They allege that the defective title that all the defendants had a hand in processing has prohibited them from foreclosing on the property.

They are seeking unspecified damages, costs and fees.

Originally, the case was assigned to Judge Thomas C. Evans III. However, on April 2, Evans sent a letter to state Supreme Court Chief Justice Brent Benjamin asking both he and Judge David W. Nibert be recused from hearing the case.

Because an allegation of legal malpractice was raised against Holmes, who appears regularly before both he and Nibert, Evans said remaining on the case could create a potential conflict.

As of presstime, a new judge had yet to be assigned.

Jackson Circuit Court, Case No. 09-C-32

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