Fill and Sign the Bertero V National General Corp California Court of Form

-1- IN THE CHANCERY COURT OF THE JUDICIAL DISTRICTOF COUNTY, MISSISSIPPI PLAINTIFFS VS. CIVIL ACTION NO. DEFENDANTS COMPLAINT FOR INJUNCTIVE RELIEF, BREACH OF CONTRACT, BREACH OF FIDUCIARY DUTY, DECLARATORY JUDGMENT AND PUNITIVE DAMAGES COME NOW (the " "), Plaintiffs, and file this Complaint against ("     ") and (" "), to prevent and enjoin the proposed foreclosure under certain deeds of trust executed by the on lands located in and Counties, Mississippi, to recover actual and punitive damages for breach of the agreements between the parties,     breach of its fiduciary duties to the , and to determine and declare t he ' rights under their agreements with . and are attempting to foreclose under the deeds of trust and take the ' property before the resolution of the question whether the promissory notes which the deeds of trust secure are due and payable. and the are presently involved in a suit over whether the promissory notes are due and payable, or whether agreed to forbear on t he notes. and should not allowed to foreclose prior to a judgment that the promissory notes are in default. The also seek to prevent and enjoin and from publishing any notices or other matters related to or connected with and attem pted foreclosure under certain deeds of trust on lands located in and Counties, Mississippi. In support thereof, the state as follows: -2- PARTIES 1. are adult resident citizens of , County, Mississippi. 2. is a national banking association which is domiciled and has its principa l place of business in , . may be served with process of this Honorable Court pursuant to Rule 4(c)(5) of the Mississippi Rules of Civil Procedure by mailing a copy of the Summons and Complaint to . 3. is an adult resident citizen of , who may be served wit h process of this Honorable Court pursuant to Rule 4(c)(5) of the Mississippi Rules of Civil Procedure by mailing a copy of the Summons and Complaint to . 4. is a Mississippi corporation with its principal place of business in , County, Mississippi and can be served with process of this Court through its registered agent,     at , , Mississippi . 5. is a Mississippi corporation with its principal place of business in , County, Mississippi and can be served with process of this Court . JURISDICTION AND VENUE 6. The Court has jurisdiction and venue. does business in the State of Mississippi, including, but not limited to, making and extending loans and, in a systematic and ongoing way, acquiring and owning deeds of trust and security interests in properties in Mississippi, including , and Counties, Mississippi. 7. has purposefully availed itself of the benefits of conducting business in Mississippi by entering into agreements with the to be performed in whole or in part i n Mississippi. The agreements include loans against the deeds of trust on properties in , and Counties, Mississippi. -3- 8. has committed torts against the , the injurious effect of which oc curred in Mississippi resulting in economic damage and losses in Mississippi. 9. , as owner and holder of the deeds of trust at issue herein, substituted , as Trustee on said deeds of trust by an instrument entitled "Substitution of Trustee" dated , 20 , and recorded in the Substituted Trustee Book , Pages , on file in the office of the Chancery Clerk of County, Mississippi, Judicial District, and in Substituted Trustee Book , Pages on file in the office of the Chancery Clerk of County, Mississippi. As Substituted Trustee, has instituted the foreclosure proceedings in and Counties and is subject to the jurisdiction of this Court. 10. does business in County, Mississippi. In addition, has published and disseminated in County, that certain "Substituted Trustee's Notice of Sale" dated   , 20 , and attached to the hereto as Exhibit "A" and incorporated herein by refe rence. Such publication occurred on and , 20 . Respectfully submitted, _______________________________________ Attorney for 11. does business in County, Mississippi. In addition, has published and disseminated in and Counties, that certain "Substituted Truste e's Notice of Sale" dated , 20 , and attached hereto as Exhibit "A" and incorporat ed herein by reference. Such publication occurred on 20 . FACTUAL BACKGROUND 12. -4- For over years, the have been in the business of acquiring, developing, investing in, and selling properties and other assets which include mineral interests, oil and gas leases, oil and gas wells, real estate and timberland. The nature of this busi ness is speculative and requires long-term loans, long-term financing, and long-term forbearance from a lending institution which is willing to loan money long-term on and for speculative properties and to await the development or sale of the properties to be paid. 13. The began doing business with in 20 . The relied on 's assurances that would provide the with long-term loans, financing, and, most importantly, the necessary forbearance which the would need over a long period of t ime in order to acquire, develop, and sell properties at the most optimum prices available. 14. Since 20 , the have been one of the substantial customers of . has provided the with long-term loans, financing, and the necessary forbearance for t he     ' acquisition, development, investment, and sale of various properties. Pursuant to written and verbal agreements, including modifications and amendments of notes, and the course of dealing between the parties, , e.g., has loaned money to the , has advanc ed monies to the in anticipation of sale, has encouraged the to acquire propert ies, has paid debts owed by the and has rolled the payments into the ' account, and ha s paid down the      ' account with proceeds received from time to time from the ' income produc ing properties and the ' periodic sales of properties. 15. For example, the are presently involved in a sale of approximately acres of timberland in on which holds a second mortgage. The have a t all times kept fully apprised of the ' efforts to sell the timberland and of t he proposed sale, with the agreement and understanding that the will use a portion of the sal e proceeds to bring current the accrued interest on the ' debt to the Bank. This course of dealing between the and the has been followed since 20 . 16. -5- The have secured with various mortgages, deeds of trust, and security interests in properties located in Counties, Mississippi. These properties include mineral interests, real estate, oil and gas leases, oil and gas wells, and timberlands. T he value of these properties more than secures the ' debt to . 17. The relationship between the and has been a long-standing fiduciary relationship of mutual trust and confidence for the mutual benefit and profit of both the and . has exercised a degree of control and influence over the ' business activities. The and have both benefited from the relationship. Si nce 19 , the have paid over $ in interest and $ in princ ipal in connection with loans made by to the . 18. has breached its agreements with the , its fiduciary duties to the , and its duties of good faith and fair dealing. Among other breaches, as more fully set forth here in,      has demanded that the immediately pay the Bank $ in clai med principal and interest, has sued the in the United States District Court for the District of for the amount claimed to be due, has instituted foreclosure proceedings on the ' properties in and Counties, Mississippi, and has threatened to foreclose on the ' other properties, including the timberland in which the are in the proc ess of selling. These demands, suits attempting foreclosure and threats of foreclosure constitute breaches of the 's agreements with and duties to the and threaten the with substantial and irreparable damages and losses. 19. As a portion of the security for their indebtedness to the , the on , 20      executed a certain Land Deed of Trust to , Trustee, for the benefit of , which is recorded in Book , Pages , Record of Mortgages and Deeds of Trust on Land, County, Mississippi, Judicial District and in Book , Pages , Record of Mortgages and Deeds of Trust on Land, County, Mississippi. By instrument dated   , 20 , , as owner and holder of the said Land Deed of Trust substituted , as Substituted Trustee, in place of and in lieu of , which instrument is recorded i n Substituted -6- Trustee Book , Pages , on file in the office of the Chancery Clerk of County, Mississippi, First Judicial District, and in Substituted Trustee Book , Pages , on file in the office of the Chancery Clerk of County, Mississippi. 20. On , 20 , commenced foreclosure of said Land Deed of Trust by posting a "Substituted Trustee's Notice of Sale" on the main bulletin board at the County Courthouse in , Mississippi, and by commencing publication of said "Substituted Trustee's Notice of Sale" in and . The "Substituted Trustee's Notice of Sale" wa s published by said newspapers on , 20 . FIRST CLAIM Injunctive Relief 21. The allegations of paragraphs 1 through 20 are incorporated herein by reference. 22. In order to preserve the status quo and prevent irreparable harm, and should be enjoined, both by a temporary restraining order and a preliminary injunction, from atte mpting to foreclose on and from foreclosing on any of the ' lands and properties until after a judgment has been rendered determining whether the are in default and whe ther the promissory notes are due and payable. and attempted foreclosure constitute s an attempted prejudgment seizure of property in anticipation of a judgment on the promissory note s. If it is decided that agreed to forbear on the collection of the notes a nd that the are not in default, then and do not have a right to foreclose. 23. and should be enjoined from proceeding with any further publications of the foreclosure notices. 24. 's demand for immediate payment is a breach of the agreements between the and the Bank for the Bank to provide the with long-term loans, financing, and the necessary forbearance while the , e.g., develop and sell various properties, so as to apply the proceeds received to reduce the ' debt to . -7- 25. The agreements between the and include their numerous written a nd verbal agreements, including modifications and amendments to notes, and their long-standing course of dealing and custom and practice between one another, including the Bank's repeated wai ver of the strict enforcement of the default provisions of the written agreements between them . The      have relied to their detriment on these agreements. 26. The are presently involved in a sale of approximately ac res of timberland on which holds a second mortgage. Consistent with their long-standing course of dealing, the and heretofore agreed that the wil l use a portion of the sale proceeds to bring current accrued interest on the ' debt to the Bank. Nevertheless,     has demanded immediate payment of the ' entire debt even though the are not in default under the terms of the agreements between the parties and has commenc ed foreclosure proceedings on properties located in and Counties, Mississippi, as more ful ly set forth and described in the "Substituted Trustee's Notice of Sale" attached hereto as E xhibit "A" and incorporated herein by reference. 27. should be held to be estopped to deny, dispute, renege on or breach its agreements with the and from demanding or receiving the immediate payment of the ' outstanding account, an account which is fully secured by various deeds of trust, mortgages and security interests; and to have waived strict enforcement of the default provisions of the written agreements between them. 28. The are not in default to and is prohibited and estopped from demanding or obtaining immediate payment of the ' account, has wai ved strict enforcement of the default provisions of written agreements between them, and the are entitled to forbearance from while the develop and sell those prope rties which are mortgaged or pledged to . The are entitled to injunctive relie f to maintain the status quo and to prevent the irreparable harm and injury which would result from 's -8- foreclosure sale of the properties listed in Exhibit "A" and such other injunctive relief as may be necessary pending a final judgment in this action. SECOND CLAIM Breach of Contract 29. The allegations of paragraphs 1 through 28 are incorporated herein by reference. 30. In the alternative, the are entitled to damages resulting from 's breach of its agreements with the . The damages include, but are not limited to, the diminution in the fair market value of the ' business and properties occasioned by having to sell or othe r dispose of properties prematurely or at distressed prices; lost profits; and damages to the ' good will, business reputation and credit rating. THIRD CLAIM Breach of Duties of Good Faith and Fair Dealing 31. The allegations of paragraphs 1 through 30 are incorporated herein by reference. 32. These are duties of good faith and fair dealing, whether expressed or implied, in every agreement. had and has a duty to deal with the in good faith a nd fairly with respect to the agreements entered into and performed between the parties over the years. 33. The actions of in connection with the agreements entered into with the , specifically including its acts with respect to interest rates charged, applic ation of payments, and its current demand for immediate payment from the , while the are not in default and the is fully secured with respect to the ' debt, constitutes a breach of the duties of good faith and fair dealing owed by to the . 34. The are entitled to a declaratory judgment or appropriate decree that the are not in default to , is prohibited and estopped from demanding or obtaining the immediate payment of the ' account, has waived strict enforceme nt of the default -9- provisions of the written agreement, and the are entitled to forbearance from while the develop and sell those properties which are mortgaged or pledged to . should be enjoined or estopped from demanding or recovering immediate payment of the ' outstanding account based upon its breach of the duty of good faith and fair dealing to the . 35. In the alternative, the are entitled to damages resulting from 's breach of its duty of good faith and fair dealing to the . The damages include, but are not limited to, the diminution in the fair market value of the ' business and properties occasi oned by having to sell or otherwise dispose of properties prematurely or at distressed prices; lost profits; and damages to the ' good will, business reputation and credit rating. FOURTH CLAIM Breach of Fiduciary Duties 36. The allegations of paragraphs 1 through 35 are incorporated herein by reference. 37. 's said conduct constitutes a breach of its fiduciary duties to the . The   are entitled to recover from all damages which the have suffered or will suffer as a result of 's breach of its fiduciary duties. FIFTH CLAIM Breach or Anticipatory Breach of AgreementConcerning the Application of Sale Proceeds 38. All allegations in paragraphs 1 through 37 are incorporated herein by reference. 39. has breached or has threatened to breach an agreement between the and    regarding the use and application of monies which the are to receive from the sale of certain timberland property located in . 40. In 19 , the entered into an agreement with concerning ce rtain of the     oil, gas, and mineral interests in , under which agreement the received a substantial sum of money. did not have a mortgage, deed of trust, or security inte rest on -10- said interests sold. The planned to use the monies received from to develop further oil and gas leases and oil and gas wells in County, Mississippi, on which      held a deed of trust and security interest. In the past, these oil and gas leases and wells in County, Mississippi, have provided over $ which the paid to on the     ' account. These oil and gas leases and oil and gas wells continue to be valua ble properties and a source of revenue for the to pay their account with . 41. Upon learning of the ' sale to , proposed to the that, if the   would pay $ out of the monies received from , would a pply that sum of money to the ' account and then, when the sold a acre tract of timberland in , on which held a second mortgage, the would be allowe d to use $ of the proceeds from that sale to develop further the ' said oil and gas lease s, wells and proposed oil and gas operations in the of County, Mississippi, on which held a deed of trust and security interest. Based on the long-standing relationship of trust and confidence, the agreed to 's proposal, relied on 's representati ons and assurances, and wired over $ of the proceeds received from . 42. The then proceeded to arrange for a sale of the acres of timberla nd in for approximately $ . However, has now stated and indicated that it wi ll not allow the to use any part of the proceeds received from that sale to develop further the oil and gas leases and oil and gas wells in Mississippi. 43. 's said conduct is a breach and violation of its agreement with the concerning the use and application of the proceeds received from and the proce eds to be received from the sale of the timberland; is a breach of its duties of good faith and fair dealing; is a breach of its fiduciary duties to the ; and is a will ful and intentional tortious breach of contract and bad faith. 44. should be estopped from reneging on and breaching its agreement with the concerning the use and application of the proceeds and the sales proceeds to be received -11- from the sale of the timberland. Among other things, the agreement has been partially performed. The are entitled to a declaratory judgment that, out of the sa les proceeds to be received from the sale of the timberland, the are entit led to use $ of the proceeds to develop further the ' oil and gas leases, oil and gas wells and oil and gas operations in and around the in County, Mississippi. 45. In the alternative, the are entitled to rescind and disgorge from the ' payment of the monies previously tendered to and to recover act ual and punitive damages from because of 's breach of its agreement. SIXTH CLAIM Incorrect Charges and Applications 46. The allegations of paragraphs 1 through 45 are incorporated herein by reference. 47. has breached its agreements with the by arbitrarily applying paym ents to interest in lieu of principal, charging interest on advances of principal on a premat ure date, arbitrarily adjusting interest rates, and calculating and charging interest on a dai ly rate for 365 days a year based on a 360 day year. 48. The are entitled to recover damages resulting from 's said breac hes of its agreements with the , including recover of all overpayments of principal and interest. SEVENTH CLAIM Punitive Damages 49. The allegations of paragraphs 1 through 48 are incorporated herein by reference. 50. has willfully, intentionally and tortuously breached its agreements with a nd duties to the , and has acted in bad faith. Additionally, is attempt ing to foreclose on the      ' property in and Counties, Mississippi and has threatened to foreclose on the ' other properties, thereby threatening to disrupt or prevent one proposed sale of timberl and -12- and to reduce the fair market value of the other pledged properties. The are entitled to an award of punitive damages against in an amount not less than $ . WHEREFORE, PREMISES CONSIDERED, the pray that summons issue to the Defendants in accordance with law, and that the Court will grant the following relie f to the   : (1) Immediately issue a temporary restraining order and a preliminary injunction against , , , and prohibiting them from proceeding or ta king any other actions related to or connected with the foreclosure of the properties set forth in E xhibit "A" attached hereto and incorporated herein by reference pending a final determination of this case on the merits; (2) A declaratory judgment or other appropriate decree that the are not in de fault with , that is prohibited and estopped from reneging on and breaching its a greement with the , and estopped from demanding and seeking to recover and collect the ' outstanding account with the Bank, and that the are entitled to forbearance while the   develop and sell those properties which are mortgaged or pledged to the Bank; (3) A judgment for the against for the actual damages suffered by the    as a result of the various breaches by the Bank of its agreements, fiduciary duties, a nd duty of good faith and fair dealing; (4) A judgment for the against for not less than $ punitive dama ges for the Bank's breach of its agreements with and duties to the ; (5) A judgment for the against for all incidental and consequential damages to which they may be entitled; (6) A judgment that, out of the sales proceeds to be received by the from the sa le of the ' timberland, the are entitled to bring accrue d interest current and, e.g., use $ of the proceeds to develop further the ' oil and gas leases, oil and gas wells and oil and gas operations in and around the in County, Mississippi; (7) Other appropriate temporary, preliminary and permanent injunctive relief, as may be needed; and (8) A judgment for the against for attorney's fees and costs of Court herein. -13- AND the pray for such further additional, general or specific relief to which they may be entitled. THIS, the day of , 20 . Respectfully submitted, _______________________________________ Attorney for Of Counsel: Telephone: MSB # Attorney for -14- STATE OF MISSISSIPPI COUNTY OF PERSONALLY APPEARED BEFORE ME, the undersigned authority in and for the county and state aforesaid, the within named who being by me first duly sworn, acknowledged that he/she signed and delivered the above and foregoing Complaint for Injunctive Relief, Breach of Contract, Breach of Fiduciary Duty, Declaratory Judgment and Punitive Damages on the day and year therein mentioned and for the intent and purposes therein expressed. _________________________________________ SWORN TO AND SUBSCRIBED BEFORE ME, this the day of , 20 . ______________________________ NOTARY PUBLIC MY COMMISSION EXPIRES: