Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, May 16, 1990 TAG: 9005160461
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
SOURCE: By LAURENCE HAMMACK STAFF WRITER
DATELINE: LENGTH: Medium
Cranwell, a prominent Democrat in the House of Delegates, is contesting the charges in a lawsuit being tried this week in Roanoke Circuit Court.
The trial is to resume today and continue through Friday.
In the complicated case that has been to the Virginia Supreme Court and back, Pioneer Title Insurance Co. of Los Angeles is suing Cranwell for $284,000 in a breach-of-contract complaint.
The case dates to 1974, when Cranwell was the attorney for James E. Long, a self-made millionaire who once estimated his construction business was worth $20 million before he lost everything and went bankrupt.
Shortly before his business troubles began, Long obtained a $2.5 million loan from a New York bank to build a Roanoke County apartment complex to be called Tanglewood South.
The bank - Sackman and Gilliland - obtained a title insurance policy from Pioneer before agreeing to loan the money.
As Long's attorney, it was Cranwell's responsibility to conduct monthly title searches on the project's deed and to report his findings to the bank.
And therein lies the dispute.
Pioneer contends that Cranwell found mechanics' liens that had been filed against the project when he conducted the title searches, but did not notify the bank - as required to by a contract.
Pioneer, which ended up having to pay off more than $250,000 in liens, argues that Cranwell's failure to report the liens kept the bank from learning of the "dangerous situation" of Long's financial standing in 1974.
Had they known of the liens, Pioneer attorney Denis Englisby said, "the company may have said: `Wait a minute; we might have a problem here; let's stop the train.'
"Our contract with Mr. Cranwell says that if he even smells something like this, he's supposed to tell us about it," Englisby said.
Instead, the bank continued to make monthly loan payments to Long after being told by Cranwell that there were no liens, Pioneer contends.
Cranwell spent half of Monday and much of Tuesday on the witness stand after Englisby began his case by calling him as an adverse witness - a relationship that soon became apparent.
In testimony often marked by spirited exchanges and disputes with Englisby, Cranwell explained his actions.
Cranwell testified that his initial title searches did, in fact, find two mechanics' liens that had been filed in 1974. Cranwell admitted that he did not report the liens to the bank, but instead settled them himself with money taken from his client's escrow account.
"We took care of the problem," Cranwell testified. "If we had told the company about a $1,700 lien, they would have told us to take care of it and we would have, just as we did."
Englisby interjected: "No sir, you took it on yourself" to handle the matter without notifying the bank.
Pioneer also is claiming in the lawsuit that Cranwell's firm knew of "claims and threats" of possible litigation against Long and did not report them to the bank as required in the contract.
But Cranwell's defense is expected to assert that the bank was in as good a position - or better - to detect signs of Long's impending financial collapse.
"I didn't have the right to go and audit James Long's books," Cranwell said.
Two of the liens in question were for about $1,500. But in a third case, Cranwell and members of his law firm said they had no knowledge of a debt Long owed to Moore's Building Supplies that totaled more than $400,000.
A lien was later filed by Moore's for about $290,000.
Eventually, the bank foreclosed on Long's unfinished apartment complex and bought the 10.33-acre site at an auction.
Since then, the lawsuit filed by Pioneer against Cranwell has led to a years-long legal dispute.
After hearing several days of testimony in a 1985 trial, a Roanoke Circuit Court judge granted a request to dismiss the suit after Pioneer's evidence had been presented.
But in 1988, the Supreme Court ruled that the issues raised should have been decided by a jury. It sent the case back for a new trial.
Long, who began his career working at a service station before making millions in the home construction business and then losing it during hard times in 1973 and 1974, is expected to testify when the trial resumes today.
by CNB