Lawyers for MidSouth Bank, the bank holding the note on Texarkana's Arkansas Convention Center, cannot move forward with foreclosure, but they want to proceed with claims of misconduct.
Texarkana Hotels LLC, which is the convention center's managing company, filed for Chapter 11 bankruptcy Thursday in the Texarkana Division of the Eastern District of Arkansas. Texarkana Hotels is owned by Dr. Hiren Patel and his wife, Nila. The Patels filed for Chapter 11 relief Friday in the Sherman Division of the Eastern District of Texas. The filings meant an automatic stay in MidSouth Bank's complaint for foreclosure in Miller County.
At a hearing Monday before Circuit Judge Brent Haltom, the bank's lawyer, Paul Lindsey of Camden, Ark., said he believes the state court should be able to rule on a motion asking that the Patels' lawyer, Don Overton of Little Rock, be sanctioned for making offensive statements in court filings.
"The numerous false, unwarranted, frivolous, and scandalous allegations made by defendants and their attorney, J. Don Overton, in the motion, lack evidentiary support and are slanderous," states a motion for sanctions Lindsey filed in January. "These allegations were intentionally made for the apparent purpose to intimidate, harass, delay and/or needlessly increase the cost of litigation."
MidSouth's complaint was filed Oct. 30, and the bank claims it served Hiren Patel on Nov. 3 with copies for him, his wife and Texarkana Hotels while Hiren Patel was at the Miller County courthouse to meet with County Judge Larry Burgess concerning the valuation of the convention center and adjacent water park, which the Patels also own.
Overton filed a response in December and an amended response in February in which he accuses the process server, Sharon Sharp, of fraud and perjury and asks that she be sanctioned by the court and forever barred from performing such work in Arkansas.
In an affidavit penned by Sharp, she states that she was hired to serve Hiren Patel and informed that he could be found in the courthouse while there for his 10 a.m. tax valuation meeting Nov. 3. Sharp, with an Internet photo of Patel provided to her by the bank in hand, got to the courthouse in advance of the meeting, the affidavit states.
"Dr. Patel later came in the courthouse and sat down on the bench next to me. I asked him if he was Dr. Patel and he responded, 'Yes,' " Sharp's affidavit states.
Sharp's affidavit further describes a conversation with Patel moments later outside the courthouse during which she confirms that he is Hiren Patel.
"I have since Nov. 3, 2015, had the occasion to serve Hiren D. Patel with a citation in another lawsuit that was filed in the state of Texas," Sharp's affidavit states. "The person I served on Nov. 3, 2015, at the Miller County courthouse is the same Hiren Patel that I served in the Texas litigation."
Also attached to MidSouth's filings is an affidavit from Miller County Judge Larry Burgess stating that he met with Patel at the courthouse on the morning of Nov. 3.
"The allegations of Mr. Patel that he was not at the Miller County Courthouse on Nov. 3, 2015, made via his attorney, are false," MidSouth's motion states.
Lindsey is asking that Haltom strike the language accusing Sharp of fraud and perjury.
MidSouth takes issue as well with allegations by Overton that the lawyer who filed the foreclosure complaint didn't follow civil court procedure. In his response to MidSouth's complaint alleging misconduct by Sharp, Overton included the following paragraph 11 times:
"This may be appropriate for pleadings in Texas; however, the present matter is filed in Arkansas Circuit Court and so the Texas rules of civil procedure are not applicable."
Lindsey wants Haltom to strike that language from Overton's filings as well.
"The statement serves no purpose, adds no value and is totally irrelevant to the issues," Lindsey wrote.
Lindsey said Overton's characterization of MidSouth's complaint about not in keeping with Arkansas rules of civil procedure is simply wrong.
At Monday's hearing, Overton argued that Haltom cannot hear arguments and testimony on the bank's sanctions motion because of the pending bankruptcies, which give jurisdiction to federal court. Lindsey countered, stating that the motion for sanctions doesn't require Haltom to rule on the foreclosure, just the conduct of Overton and his clients.
Haltom said he would like formal permission from the bankruptcy court to proceed before conducting a hearing on the sanctions motion. Lindsey said he believes the federal court will "carve out" the issue and allow Haltom to go forward on it alone.
Haltom asked Overton why he is continuing to serve his motions in the case to Robert McGinnis of Texarkana, the lawyer who filed the original foreclosure complaint but who withdrew from the case in mid-December. Overton said he wasn't aware of the substitution of Lindsey for MidSouth, and he had not seen an order concerning it. The order has been publicly accessible and available online since it was filed Dec. 14.
"It wouldn't have taken anything to know that, and you know Mr. Lindsey is in this case because you've been communicating with him. For the purpose of this hearing, you did. You've been communicating with him (Lindsey) and yet you served Mr. McGinnis," Haltom said. "You don't have a certificate of service to the right lawyer. I'm telling you right now that Mr. Lindsey is the lawyer and (McGinnis) probably got off the case because of these allegations. I think he felt some of that was directed at him."
Haltom said he will schedule a hearing to address the issue of sanctions if Lindsey acquires permission from the bankruptcy court for him to do so.
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