McLaughlin v. Miners & Merchants Bank & Trust Co.

758 F. Supp. 375, 1991 U.S. Dist. LEXIS 2713, 1991 WL 29454
CourtDistrict Court, W.D. Virginia
DecidedMarch 6, 1991
DocketCiv. A. No. 87-0230-A
StatusPublished
Cited by2 cases

This text of 758 F. Supp. 375 (McLaughlin v. Miners & Merchants Bank & Trust Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McLaughlin v. Miners & Merchants Bank & Trust Co., 758 F. Supp. 375, 1991 U.S. Dist. LEXIS 2713, 1991 WL 29454 (W.D. Va. 1991).

Opinion

MEMORANDUM OPINION

WILSON, District Judge.

This is an action by plaintiff, Tucker W. McLaughlin ("McLaughlin”), against defendant, United Virginia Bank (“UVB”),1 alleging “lender liability” arising in tort and contract. McLaughlin is a resident of South Carolina. UVB is a Virginia corporation with its principal place of business in Richmond, Virginia. Miners & Merchants Bank and Trust Company (“Miners & Merchants”) and Grundy National Bank (“Grundy National”) were defendants, but the claims against them have settled. Each of these banks, however, is a Virginia corporation with its principal place of business in this state. There is diversity of citizenship, and the requisite amount is in controversy exclusive of interests and costs and, therefore, the court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. This case was stayed on March 23, 1988, in light of parallel proceedings in the Circuit Court of Buchanan County, Virginia. This matter is before the court, sua sponte, to consider whether the court should continue to abstain for reasons of judicial economy. The court finds that the exceptional circumstances and concerns that justified abstention on March 23, 1988, now justify dismissal.

[376]*376I

McLaughlin’s failed business relationship with UVB has spawned no less than eleven lawsuits between UVB and McLaughlin or various companies in which McLaughlin has a controlling interest. The pertinent companies in which McLaughlin has had- a controlling interest are Southside Oil Company, Inc. (“Southside”), Tazewell Oil Company, Inc. (“Tazewell”), and Cardinal Fuels, Inc. (“Cardinal”). McLaughlin is the president and sole shareholder of Southside. Southside wholly owns Tazewell and Cardinal, and McLaughlin is president of those companies, as well. In fact, all of McLaughlin’s businesses were, in McLaughlin’s words, “very much interrelated, lending large sums of money to each other and owning parts of each other; ... it was all one ball of wax.” McLaughlin Affidavit at 2.

From early 1981 through May 1984, UVB made loans to Southside and to its subsidiaries. Southside and its subsidiaries provided collateral for the loans, and the loans were personally guaranteed by McLaughlin. According to McLaughlin, corporate formalities were ignored in his dealings with UVB, and he and his companies were treated as one. As McLaughlin states:

I personally guaranteed all of the credits. As our informality grew, the bank and I agreed that all of my business interests — real estate, oil companies, and newspaper assets, in partnership and corporate form — even my home, would all be used as collateral for the loans, and corporate distinctions within our relationship were not even considered or discussed.

McLaughlin Affidavit at 1-2.

Because McLaughlin’s companies constantly overdrew their checking account at UVB, UVB required additional collateral. McLaughlin pledged his one-half interest in a partnership known as Halifax Square Shopping Center (“Halifax Square”). Finally, in May 1984, UVB refused to honor any more overdrafted checks. UVB also requested and received a demand note secured and guaranteed by McLaughlin to cover the overdraft balance of $266,146.51. During the same time period, UVB allegedly released confidential information concerning McLaughlin and his companies to prospective buyers of two of McLaughlin’s companies. McLaughlin alleges that the information released intimated that he was in dire financial condition and that the release of that information adversely affected his relationship with those potential buyers.

Meanwhile, in early 1983, Miners & Merchants loaned Cardinal $250,000 on a demand note, which Cardinal secured with its accounts receivable and other assets and which was personally guaranteed by McLaughlin. Upon learning of McLaughlin’s financial problems with UVB, Miners & Merchants also required additional collateral. To satisfy Miners & Merchants’ demand for additional collateral, Cardinal pledged Tazewell’s equipment and other assets. McLaughlin also unsuccessfully sought to have Miners & Merchants convert Cardinal’s demand notes into installment notes. Miners & Merchants recorded liens on Tazewell’s assets, notified its customers of those liens, and notified Grundy National of a lien it claimed on McLaughlin’s funds deposited in Grundy National. As a consequence of that lien, Grundy National refused to honor checks drawn on McLaughlin’s Grundy National account. McLaughlin alleges that the actions of the three banks effectively denied him access to funds, causing Tazewell to go out of business and causing McLaughlin and his other companies to suffer serious financial losses.

II

No less than eleven lawsuits between UVB and McLaughlin or his companies have arisen out of the above facts:

(1) On June 3, 1985, UVB brought an injunction suit in the Circuit Court of Buchanan County, Virginia, against Tazewell to repossess inventory;
(2) Tazewell filed an action for damages on September 10, 1985, in the Circuit Court for the City of Richmond [377]*377against UVB, Miners & Merchants, and Grundy National;
(3) McLaughlin and various other individuals brought an action on March 26, 1986, in the Circuit Court of Buchanan County alleging breach of contract, unreasonable handling of collateral, tortious interference with contractual relations, and intentional infliction of emotional distress;
(4) On December 31, 1986, UVB brought a collection suit in the Circuit Court of Buchanan County against McLaughlin and several of his companies to recover on various notes and guarantees;
(5) Cardinal brought suit against UVB in the Circuit Court of Buchanan County on May 14, 1987, alleging tortious interference in Cardinal’s contractual relationship with Miners & Merchants;
(6) On that same date, Tazewell and Cardinal filed a separate action in the Circuit Court of Buchanan County against UVB alleging conversion, breach of fiduciary duty, and malicious prosecution;
(7) On June 21, 1987, Cardinal brought suit against UVB and Miners & Merchants in the Circuit Court of Buchanan County alleging damages for conspiracy and breach of fiduciary duty;
(8) On June 4, 1987, McLaughlin brought this action against UVB, Miners & Merchants, and Grundy National alleging conspiracy, breach of contract, breach of fiduciary duty, tortious interference with contract, and others;
(9) On July 25, 1988, UVB brought a declaratory judgment action in the Circuit Court of Buchanan County against McLaughlin to determine the status of notes and collateral held by UVB;
(10)On June 1, 1990, McLaughlin brought an action in this court against UVB alleging malicious prosecution, “prima facie tort,” and slander of credit; and
(11)On June 4, 1990, McLaughlin and his companies brought an action in the Circuit Court of Halifax County against UVB alleging breach of contract.

Most of the Buchanan County suits were consolidated for trial.

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758 F. Supp. 375, 1991 U.S. Dist. LEXIS 2713, 1991 WL 29454, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mclaughlin-v-miners-merchants-bank-trust-co-vawd-1991.