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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 3, 1998
(Date of earliest event reported)
LANDAMERICA FINANCIAL GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Virginia 0-13990 54-1589611
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
101 Gateway Centre Parkway
Gateway One 23235
Richmond, Virginia (Zip Code)
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(804) 267-8000
6630 West Broad Street
Richmond, Virginia 23230
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Commonwealth Land Title Insurance Company ("Commonwealth"), a title
insurance underwriter and subsidiary of LandAmerica Financial Group, Inc., and
four current or former employees of Commonwealth, have been named as defendants
in a suit filed on November 3, 1998 by Norwest Mortgage Inc. and Norwest
Funding, Inc. (together, "Norwest") in the Superior Court for the County of Los
Angeles, California (Case No. VC028084). Norwest seeks to recover from
defendants claimed losses in excess of $40 million plus punitive damages and
attorneys' fees. The complaint alleges that Norwest suffered such losses as the
result of a fraudulent mortgage loan scheme related to loans originated by
Allstate Mortgage Company ("Allstate"), a California mortgage broker. It further
alleges that approximately 254 fraudulent loans were purchased by Norwest
Funding, Inc. in 1996 and 1997 under a 1994 Purchase Agreement between Norwest
Funding and Allstate. Norwest contends that Commonwealth issued title insurance
policies and performed certain related sub-escrow functions on a number of these
loans. Commonwealth did not close any of the transactions. The complaint asserts
that by virtue of their alleged knowledge of certain information and their
alleged acts and omissions in the title insurance transactions, certain of
Commonwealth's employees conspired with and aided and abetted Allstate and
others in defrauding Norwest in the mortgage loan scheme. The complaint further
alleges that Commonwealth negligently misrepresented the genuineness of the loan
transactions and the absence of facts adverse to Norwest and other purchasers,
that Commonwealth and the individual defendants were negligent in the
performance of Commonwealth's sub-escrow function and as a title insurer and
that Commonwealth breached an alleged fiduciary duty to Norwest.
On November 5, 1998, Commonwealth was notified that the Norwest suit
had been filed. As of the date of this report, Commonwealth has not been served
with the suit but anticipates that service will be effectuated during the next
week. Commonwealth is currently investigating the facts alleged in the
complaint. No assessment of the merits of the case has been made at this time.
Management is, therefore, unable to make a meaningful estimate of the amount or
range of loss that could result from an unfavorable outcome or determine the
amount of any potential offsetting recoveries that may be available.
Commonwealth intends to vigorously defend the suit and any attempt to shift to
it mortgage lending business risks or responsibilities outside of the scope of
the title insurance policy.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
LANDAMERICA FINANCIAL GROUP, INC.
Dated: December 3, 1998 By: /s/ Russell W. Jordan, III
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Russell W. Jordan, III
Senior Vice President, General Counsel
and Secretary
