Miss. Auditor asks federal court to do nothing in $14 million fight, files state suit

John O'Brien Dec. 27, 2007, 4:46pm

NEW YORK - Mississippi State Auditor Phil Bryant has asked a federal bankruptcy court to abstain from making any decisions in a dispute over $14 million in fees given to a private law firm in the State's lawsuit against MCI, Inc.

Bryant says the issue should be decided in a state court, which is why he filed an action Dec. 20 in Hinds County Circuit Court against The Langston Law Firm.

"(T)his adversary proceeding is an unnecessary burden on the Court's docket, (and) plaintiffs may be form shopping to avoid having the Mississippi state courts interpret and enforce the Mississippi statutes that would require the Langston firm to repay its fees to the State of Mississippi for proper approval and appropriation by the legislature," Bryant's motion says.

Bryant had insisted in November that state Attorney General Jim Hood represent him in the lawsuit, though Hood, who had hired the Langston firm to pursue the case in 2004, declined. In the case, the State alleged MCI owed back taxes after its predecessor Worldcom collapsed in 2002, resulting in a $100 million settlement.

MCI and the State agreed that $17 million would go to attorneys fees, though the Langston firm, headed by Hood contributor Joey Langston, could only collect $14 million. The extra $3 million went to a $4.2 million donation to the Children's Justice Center of Mississippi.

Bryant asked the center to return the money to the State, and it did. He also asked Langston to do the same, and Langston refused.

"It is the State Auditor's contention that the manner in which the Langston firm was paid $14 million in legal fees for services rendered to the Mississippi State Tax Commission in the bankruptcy violated Mississippi statutes, and that the fees must be returned to the State of Mississippi for approval and disbursement by the Mississippi State Legislature," the motion for abstention says.

In his state complaint, Bryant gives his argument.

"Any contract for attorneys; fees to be paid to Special Assistant Attorneys General is subject to the provisions of state law, and no contract can supersede the requirements of state law," attorney Arthur Jernigan wrote.

"Because Defendants received fees in the form of public funds that did not come 'out of the attorney general's contingent fund, or any other funds appropriated to the attorney general's office,' (Miss. Code Ann. 7-5-7), they have illegally received public funds which must immediately be returned to the State of Mississippi, with interest."

Langston called Bryant "a political opportunist." Bryant was in the middle of a successful bid for Lieutenant Governor when the suit was filed.

"Bryant, through the state and national publicity surrounding the settlement, had actual notice of the settlement and could have objected to its approval by this court. He did not," wrote Langston's attorney, Michael Richman.

"Instead, he has waited until a few short weeks prior to the general election for the Lieutenant Governor post he so desperately desires to stage a transparently political and legally devoid attack on attorney fees. This Court should not fall prey to his antics."

Admitted felon Timothy Balducci was also appointed a special assistant attorney general for the case. He worked at The Langston Law Firm at the time, but has since opened his own firm.

Balducci also pleaded guilty to attempting to bribe a state judge in a $26.5 million attorneys fees suit earlier this month and is cooperating with federal prosecutors in their case against four others, including prominent trial lawyer Richard "Dickie" Scruggs.

Langston is representing Scruggs, and his office was searched by federal investigators earlier this month.

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