AG Hood never had authority to bring Katrina suit, judge rules

John O'Brien Jan. 12, 2009, 7:19pm


BRANDON, Miss. (Legal Newsline) - Mississippi Attorney General Jim Hood's controversial lawsuit against five insurance companies he claimed mistreated Hurricane Katrina victims has been dismissed by a state judge.

Rankin County Chancellor John Grant III tossed the suit Dec. 22, ending more than three years of litigation initiated by Hood just weeks after Katrina hit the Mississippi coast in 2005.

Grant wrote that Hood had no business bringing the suit, which alleged the companies intentionally misrepresented the amount of damage done by wind (covered by their policies) and water (covered by a federal program).

"The Attorney General is neither a party, third-party beneficiary nor assignee of the private insurance contracts at issue," Grant wrote. "Therefore, he lacks standing necessary to pursue this matter.

"This lawsuit involves nothing more or less than private contractual rights and obligations between those coastal property owners and their insurance companies. The private nature of these claims is illustrated by the fact that many individual claims following Hurricane Katrina have been resolved through consensual adjustment, mediation or arbitration, all without the Attorney General's participation of intervention of any kind."

Grant did not stop there, continuing that Hood was acting under the guise of public interest while attempting to litigate a de facto class action not permitted by state law.

"There is simply no specific constitutional nor statutory provision that authorizes the Attorney General to bring this action," he wrote.

"The Attorney General in this case is not acting on behalf of a state agency, nor is he representing the Mississippi Department of Insurance which, coincidentally, reviewed and approved the insurance policy provisions the Attorney General now attempts to invalidate."

The Katrina saga is well-known for being the downfall of famed plaintiffs lawyer Richard "Dickie" Scruggs, who grouped a handful of law firms to create his Scruggs Katrina Firm. When a dispute arose with one of the partners over more than $26.5 million in settlements, Scruggs and four others attempted to bribe the judge who handled the case.

Scruggs is currently serving a five-year sentence in federal prison in Kentucky.

Also noteworthy was an FBI report released last year that said Scruggs offered $500,000 to two of his alleged co-conspirators from the judicial bribery scheme. It says Timothy Balducci and former state Auditor Steve Patterson were to attempt to convince Hood not to indict State Farm on criminal charges regarding Katrina claims because Scruggs feared it would put an end to a possible settlement with his Scruggs Katrina Group.

Hood said he is too hard-headed to be influenced by outside forces.

Federal prosecutors also said Scruggs and Hood worked closely to preserve confidential documents stolen from State Farm by a pair of sisters who worked at a company that teamed with State Farm after Katrina.

Scruggs was charged with contempt for allegedly violating a Dec. 2006 order from a federal judge that told Scruggs to return the insurance documents.

Instead, Scruggs gave them to Hood, claiming he was permitted to hand them over to law enforcement officials. Though Scruggs beat the criminal contempt charge, a federal judge found him and the sisters in civil contempt.

Scruggs had promoted the sisters to the media as whistleblowers who would reveal the insurance industry's treacherous practices and gave them $150,000 salaries as litigation consultants.

Scruggs also spent heavily to support candidates against Insurance Commissioner George Dale, who set up a claims-revisiting procedure before being ousted from office.

Only Nationwide and Allstate had not been dismissed from the case before Grant's order. State Farm, United Services Automobile Association and Mississippi Farm Bureau Insurance were the other defendants.

From Legal Newsline: Reach John O'Brien by e-mail at

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