State Farm's case against Hood over

By John O'Brien | Feb 7, 2008


HATTIESBURG, Miss. - State Farm Insurance Cos.' lawsuit against Mississippi Attorney General Jim Hood has come to an end with a confidential settlement.

U.S. District Judge David Bramlette on Thursday dismissed the case, which alleged Hood was unfairly threatening the company with criminal charges to force civil settlements with unhappy policyholders affected by 2005's Hurricane Katrina.

"The Court further finds that, based on a confidential settlement agreement between the parties, which shall remain under seal, this case shall be dismissed with prejudice," Bramlette wrote. "The Court retains jurisdiction to enforce the settlement agreement."

Hood said he was happy to have a turn on the witness stand.

"Thanks to Judge Bramlette, who has the patience of Job, this case has been dismissed," Hood said. "I am glad I had an opportunity to rebut the allegations against our office.

"The Office of Attorney General will continue to fight for the policy holders Mississippi. As for the criminal investigation, as with any case, I cannot comment."

State Farm was also positive.

"The court has taken control of this case and ruled that our contract with the attorney general is valid, unambiguous and enforceable and we are very pleased with that outcome," State Farm spokesman Phil Supple said. "Given that, we have no problem dismissing the case."

Hood sued State Farm and four other insurance companies weeks after Katrina, claiming that they intentionally misrepresented to policyholders the amount of damage done by wind (covered by their policies) and water (covered by a federal program).

A proposed settlement with State Farm had the potential to affect more than 35,000 policyholders, but a federal judge did not approve of it for procedural reasons. A separate successful settlement of 640 claims was coupled with a $5 million payment to Hood with the agreement his criminal investigation would cease, the company says.

Hood eventually sued State Farm again for not making the rejected settlement work. State Farm claims he threatened it with the prospect of another criminal investigation.

"(T)he Court now finds that... the Jan. 23, 2007, letter agreement between Attorney General Jim Hood and (State Farm) is a standalone agreement, unambiguous and enforceable between the Mississippi Attorney General on behalf of the State of Mississippi and State Farm, and any of its current and former employees, directors, engineers, agents, counsel and adjusters," Bramlette wrote.

The settlement capped a hectic few days in the case. Attorneys for State Farm and indicted trial lawyer Richard "Dickie" Scruggs, central in Katrina litigation until he was charged with attempting to bribe a state judge in a dispute over at least $26.5 million in fees, bickered during the weekend and Monday over a scheduled deposition.

Through a pair of sisters who worked for a claims-adjusting company, Scruggs, known nationally for his role in litigation against tobacco companies that led to a settlement worth $246 billion to 52 participating states and territories, came into possession of confidential documents that he says shows State Farm's guilt.

When ordered by an Alabama federal judge to return the documents to State Farm's attorneys, he gave them to Hood. For that, Scruggs, a campaign contributor to Hood, has been charged with criminal contempt in Alabama.

Though the deposition was sealed and will probably remain so, it is likely Scruggs invoked his Fifth Amendment rights not to incriminate himself. His attorney, John Keker, said he would before the deposition apparently took place Monday evening in Oxford, Miss.

On Wednesday, Hood and State Farm showed for a hearing in Natchez, Miss. Hood took the stand to defend both his criminal and civil investigations, according to a report by The Associated Press.

The report says Hood was asked if Scruggs threatened to back another candidate if Hood didn't terminate his criminal investigation in the settlement last January.

"If you're asking me, 'Did somebody come to me and threaten me?' The answer is no," Hood replied, according to the report.

According to the criminal contempt charges filed in Alabama against Scruggs, he contributed $44,000 to Hood's 2003 campaign.

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