Former business partners bear the sins of Scruggs

By Victoria Johnson Hoggatt | Apr 16, 2008


David Nutt

Don Barrett

OXFORD, Miss. (Legal Newsline) - Used to be every trial lawyer in Mississippi, indeed America, seemed to want to claim professional kin with Richard "Dickie" Scruggs. Now the association appears to be the kiss of death for big name tort law firms.

The plague continued Tuesday in Oxford in the Jones v. Scruggs trial, as specially appointed Lafayette County Circuit Court Judge William Coleman ruled that a former Scruggs Katrina Group member, attorney John Jones, was entitled to entry of a default in his attorneys fees dispute against Scruggs and other SKG joint venture partners, as punishment for Scruggs and others attempting judicial bribery in the fee dispute state court case.

The ruling came on a motion for sanctions filed by John Jones' Oxford attorney, Grady Tollison, after the November indictment of Scruggs, his son Zach and law partner Sidney Backstrom on federal conspiracy charges alleging that the trio, along with attorney Timothy Balducci and former state Auditor Steve Patterson, acted in concert to bribe Circuit Judge Henry Lackey. They were exchanging $50,000 for a favorable ruling on SKG's motion to compel the Jones contract dispute to move to arbitration.

Arbitration was called for in the joint venture SKG contract, and Lackey said he would have granted the motion to compel arbitration had he not been approached by Balducci. Instead, Lackey became a wired informant for the FBI.

Scruggs withdrew his Scruggs Law Firm from the SKG after the indictment, and the remaining partners, Mississippi firms Nutt & McAlister and Barrett Law Office and Florida's Lovelace Law Firm, renamed themselves the Katrina Litigation Group.

Jones' motion to strike the pleadings in the state court proceedings, meaning the defendants' answer to the complaint, as well as SKG's motion to move the case to arbitration, was held in abeyance by Coleman until the federal Scruggs judicial bribery trial was resolved.

Jones' attorneys said initially that they would call all the major players to testify in the state court case sanctions hearing, including Scruggs, as witnesses to determine who knew what, when.

Scruggs invoked the Fifth Amendment's protection against self-incrimination more than 19 times, a fact that Jones' attorney alluded to as proof that Scruggs' guilty plea to federal conspiracy charges was not adequate proof of accepting responsibility for his actions and that severe sanctions were still warranted by the state court for judicial bribery, a crime Tollison said was "second only to treason."

The remaining members of the former SKG all claimed that they had no knowledge of any under-the-table goings on carried out by Scruggs and Balducci, and should not be penalized.

Coleman had earlier ruled that acts of one joint venture partner would be attributed to all partners. That ruling could only be helped along by the fact that the same defendants were ruled against Tuesday. The KLG has also been disqualified from handling Katrina claims by U. S. District Judge L.T. Senter.

Disqualification of those attorneys in Scruggs' and then KLG's action against State Farm on behalf of Katrina victims was a penalty for Scruggs' giving consulting jobs that carried $150,000 salaries to two former employees of E.A. Renfroe & Co. who had stolen confidential State Farm documents and given them to Scruggs.

The practical effect of Coleman's ruling is that the defendants' motion to compel arbitration and the defendants' answer to Jones' lawsuit will be struck from the record as if neither had ever been filed, and Jones will be allowed to take a default, as if the defendants from the former SKG had never responded to the Jones v. Scruggs, et al., lawsuit at all.

There will be discovery and a hearing to determine damages, and whether additional punitive damages are merited, before the final judgment is entered.

Suing Scruggs has practically become a cottage industry in its own right, as Scruggs' former joint venture partners in mass tort/class action asbestos, tobacco and Katrina insurance claims litigation sue Scruggs and each other over dispensation of attorneys' fees.

If the Scruggs convolutions seem difficult to follow, it is because the lawyers do indeed take turns and switch sides. John Jones, the victor in Tuesday's fight, was a former Scruggs defense lawyer who represented him when he was being sued over attorneys fees by another of his former joint venture partners, that one a partner in asbestos litigation, attorney Roberts Wilson.

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