Monthly Archives: August 2008

Biden gives back Scruggs money: does this mean he will be the Veep nominee?

Q: How do you know you’ve hit rock bottom? 

A:  When even a politician doesn’t want your money.  

This story says Delaware Sen. Joe Biden is donating some Scruggs campaign cash to charity, possibly to start offloading links to disreputable figures.  A sign that he’s going to be looking to take up residence at the Naval Observatory come next year?  It’s actually not just Dickie Dough, but money from the whole Scruggs Gang. 

You might remember this post I did last December on some of Scruggs’ political outreach efforts — the post quotes some news stories and mentions P.L. Blake’s "relationship" with Biden.  Doesn’t mean much by itself, I suppose, when you are a Senator everyone claims to have a relationship with you.  Heck, even I got yelled at by John McCain back in my reporter days, maybe that means I had a relationship with McCain. But hey, come to think of it, who hasn’t been yelled at by McCain — if you’ve spent any time at all around him, he’s yelled at you.  Maybe there’s more to the P.L. Blake-Biden thing,  maybe there’s not.  Maybe Blake got $50 million to clip newspaper articles, maybe he didn’t.  Just sayin’. 

I wonder, will Jim Hood follow Biden’s lead and give back all those campaign contributions he got from Scruggs last year? 

 

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Blogging has been limited and infrequent, I know

I know a lot of people are disappointed I haven’t been able to devote my usual time to this blog.  The workload I’ve had the last few months has been not only heavy — that’s normal for me — but full of a vast number of motion practice deadlines.  As those of you connected with the law know, filing and responding to motions is time consuming and exacting work, and I’ve had more than my fair share to deal with recently. 

I keep thinking tomorrow or the next week will be that mythical Shangri-La where some time frees up for blogging, but so far time remains tight.  If I can’t do a good job blogging, it’s better not to do it at all — which explains the infrequency of my posts.  Many days, I’ve been too busy to respond to e-mails, so if you’ve sent me one and I haven’t answered yet, I hope you understand.  So, with that said, on the road to Shangri-La, I’ll try to regroup next week, catch up on some of what I’ve missed, and re-evaluate where to go from here. 

    

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Zach Scruggs’ sentence begins August 25

UPDATE:  As a number of people have pointed out, this post is in error.  Zach Scruggs’ sentence actually began on August 15.  Sorry for the error, that’s what you get for trying to blog from a cyber cafe in 20 minutes while the clock is burning minutes faster than a lawyer burns through a retainer. 

———————————  

This Sun Herald story by Anita Lee is a little old, but I’m just now getting back to some things I wanted to blog about before but didn’t have the time for.  It says Zach Scruggs’ prison sentence begins August 25 — it had been scheduled to begin today — and he will serve his time in a minimum-security federal prison in Fort Smith, Arkansas, the same place where Sid Backstrom will serve out his sentence.  

Just out of curiousity, I did some quick research on the Ashland, Kentucky prison where Dickie Scruggs is located.  Here is a link to a Bureau of Prisons website that talks about the difference between various prisons and their levels of security. Not tremendously informative, but since Ashland is a low-security facility, it indicates prisoners there are housed in dormitory-like settings.  I lived in a dormitory in college, where I was in a room with a roommate and there were communal showers and toilets, and I’m not sure whether this is what is meant by a dormitory, or if it is some barracks-like setting right out of Cool Hand Luke.  I also found this post on a website that discusses prison rules — the most interesting thing about the site was that the post is by a state corrections officer whose fiance is a prisoner in a federal facility (hey, stick with what you know, I always says) —  but there is a little additional information about what conditions are like at the Ashland facility.

 

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Rare occurrence: good legal news for Scruggs

This story by Patsy Brumfield of the Daily Journal says Dickie Scruggs has won a legal victory of sorts: the Mississippi Supreme Court has stayed proceedings in the Lafayette County lawsuit Jones v. Scruggs, and agreed to decide whether the case should be sent to arbitration. 

If you recall, this lawsuit was the origin of the "earwigging" of Judge Lackey that landed Scruggs, his son and Sid Backstrom in the pokey.  Earlier this year, the new judge presiding over the case, Judge Coleman, refused to send the case to arbitration and was considering whether and how much money sanctions should be assessed against Scruggs for unfairly tampering with the legal process.  Having the state Supreme Court agree to take up the matter is a victory of a sort, I guess, but is kind of like standing in the charred, smoking remains of your burned-up house and finding that the box with your award ribbons from sixth grade music camp made it unharmed. 

 

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Greetings from the Oregon Coast

I’m posting today from the Oregon Coast Cyber Cafe in Manzanita, Oregon, which, when I looked it up on my PDA, sounded like a cool place to have some vastly overpriced decaf coffee and listen to some piped in tunes while blogging.  No offense, but it turns out to be a tiny little house behind a local grocery store converted into an office-like setting with some VFW-hall-like tables and some computers, and where you pay big ransom money for wireless time.  To which I say . . .  OK, deal! Because it’s not easy to find a place to blog in these small Oregon towns.  I’ve been camping with my family this week, which is one reason posting has been light, and this will have to do.  The local library has wireless, but it doesn’t open until noon, and also doesn’t allow power cords for your laptop, and I had an unfortunate battery shutdown yesterday.  So this is where it happens today.  If the blogging is no good, blame it on having to rush before my minutes are used up.

 

 

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Federal grand jury may probe Scruggs’ involvement in Wilson case

The deal Dickie Scruggs cut for five years of prison time in the attempted bribery of Judge Lackey does not keep the feds from trying to tack on another nickel or dime — or more — onto his sentence through investigation of possible conspiracy to influence Judge DeLaughter in another case.  This story says a federal grand jury may soon be moving ahead with the investigation. About time, wouldn’t you say, that the feds take a closer look at Earwigging, Inc.?  Escaping to Cuba might look more and more attractive, when Scruggs contemplates that he might not be home in time to watch the 2018 Super Bowl.   

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What’s up in Jim’s neighborHood?

It’s hard to tell when Jim Hood comes out of nowhere with some bizarre escapade like last week’s press conference whether such an event is an objective in itself or merely an attempt to deflect attention from something else that will come up later.

If you recall, last week Hood said he is:

  • responsible for the additional State Farm Katrina settlements because he sued State Farm several months after they announced a deal with Mississippi Insurance Commissioner George Dale to reopen thousands of claims files;
  • the strongest man in the South, and he would prove it by walking right through a brick wall in front of reporters’ eyes, except there was no brick wall around; and
  • probably the reincarnation of the Pharaoh Thutmose III of Egypt, circa 1500 B.C, or possibly P.T. Barnum, or both.  

Just kidding about the last two, but he actually did say the first one.  It’s a hard one to figure, saying something so utterly refutable — it is just natural Hoodism/Hoodzpah/Hoodwinking? Or is Jim trying to get out in front of some other news, you know, build up some positive press before something else heads south in the South?   

 

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Amazingly, Hood claims credit for State Farm payments, announces settlement of lawsuit

Another wonderful day in Jim’s neighborHood. Mississippi AG Jim Hood announced a settlement of the breach of contract lawsuit he filed in June 2007 against State Farm.  Insurance Commissioner Mike Chaney took issue with Hood’s chest thumping, according to this story in the Sun Herald.

Insurance Commissioner Mike Chaney, who was on the Coast to speak to two different groups Wednesday, said after hearing about Hood’s remarks: "I think he’s crazy to call a press conference on a lawsuit claiming credit for something he didn’t do."

Hood claimed credit for State Farm paying an additional $74 million of Katrina settlement money.  State Farm paid this money, following the collapse of a deal between State Farm and Dickie Scruggs, with Hood’s approval, to certify and then settle a class action involving some 36,000 Mississippi homeowners.  The class action settlement was rejected by U.S. District Court Judge L.T. Senter, Jr., who was concerned, among other things, about procedural unfairness of the process set up under the agreement to settle claims, and about what exactly Scruggs would do to earn some $15 million due him under the settlement.  This failed class action was a backdrop to a settlement at about the same time of some 640 Katrina cases by Scruggs and State Farm (this settlement money, of course, is what led to the dispute within the Scruggs Katrina Group over allocation of the dough, leading to ejection of attorney John Jones from the group and a lawsuit by Jones, leading to Scruggs trying to grease with wheels of the lawsuit by bribing the judge over a procedural matter of sending the case to arbitration).

If you need or want a refresher on the Hood lawsuit, I wrote about it back in 2007, including in this post. Hood’s lawsuit alleged State Farm breached its agreement to make additional payments to Mississippi homeowners, which as you can see, was part of the class action proposal.  Earth to Hood: one problem with this theory –(1)  when a federal judge steps on your agreement, you are relieved from performance of it, and (2) State Farm had already agreed, in a deal with then-Insurance Commissioner George Dale, to reopen the claims, which resulted in payments that probably were about equivalent to what they would have paid under the class action process, minus the dough to Scruggs. (The failure of Scruggs to get the money turned out to be an incredibly lucky thing for him. Hey, what’s an extra $15 million to a guy who’s already loaded, anyway? Besides, if Scruggs had gotten this money, it was just another opportunity for another dispute with his partners, another lawsuit and more earwigging temptations) 

Here’s a post I wrote about the deal between State Farm and Dale.  You may want to note the date of it — March 20, 2007.  Then you may want to note the date of Hood’s lawsuit — June 2007.  Then you may want to note that, in his press conference yesterday announcing the settlement of his lawsuit, Hood claimed credit for the results created by Dale.  Then you may want to note that Hood, in a second press conference yesterday, claimed credit for the following: 

  • Brett Favre coming out of retirement.
  • The peanut butter and jelly sandwich. 
  • Invention of the word "Hi."  
  • Nice weather.
  • Affordable, but elegant silverware.
  • Long pants.
  • Smiling.
  • Good health, for those who have it. (He blamed State Farm for those who are in bad health, and said he is considering suing the company over this and opening a grand jury investigation, possibly involving the Rigsby sisters as star witnesses).

 As the Sun Herald story noted, State Farm, like Chaney, wasn’t buying Hood’s line:

He [Hood] credited the lawsuit with forcing State Farm to pay policyholders an additional $74 million. However, Hood filed the lawsuit in June 2007, after State Farm had begun the re-evaluation process under the Mississippi Insurance Department’s supervision. Hood’s lawsuit accused the company of violating an agreement with his office that called for federal court supervision of the re-evaluation.

"We find it perplexing Attorney General Hood would claim full credit for a process he opposed from day one and was the foundation for his lawsuit against us, which he now has settled," State Farm spokesman Fraser Engerman said Wednesday. "Nonetheless, we are pleased the attorney general understands State Farm has met its obligations under the agreement made with his office in January 2007.

Yes, ladies and gentlemen, just another example of Jim’s incredible Hoodzpah.  If I was George Dale, I’d be pretty ticked off. The earliest Hood started talking about his lawsuit was somewhere around May 2007, as you can see from this post I wrote from that time.  

Here, by the way, is a press release from Hood’s office, which has a link in it so you can listen to the press conference, if you care to.  

Now look at this press release from Dale last December. In it, he says the figure for all settlement money because of his agreements with State Farm and Nationwide to re-evaluate claim totaled $110 million — Nationwide paid out an additional $40 million, in addition to the State Farm dough. 

Oh, I almost forgot.  At that second press conference yesterday, Hood also claimed credit for the following: 

  • The Nationwide payments of $40 million (even though he didn’t sue Nationwide for breach of contract, he is sure they were scared into paying by the example he set with State Farm).
  • Tax rebates.
  • Friendly dogs and soft kitty cats.
  • When the sun shines and the fish bite.

Now that Hood has emerged from the phone booth wearing a cape with a big S emblazoned on his chest, let’s take a look at some other statements by Hood on this matter, some that were made under oath.

For example, here is some of his testimony from a hearing in Natchez earlier this year, which came as part of the lawsuit by State Farm against Hood — yes, that’s right, remember that State Farm successfully sued Hood to enjoin him from further criminal investigation of the insurer, which is kind of like an elk taking away a hunter’s 30.06 and chasing him off with a spray of bullets. 

Q. Would it surprise you if State Farm has spent in excess of $70 million on reevaluated Hurricane Katrina claims on the coast? 
A. Probably, in that I don’t know what State Farm’s included  in that 70 million. It could be legal fees, all that type thing. They have had statistical — we take questions about their statistics frequently when they name how many policyholders settled and so forth.

Check it out. It’s on pages 73 and 74 of the transcript of that proceeding, and you can find the transcript as the top link in this post I wrote in February 2008. (I link to the post rather than just the transcript because I want you to read the first paragraph of the post, it’s one I thought was pretty funny). 

Do you see what Hood said? He didn’t know the first thing about the process, how much was paid, who was getting paid, and so forth. He even doubted State Farm had paid $70 million!  But when it comes time to settle the lawsuit, he covers his tail by claiming credit for the results he testified he didn’t know a thing about.  If you read the seven or eight pages before the ones I cited, you will see I am correct.  Another amazing display of Hoodzpah.

Oh, and I almost forgot to mention it, but at that second press conference yesterday, Hood also claimed credit for:

  • Making chocolate taste good.
  • Straight teeth and good dental hygiene on the part of most Americans.
  • Several sonnets and plays mistakenly attributed to Shakespeare.
  • Throwing the winning touchdown pass for the New York Giants in the Super Bowl.
  • Catching the winning touchdown pass for the New York Giants in the Super Bowl.
  • Inventing the Super Bowl.
  • Inventing the New York Giants.
  • Inventing the National Football League.
  • Inventing football.

 

 

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Stars in stripes: Dickie Scruggs reports to prison

I know I haven’t been blogging enough where these two things happen in one day:

a.  My wife tells me I haven’t been blogging enough; and 

b.  Dr. Ed Duett, of Mississippi State, tells me folks in Mississippi are complaining that I haven’t been blogging enough. 

Ed is in Portland for some kind of academic risk management conference, and I had lunch with him Monday.  Good to see him again (I spoke at the Mississippi State Insurance Day in April).   So, workload permitting, I’m trying to catch up.  So here goes.

I got a chuckle out of the headline and lede of this Associated Press story: "Anti-tobacco lawyer Dickie Scruggs has reported to a federal prison in eastern Kentucky." 

Anti-tobacco lawyer?  Is that an apt description?  If anything, I think Scruggs would be described as pro-tobacco — after all, without it, he wouldn’t be pulling in his $50 million a year, or whatever his take is.  If those tobacco companies weren’t around, Scruggs would be just another con trying to get large by lifting weights, instead of being the richest guy in the cell block.  Maybe "pro-money lawyer Dickie Scruggs" would have been more accurate, or more accurate yet, "pro-Dickie Scruggs lawyer Dickie Scruggs."  

No word yet on whether he has hatched any escape plans.  

 

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Colorado Court of Appeals: anti-concurrent cause provision bars coverage where covered snow combined with uncovered rot to cause loss

Thanks to one of my loyal readers who often points out anti-concurrent cause cases for passing along the Colorado Court of Appeals July 24 decision in Colorado Intergovernmental Risk Sharing Agency v. Northfield Ins. Co.

This opinion is right on the money in its analysis of how anti-concurrent cause language works.  In the case, a roof on a building containing a pool collapsed from the weight of snow, but the timbers supporting the roof were rotted from humidity and chemicals from the pool (this kind of rotting due to pools happens more often than you would think).  The way the case came to trial was this: CIRSA (I hate acronyms as much as the next English major/former journalist, but in this case the name is a real mouthful, so I’ll compromise my standards a bit) had the primary level of insurance, and Northfield had the second layer.  CIRSA paid out on the loss, and Northfield declined to pay CIRSA for any of the money CIRSA had paid, citing an anti-concurrent cause provision in the Northfield policy.  The anti-concurrent cause language was the standard Insurance Services Office clause:

We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

The trial court correctly said Northfield didn’t have to pay for any of the loss that was due to excluded rot, but incorrectly allowed the jury to apportion the damages between covered snow weight and uncovered rot.  Question: what do you think the jury’s apportionment was?  C’mon, just take a guess, knowing how juries love to stick it to insurance companies, even when the plaintiff is a government agency.  That’s right: 90 percent due to snow.

On appeal, the Colorado Court of Appeals got it right.  This case presents a classic example of a true concurrent cause: the loss was caused by a combination of factors that arose independently, but the loss would not have occurred but for the combination of the two.  That is the best, shortest definition I have come up with of what a concurrent cause is.  The key, once again, and I’ve said this as often as I can because I’ve come to see that it is counterintuitive to most people, is to look first to what the loss is and define the loss.  Unlike in Hurricane Katrina cases, the damage to items of property was not due to discreet and separate causes — for example, first covered wind causes some damage to an item of property, and then uncovered flood causes some more.  That is not an example of concurrent cause, because a given item of property acted upon by each force was damaged by each force separately and in its own way.  The "loss" in Katrina cases was not the total damage to the house, but rather loss to specific items of property — a house consists of many items of property. 

In the CIRSA case, however, the "loss" was to the whole — apparently there were no items of property where you could segregate out damage from covered snow from the involvement of rot in helping the snow cause damage.  To put it another way: under normal circumstances where there was no uncovered rot, the roof would have held up the snow without collapsing.  In Katrina cases, the wind damage was not dependent on the existence of flood, so the "loss" in those cases cannot be caused by concurrent forces. 

Also, thanks to the Colorado Court of Appeals for favorably citing my work on anti-concurrent cause: the particular article they cited was Katrina in the Fifth Dimension, which appeared earlier this year in New Appleman on Insurance: Critical Issues, and which examined the U.S. Fifth Circuit’s Katrina decisions.  I think it’s the third case — that I’m aware of — that has cited to my analytical methodology, the first state court case and the first non-Katrina case.  I hope my methodology continues to catch on, because it truly is easier to use and brings more predictable results than any other.  In reality, there really aren’t any competing methods of analysis, other analysis is more like what happens when you stub your toe — hopping around, shouting and hoping the pain will just go away. 

So the analysis and the result of this case are correct: in this instance, unlike a lot of things people have come to think of as concurrently caused, the loss actually was due to concurrent forces, and therefore none of the loss was covered by the Northfield policy.  Now some people will see this as crazy and unjust no matter what I say, and I will only point out that I am describing what I see in how anti-concurrent language works, without regard to which side is going to win in any given case.  As it turns out, the prior two cases that cited my anti-concurrent methodology found for the policyholder.  Whether anti-concurrent language exists or not is of no particular concern to me, but since it does exist, I’d like courts’ analyses of it to be as focused, sharp and correct as possible, that’s all. In other words: I’m just sayin’.   

 

 

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