When I heard about this yesterday it made no sense to me, and it still doesn’t. Jim Hood says he is in the "final stages" of drafting a complaint against State Farm for breach of the settlement agreement that was shot down earlier this year by fedeal district court Judge Senter. Hood is up for re-election in Mississippi this year, and maybe this is just an effort at getting free campaign publicity. How else do you explain announcing a lawsuit that has not even been drafted yet, much less filed?
The settlement with Hood, to my understanding, was that as part of a massive class action settlement involving some 36,000 State Farm policyholders in Mississippi, Hood would drop both a prior civil suit against State Farm and cease a related grand jury investigation into claims practices. State Farm also was to pay Hood $5 million. Remember however, that the class action settlement, put together by the Scruggs Katrina Group and State Farm, didn’t make it past Judge Senter, who twice refused to certify a class action, saying it contravened the Federal Rules and involved an arbitration and settlement process that was procedurally unfair to policyholders. After the second try, the Scruggs Group backed off the proposed class action, and State Farm also moved on, making an agreement with Mississippi Insurance Commissioner George Dale to review the 36,000 claims anyway, but without class action status and the arbitration process.
I don’t know whether Hood got his $5 million or not, but this sounds an awful lot like a question on a Contract Law 101 final exam, with the correct answer being that you can’t sue someone for breach when their performance of the agreement is prevented by a federal judge. Maybe in the course of drafting this complaint Hood will pull out those old law school finals and contemplate how to get around State Farm’s impossibility defense. I wonder if by the time this thing gets drafted — if it does — Hood will get around to seeing Judge Senter’s refusal to approve the class action and State Farm’s lack of performance more as a failure of a condition precedent to Hood’s own performance — a justification for reinstituting the lawsuit he previously dropped. Maybe that’s what he’s driving at.