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Thursday, Nov. 12, 2009

Miss. high court reverses Scruggs' fees ruling

JACKSON, Miss. -- Even though disgraced lawyer Richard "Dickie" Scruggs conspired to bribe a judge in a dispute over Hurricane Katrina litigation fees, an arbitrator should decide how much the opposing attorneys will get, the Mississippi Supreme Court ruled Thursday.

A Jackson law firm - Jones, Funderburg, Sessums, Peterson and Lee - sued Scruggs and his associates in 2007, claiming it had worked on the insurance case as a member of the Scruggs Katrina Group but was denied its fair share of $26.5 million in attorneys' fees.

The Scruggs Katrina Group was set up by Scruggs and others to sue insurance companies on the behalf of hurricane victims.

Scruggs had claimed the contract with Jones provided that all disputes over fees would be settled by arbitration.

A judge ruled for Scruggs on that issue in 2008. The Supreme Court on Thursday upheld that ruling.

However, the Jones firm sought additional damages, claiming the fees case was tainted by Scruggs' efforts to bribe Circuit Judge Henry Lackey for a favorable ruling. Lackey cooperated in a federal investigation that led to an indictment of Scruggs and others for offering Lackey $40,000 to rule for them.

After Lackey recused himself from the fees case, a new judge ruled the Jones firm was entitled to monetary sanctions because of Scruggs' conduct. No dollar amount was set, pending the outcome of Scruggs' appeal of the ruling.

On Thursday, the Supreme Court overturned the sanctions.

Justice David A. Chandler, writing in the 5-2 decision, said the trial judge erred because Scruggs' "wrongful actions did not occur in the ordinary course of SKG business."

"The record aptly demonstrates that the scope of SKG's business did not contemplate an attempted bribery of the trial judge. This unauthorized criminal act constituted extraordinary behavior outside the ordinary course of SKG business and amounted to an act of 'private malice or ill will' ... There was no evidence that Scruggs intended, by this act, to benefit SKG," Chandler wrote.

Presiding Justice George C. Carlson Jr., in a dissent, said Scruggs was acting on behalf of all the partners in SKG when he concocted the scheme to attempt to bribe Lackey.

Carlson said a favorable ruling from Lackey would have benefited all of the SKG partners, not Scruggs alone.

Scruggs, his lawyer son Zach, their legal associate Sidney Backstrom, disbarred attorney Timothy Balducci and his associate, former state Auditor Steven Patterson each pleaded guilty to federal charges in the bribery case.