BILL MINOR: Wilkie’s book unravels State Farm lawsuit tangle

JACKSON – Two weeks ago a Wall Street Journal editorial alleged that Attorney General Jim Hood was used as a pawn by disgraced tort king Dickie Scruggs to “shake down” State Farm Insurance to settle Scruggs’ multimillion-dollar 2007 lawsuit in behalf of 640 Gulf Coast homeowners angry over the company’s offered Katrina claims payment.
The Journal contended that Democrat Hood, at the behest of Scruggs, held a threat of criminal indictment over the head of State Farm unless it accepted a proposed settlement of the 640 claims brought by Scruggs’ lawyer group, together with lawyers’ fees.
Portions of Curtis Wilkie’s forthcoming book on Scruggs’ downfall titled “The Fall of the House of Zeus,” obtained by this writer, clearly put a lie to the Wall Street Journal’s version of Scruggs’ relationship with Hood during the State Farm-Katrina lawsuit episode.
Rather than being Scruggs’ lapdog in attempting to force State Farm to cave in, the Wilkie book shows that Hood was a constant thorn in the side of Scruggs’ negotiations with the insurance company.
At one point, Wilkie writes, Scruggs threatened to call a press conference attended by several high-ranking public officials (including his brother-in law, Sen. Trent Lott, a plaintiff in the lawsuit) and announce that Hood was the only obstacle standing in the way of getting a $89 million settlement of homeowners’ claims plus $26.5 million for Scruggs’ lawyer group.
The announcement obviously would be damaging to Hood’s political career.
Actually, Hood had launched both a criminal investigation and a civil lawsuit against State Farm over its refusal to make allowance for water damage as well as wind damage by Katrina to policyholders’ residences, the same issue the Scruggs group would raise in their lawsuit.
The sticking point for State Farm in its negotiations with Scruggs was that it would not go forward as long as Hood held a criminal case over their heads. Wilkie writes that a heated meeting took place in a private room at Jackson’s airport in January, 2007 involving Scruggs and Hood as well as Booneville attorney Joey Langston and his onetime associate Steve Patterson. The latter two were picked by Scruggs as emissaries to soften up Hood on his insistence to pursue a criminal case against State Farm.
A few days later, Wilkie writes, Hood drove (Gov. Haley Barbour had denied him use of the state plane) to Memphis to meet with three high State Farm officials. At the Memphis meeting, the Wilkie book continues, Hood reached a settlement of his civil suit by which the insurance company would pay Hood’s office $5 million as reimbursement for its expenses in the investigation and set up an apparatus to deal with unresolved claims by Coast homeowners.
While on his Memphis trip, Wilkie writes, Hood spoke by cell phone to an assistant about the status of the criminal investigation and was told he had little evidence to pursue criminal indictments. Having reached the settlement with State Farm on his civil suit, before he left Memphis Hood informed State Farm officials he would discontinue his criminal case, Wilkie writes. That opened the way for the Katrina lawsuit settlement.
Ironically, it was State Farm’s $26.5 million legal fee settlement that later was the thread that sent Scruggs to prison. Johnny Jones, one of the lawyers in Scruggs’ Katrina group brought suit against Scruggs over the share Scruggs offered him for his considerable work on the lawsuit.
Jones’ lawsuit, put in the hands of a Lafayette County judge, proved Scruggs’ undoing when the nationally noted attorney was linked to a $40,000 bribe offered the judge to rule in Scruggs’ favor. Scruggs, who pleaded guilty, was sentenced to five years in federal prison. Scruggs picked up an additional two year sentence for conspiracy in another fee-splitting case that wound up before Hinds County Circuit Judge Bobby DeLaughter. When DeLaughter was found to be involved in a complicated peripheral case, he also was given federal jail time.

Bill Minor has covered Mississippi politics since 1947. Contact him at P.O. Box 1243, Jackson, MS 39215-1243, or e-mail at edinman@earthlink.net.

Bill Minor