Opinion ID: 1433971
Heading Depth: 2
Heading Rank: 2

Heading: Teel Scheme

Text: In October 1998, at the same time that Whitfield was seeking reelection, Wes Teel was running for judicial office for the first time and facing a run-off election for a seat on the Eighth Chancery Court District of Mississippi. Just as he had done for Whitfield, Minor offered to guarantee a loan from Peoples Bank, in this case a line of credit up to $25,000. Teel accepted, and the loan closed on November 12, 1998. Teel withdrew $24,500, which he deposited in his campaign account, and with the help of those funds he won the election. Teel did not report the loan on his campaign disclosure forms. [8] Again, at Minor's request, the loan was structured so as to require a balloon payment or renewal every six months. As was the case with Whitfield, Teel ignored letters and phone calls from the bank when his loan matured six months later, so the bank contacted Minor. However, unlike Whitfield, Teel never made any payments at all on the loan with his own funds. On June 28, 1999, after having cashed a check a few days earlier, Minor paid approximately $1,200 cash to renew Teel's loan, just minutes before making cash payments on both of Whitfield's loans at the Peoples Bank branch in Biloxi. When Teel's loan became due again in February of 2000, Minor enlisted the help of his friend and fellow attorney Richard (Dickie) Scruggs to act as intermediary in paying off the loan in full. In exchange for signing a 30-day promissory note, Scruggs gave Teel a check for $27,500 on February 23, 2000, which Teel used to pay off his loan. Minor then reimbursed Scruggs by check on March 9, 2000, thereby satisfying Teel's obligation to Scruggs. [9] Teel never contacted Scruggs regarding the promissory note again. Additionally, Teel failed to include the $27,500 check in his annual statement of economic interest for that year. In the meantime, Minor & Associates was in the early stages of litigating Peoples Bank v. United States Fidelity and Guaranty (USF&G), which it had filed in the Eighth Chancery Court District the summer before Teel's election. Minor's firm represented Peoples Bank (the same bank that had made the loans to Whitfield and Teel) in a suit against its insurer, USF&G. Peoples Bank claimed that USF&G had a duty to defend it against a particular class of lawsuits being brought by its customers, but USF&G denied coverage under the bank's insurance policy. Despite the fact that this was a complex insurance dispute, Minor's firm had elected to try the case without a jury in chancery court, which is an equity court that generally handles matters such as divorce, child custody, juvenile delinquency, and property disputes. [10] Immediately upon filing the complaint, Minor again saw to it that his own judge of choice was assigned to the case by filing a motion for an expedited hearing to schedule a trial before Judge J.N. Randall, who was appointed to the bench by the Governor largely at Minor's recommendation. Just as Whitfield had done in the Marks case, Randall issued a Fiat setting a hearing in his court and effectively assumed control of the case. However, Randall did not prove to be as cooperative as Minor would have liked. When USF&G moved to transfer the case to Circuit Court, Randall, who had never handled an insurance dispute before, granted the motion. Minor got very upset, and, in an ex parte conversation, convinced Randall to take the case back. In discovery, Minor sought access to all of USF&G's documents relating to Peoples Bank's claim, but USF&G objected on the basis of attorney-client privilege and work product. Already overloaded with work himself, Randall assigned the discovery dispute to Teel, who, on October 16, 2000, rejected USF&G's privilege claims and ordered all documents disclosed to Peoples Bank. In response, USF&G filed a motion to reconsider with Randall, and Randall granted the motion and set aside Teel's ruling. Minor was extremely upset and immediately called upon Randall in his chambers for another ex parte meeting. Minor upbraided Randall and convinced him to reassign the entire case to Teel, and Randall obliged. [11] After Teel took control of the case, USF&G's attorneys moved to stay the proceedings pending the outcome of USF&G v. Omnibank, which was then pending before the Mississippi Supreme Court. See 812 So.2d 196 (Miss.2002). In Omnibank, another bank had sued USF&G based on the same contractual provisions at issue in Peoples Bank, and the Mississippi Supreme Court's decision would likely have resolved the dispositive issues in Peoples Bank as well. The federal district court in Omnibank had granted summary judgment in favor of the bank, finding that USF&G did have a duty to defend. See Ramsay v. Omnibank, 215 F.3d 502, 504 (5th Cir.2000). On appeal, this court had certified the duty-to-defend question to the Mississippi Supreme Court. See id. On July 30, 2001, Teel concluded that the motion to stay was well taken and agreed to stay the case, but only for a month, until September 1, 2001. Teel did not reschedule the trial, which was set for the following December. Therefore, when the Mississippi Supreme Court still had not reached a decision one month later, USF&G was faced with an imminent trial and the possibility of significant punitive damages. On December 18, 2001, Teel granted summary judgment for Peoples Bank on the duty-to-defend issue, reserving the issues of bad faith and punitive damages for trial. Fearful of a significant punitive damages award, USF&G agreed to enter into settlement talks. Teel served as the mediator, engaging in private discussions with each party in the attempt to reach an agreement. After these conferences proved unproductive, however, Teel took the unusual step of bringing the parties together to make an announcement. Teel declared that he was offended by USF&G's failure to defend Peoples Bank and that, in his determination, $1.5 million (five times the amount of actual damages in the case) was an appropriate settlement figure. On December 21, 2001, fearing a worse outcome if they tried the punitive damages issue before Teel, USF&G agreed to the $1.5 million settlement. Just over three months later, the Mississippi Supreme Court issued its opinion in Omnibank, determining that USF&G had no duty to defend under the insurance policy. See 812 So.2d at 201-02. Meanwhile, unbeknownst to USF&G's attorneys, Minor had been providing other financial assistance to Teel (in addition to the loan transactions that had been completed the year before). In October of 2001 (after the one month stay had lapsed and the parties were preparing for trial in Peoples Bank ), Teel, along with two other chancellors from the Eighth Chancery Court District, was under investigation by the Mississippi Administrative Office of the Courts  in Teel's case for allegedly keeping reimbursement money for himself rather than paying office-supply vendors. Minor held several strategy meetings with the judges and hired a public relations firm to help with media exposure. On or about October 31, 2001, Minor flew Teel and the other judges in his private plane to Jackson for a meeting in these matters that Minor had personally arranged with the Mississippi Attorney General. Finally, in June of 2002, after Teel was acquitted of the criminal charges, Minor sent Teel's attorney a check for $10,000 to cover part of the defense costs, for which he received a thank-you note from Teel.