Opinion ID: 1638324
Heading Depth: 1
Heading Rank: 4

Heading: The April 16, 2008 order

Text: ¶ 13. At the April 15-16, 2008, hearing on the motion for sanctions, it was established that in the United States District Court for the Northern District of Mississippi, Richard Scruggs, Backstrom, Balducci, and Patterson all had pleaded guilty to conspiracy to commit bribery of an elected state official, that Zach Scruggs had pleaded guilty to misprision of a felony, and that all were awaiting sentencing. No members of the other defendant law firms had been charged in the bribery investigation. ¶ 14. In his testimony before Judge Coleman, Richard Scruggs invoked his rights under the Fifth Amendment. Judge Lackey testified that he initially was contacted by Balducci and had several subsequent interactions with him; at one point, Balducci gave him a proposed order compelling arbitration as to all the defendants. During one such interaction, Balducci told Judge Lackey that they had decided to change tactics to delay the entry of the proposed order, and Judge Lackey had assumed that they referred to the four other SKG firms. However, Judge Lackey testified that Balducci never told him that Barrett, Nutt, Lovelace, or anyone at their firms knew anything about his contact with Judge Lackey. In fact, Judge Lackey testified, Balducci later told Judge Lackey that the only persons who knew about the scheme were himself, Judge Lackey, and Richard Scruggs. ¶ 15. David Nutt testified that he lacked any knowledge of the attempted bribery scheme until the day after the indictments. Nutt further testified that before the bribery allegations, all the defendants had been represented by the law firm of Daniel, Coker, Horton, and Bell, but they had no joint defense agreement. However, Nutt admitted that all defense fees had been advanced by the Nutt Firm on behalf of the other codefendants. Nutt testified that Richard Scruggs had not been authorized to hire attorneys to act on behalf of the other defendants. ¶ 16. Nutt also testified that the Nutt Firm had paid a $40,000 invoice for voir dire services performed by Balducci in an SKG case referred to in the record as Lisanby v. USAA. Lisanby was one of several SKG cases that were handled exclusively by the Scruggs Firm, but at the time the Nutt Firm was billed for voir dire, Lisanby had not gone to trial. The $40,000 invoice was among many invoices attached to a manifest for $750,000 in SKG expenses submitted by the Scruggs Firm in November 2007 for payment by the Nutt Firm. In fact, the $40,000 invoice was a falsified invoice that billed the bribe money to SKG. Nutt testified that he had not seen the invoice when it arrived, but, apparently, his law partner had approved the invoice for payment along with the rest of the items in the manifest. Nutt testified that after the bribery charges arose, he located the invoice and contacted the FBI. Nutt further testified that the invoice had appeared to be a reasonable charge, and that his firm had had nothing to do with the Lisanby case. ¶ 17. Dewitt Lovelace testified that he never had authorized any ex parte contact with Judge Lackey. Lovelace testified that he had lacked any knowledge of the attempted bribery until he saw the indictments, and that he never had authorized any of the other defendants to act on his behalf. Lovelace further testified that he never paid any defense fees to Daniel Coker, and he never requested that the case go to arbitration. Following this testimony, the parties stipulated that Don Barrett's testimony would be substantially the same as that of Nutt and Lovelace. [3] ¶ 18. In a bench ruling, Judge Coleman found that in March 2007, Balducci had met with members of the Scruggs Firm and had agreed to influence Judge Lackey for a favorable decision in the Jones case. Judge Coleman further found that this attempt to influence developed into a conspiracy among Richard Scruggs, Zach Scruggs, Backstrom, Balducci, and Patterson to bribe Judge Lackey, which was carried out. However, Judge Coleman found that there is little, if any, evidence that the other defendants participated or were aware of the bribe or part of the conspiracy. ¶ 19. Noting that no motion for reconsideration had been made, Judge Coleman refused to reconsider his prior ruling that as to the conduct on the part of one or more of the defendants in this matter, the actions for one, if shown to have occurred in the furtherance of the purpose of the joint venture, are the actions for all, and the [c]ourt may order sanctions accordingly. Judge Coleman found that, although the complaint listed individual defendants, the Jones Firm's lawsuit was against SKG itself, or against its assets. Notwithstanding, Judge Coleman granted the motion for sanctions against all defendants, struck the defendants' pleadings and answer, and entered default in favor of the Jones Firm. ¶ 20. In an April 17, 2007, order, Judge Coleman struck the defendants' answer and their motion to stay proceedings and compel arbitration, and entered default against them. Judge Coleman ordered a hearing to take an account and to determine the amount due the Jones Firm under the joint-venture agreement. At the hearing, the defendants would be permitted to raise legal issues such as whether the facts established a legal basis for recovery. Judge Coleman allowed discovery on the issue of the Jones Firm's damages, including its claim for punitive damages. Additionally, Judge Coleman ordered the defendants to pay the Jones Firm's reasonable attorneys' fees and expenses incurred since July 17, 2007, until the date of the order, without prejudice to the Jones Firm's claim for attorney's fees in the first amended complaint. ¶ 21. On May 1, 2008, the Scruggs defendants moved to supplement their petition for an interlocutory appeal to include the April 16, 2008, order. On May 7, 2008, the Barrett Firm, Don Barrett, the Nutt Firm, and the Lovelace Firm filed a petition for an interlocutory appeal, later joined by the Scruggs Firm, from the April 16, 2008, order. On June 4, 2008, a panel of this Court denied the petition, but on motion for reconsideration, on August 14, 2008, this Court, sitting en banc, granted the petition for an interlocutory appeal and stayed all proceedings in the trial court. On August 25, 2008, the Jones Firm and the Scruggs Firm filed a Joint Motion to Partially Lift Stay and to Dismiss Certain Parties to Appeal, and stated that the Jones Firm had settled with the Nutt Firm, Richard Scruggs, and the Scruggs Firm. This Court granted the joint motion. Accordingly, the remaining appellants are the Barrett Firm, Don Barrett, and the Lovelace Firm. This Court granted the appellants' motion to consolidate the interlocutory appeals.