Claims News Service, June 20, 2:15 p.m. EDT -- A new legal motion filed yesterday by State Farm seeks to remove and disqualify famed attorney Richard Scruggs from representing Mississippi policyholders who are disputing Katrina claim payments with the company.
The action stems from initial information the Scruggs Katrina Group received from independent claim adjusters Cori and Kerri Rigsby back in Feb. 2006. According to the motion from State Farm, Scruggs illegally and unethically obtained the confidential information from the two sisters, and then gave them both litigation consulting jobs at the firm that paid them each $150,000 a year.
To bolster its case, State Farm retained professional responsibility and ethics professor Charles Wolfram as an expert witness to review the evidence. In the legal motion, Prof. Wolfram states, "Scruggs blatantly, seriously, and repeatedly departed from the standard of conduct that would be followed by a lawyer of ordinary care and prudence in dealing with clearly confidential and privileged information possessed by the Rigsby Sisters as former confidential agents of State Farm."
Wolfram went on to say that "Mr. Scruggs' course of conduct warrants his disqualification from further participation in this matter. Moreover, Mr. Scruggs' extensive sharing of State Farm confidential documents and other information obtained from the Rigsby Sisters with all other members of the SKG requires that those other lawyers and their law firms also be disqualified."
State Farm also referenced in their release a ruling quietly issued last week by U.S. District Judge William Acker, Jr., in Alabama, who formally recommended that a government attorney prosecute Scruggs' criminal contempt in regards to his relationship and with the Rigsby sisters. The sisters, meanwhile, were exempted from this recommendation.
The Scruggs Katrina Group posted a response on their web site shortly after the legal motions and documents were released by State Farm.
"To date, the Scruggs Katrina Group has settled more than 1,000 cases worth hundreds of millions of dollars in Katrina-related disputes. And those numbers are growing. Conversely, State Farm has shortchanged almost all of their 35,000 policy-holders in the state. They tried to disqualify Judge Senter and his law clerk, Jerry Reid. They have attempted to discredit Attorney General Jim Hood in the media. They have stopped writing new homeowners' policies in Mississippi. Now, predictably, they have declared war on us."
Scruggs Katrina Group also accused State Farm of paying the legal fees for the recent testimony of Mississippi Department of Insurance Deputy Commissioner Lee Harrell during a policyholder's suit, but the conflict-of-interest accusation appeared to be cleared up when Mississippi's Attorney General Jim Hood was reported to have said that the company would only pay for parts of the testimony related to market-conduct examination, a common practice.
Interested in more legal news and in-depth articles? Head over to Claims' legal channel for more information.
