“When I stood before Judge Biggers, I made a promise to him that I would try to be a better man. I spent a lot of time thinking about that pledge under circumstances few in this courtroom can imagine. I hope that what I am doing today is a major step toward redeeming that pledge. … I apologized to bench and bar for this sordid business.” He stated that he intends to fully cooperate. He thanked people, particularly in Oxford and the coast for their prayers for his family. He renewed his pledge he had made to Biggers.
It was very solemn. He seemed frail, but I could not tell whether that was partly from walking with leg irons.
Wow.
Um . . . no apology to Wilson?
Nope. I think he has to have at the back of his mind the civil suit. He did not ‘come clean’ on that .
I haven’t yet understood how Wilson plans to get around the requirement that you have to contribute labor and skill to a case to earn fees. See, e.g., MRPC 1.5. I have never understood his claim to tobacco fees. Asbestos fees, I can see. Tobacco fees, I can’t.
4. rogerwilco. The theory is that Scruggs used the fees Wilson was entitled to from Asbestos to fund the tobacco litigation therefore the Court should trace the funds to the tobacco litigation and impose a constructive trust on the tobacco generated by the fees he was due in Asbestos.
I remember our law professor hitting on this theory in law school hard but I have only seen it a few times and never successfully UNTIL NOW at least.
I understand, but I don’t agree with the constructive trust theory. I think you should have to work on a case to take part in the fee. I’m old fashioned that way.
Did not Luckey successfully argue the constructive trust theory? It is also my understanding that in the original Wilson litigation, the Special Master’s recommendation was that a constructive trust, in fact, existed and Wilson was due tobacco fees. That is what struck fear in Dick, in my opinion, and made him associate Langston and Balducci. Now the big question is: Which, if any, of the other tobacco lawyers knew about the payment to Langston to preserve the tobacco fees? South Carolina anyone?
“I have never understood his claim to tobacco fees. Asbestos fees, I can see. Tobacco fees, I can’t.”
RogerWilco: Didn’t lawyers who contributed only an investment get money out of the tobacco settlements? (I realize that ought to be champerty and maintenance, but did it not occur?).
Also, as I understand it, Wilson has an additional claim to a large sum of money on asbestos fees that got shorted by the rejection of the special masters recommendation.
In the end the Wilson fight may be over bragging rights, because if Pickering is successful in getting the MCI money back from Langston he has already publicly hinted that he intends on going after the tobacco money.
I’m all for the asbestos fees, as I say.
I don’t know if people who only contributed money got fees. If they did, I say they shouldn’t have. I don’t agree with your position if you’re saying that because some lawyers got fees without contributing time and labor, it might be ok for a court to award Wilson the same thing.
I would object to any lawyer, in any context, pursuing a fee case regarding a case in which they didn’t work. My objection isn’t specific to this situation. It’s based on my understanding of what the ethics rules require, notwithstanding Wilson’s constructive trust argument.
It was shown in the Wilson/Luckey litigation that Scruggs took the money from the account marked “Wilson Asbestos Fees” and directly invested it in the Tobacco litigation. Then he told Bob to go to hell and forced him into bankruptcy and got then DA Ed Peters to try to indict him for failing to pay his state taxes. Which he could not pay since Scruggs screwed him and forced him into bankruptcy. (what a nice guy.)
Judge Lee ruled already that Wilson was/may be entitled to a percentage of the Tobacco fees because of this conversion, however he delayed his final ruling on the determination of the underlying state claims, you guessed it, in front of Delaughter. Do you guys get it now? The Delaughter case was not just about 15 million it was about maybe hundreds of millions. And not just Dickie’s Tobacco maybe his % comes off the top like Dickies so he collects from everybody?
Dickie had to win or settle we could not afford to lose. So he made sure he didn’t. That is why the entire Tobacco group paid the legal fees for this case against Bob for some many years and they may all live to regret it now, and all should be writing at least letters of apology to Bob, as I think most all of them would have never agreed to this type of conduct, but they as Joint Ventures helped fund it and may be equally liable under the law.
Proving every Bob has his day!
Constructive trust is a venerable concept of equity. Professors Champion and Weems both drove home the concept to me. Conversion of someone’s money makes them an unwilling participant in the scheme of the trustee/bailor, no matter the risk involved. Shouldn’t that unwilling participant have the fruit of his asset which was wrongfully withheld? Similar to replevin, it has been seen internationally in the cases of art and cash that the Nazis, and their Swiss lap dog accomplices, seized in WWII and for which they have had to compensate the vicitms (able to bring a provable claim.)
Wheres the confidential relationship necessary for a constructive trust? Seems to me Scruggs and Wilson, both attorneys, contracted at arms length over attorneys fees. While Wilson undoubtedly wants a piece of the Tobacco I have never seen how he is entitled to it under the law.
The matter was based in contract, with Scruggs disbursing the collected funds to other partners of the Asbestos litigation. He therefore had the duty of a fiduciary, and so was a trustee of the funds belonging to the others.
I would say Wilson would be entiled to reasonable interest or earnings on the money but not an actual share of the tobacco fees. Would he have settled for the losses if the tobacco case had failed or been overridden by Congress?
I don’t believe parties to an arms length contract are fiduciaries. As for a dispute concerning attorneys fees, if parties are not in a confidential relationship the extraordinary remedy of a constructive trust is not available; rather their remedy is for breach of contract.
Thats what astonishes me once again in all this, Scruggs et al risked everything when the law was seemingly in their favor (ie the arbitration agreement and the constructive trust theory). Sure they would have had to pay something but not what they have given up. I think the Judge’s quote hit the nail on the head.
After you have several hundred million socked away, I don’t think it’s money as much as it is “winning.” And if you have a cutthroat nastiness, cheating your fellow lawyers out of fees they’re due becomes a game that I suspect is quite entertaining — thrilling for the risks you’re willing to take to prove you’re smarter, better connected, tougher, colder, meaner than other lawyers. Just as it was something other than money that motivated Cheney and Rove (for them it was that great aphrodesiac, power) I think it was something other than money that motivated Dickie. Eliot Spitzer didn’t have to hire a prostitute to get laid, but it was an adrenaline flowing thrill, I bet, when he was with her. Ditto Bill Clinton with Monica Lewinsky. Ditto Bill Bennett’s and Charles Barkley’s gambling habits. It’s not about money. It’s about hubris and ego and narcissism and self absorption and dry drunk delusion.
Partners in a partnership owe the duty of a fiduciary to one another with regard to assets of the partnership, liquid or illiquid irregardless. A partner who acted as the CFO/Controller/Treasurer/or what have you would be under a greater duty than the others with respect to the funds. Besides business relationships, in a marriage where one spouse withheld money from another wrongfully, or in an estate where property or funds have been withheld from the rightful heirs, the Courts in Mississippi have imposed constructive trusts. BTW when were you admitted?
DLM
Please inform me if there are age/standing requirements to comment on folo. I have been unaware of any and I apologize if I am violating any administrative rules.
Parts of the argument Wilson is making is no stretch at all. Parts may make new law.
First: Scruggs and Wilson were partners on the fee-splitting on asbestos fees. There is no dispute about that. They had a deal under which Scruggs had an undoubted duty to account for proceeds. There’s no doubt that’s a confidential relationship.
Second: Scruggs held the money and did not account to Wilson. Again, not disputed.
Third. Scruggs used the money to finance his efforts on the tobacco litigation.
Up to this point, the legal principles are nonexecptional. Scruggs had a fiduciary relation to account for the money. Instead, he used it for another purpose: To invest the cash in the tobacco litigation.
So now we are at four:
Fourth: Scruggs has as profits from this cash his profit from the tobacco litigation. He used it there, and he reaped that reward. RogerWilco has a problem about equities– should we let someone profit from “investing” in a lawsuit? But I don’t think that’s exactly what happened here. Without asking Bob Wilson, Scruggs took Bob Wilson’s money and invested it in the tobacco lawsuit. Who should get the proceeds of that investment?
The answer seems easier to me than it does to Roger: Scruggs should not, because it isn’t the profits from his money. It’s the profits from Bob Wilson’s money. So the next question: How to calculate the profits from Bob Wilson’s money, vs. the profits from Dickie Scruggs’s work on the case?
None of which I am aware. Just curious about when you were admitted to the Bar. The chilluns’ need putting to bed along with some Discovery, will be signing off for now.
Best Regards
DLM JD,MBA
DLM: that wasn’t addressed to me was it (the answer for my admission is 1981).
Good Evening, NMC. No the question was for Random Thoughts. Fabulous job you did in Aberdeen! My connectivity is the pits, and so many of my responses tonight are delayed significantly (need a new ISP.)
NMC
Thanks for the enlightenment it all makes much more sense to me now.
DLM, as for your earlier question I am a newbie. I was admitted in MS ’07 and hopefully I will be admitted in Louisiana in ’09. I’m taking the LA Bar in a week and a half which is my excuse for being slow in catching on to the constructive trust explanation, as well as any edginess I may have.
Gotcha, RT . . . your brain is filled with Frog Law (a/k/a Civil Code). You certainly have my deepest sympathies as I wouldn’t wish a bar exam on my worst enemy. In my opinion bar exams violate the Geneva convention, but then again it wouldn’t apply because the applicants are not considered enemy combatants (except by certain existing members of the Bar.) Bonne chance! (good luck) – DLM
NMC 20, I think we will just have to disagree on this one. I think the constructive trust theory is more agreeable in a straight business dispute, as opposed to a legal fee dispute (because of the ethical considerations re fees).
Aren’t these joint venture agreements? And don’t they therefore have partnership law applications?
When are the Feds going to attempt to clean up the CORRUPTION in the “Victims of KATRINA” litigation pending in Federal Court here in New Orleans. Mr. Scruggs, et al don’t have “nothing” on the corruption taking place here. If anyone wishes to read about it, pull up the Complaint in Civil Action no. 08-4728 on the docket of the United States District Court for the Eastern District of Louisiana, which is available on PACER. If any of you have “influence” with the FBI, then tell them we really need them here!