Insurance Law

Scruggs sues firm that demanded money from him for defense of Rigbys

By David Rossmiller

Two questions.

Number 1.

Q:  How close is this whole Rigsby mess to unraveling, like a crow swooping down, grabbing a loose thread on your suit and flying off?

A: Apparently, pretty close.

Number 2.

Q: When is an agreement to indemnify someone's expense not an agreement to indemnify someone's expenses?

A: Apparently, when Dickie Scruggs is involved.

Take a look at this new lawsuit filed by Scruggs against one of the law firms that had been defending the Rigsby sisters, Kerri and Cori, in the Renfroe v. Rigsby case in federal court in Alabama.   Scruggs is suing for declaratory relief -- a declaration by the court interpreting, in this case, a contract -- to the effect that the Scruggs Law Firm doesn't owe some $1.7 million in fees to Zuckerman Spaeder, a D.C. law firm that, as I wrote about here, withdrew from representing the Rigsbys in March because of non-payment. 

You may remember that the Rigsbys have testified in the Renfroe case that Scruggs agreed to defend and indemnify them if they ran into legal problems for taking State Farm documents illicitly and giving them to Scruggs.  Unfortunately for them and others, this agreement is not in writing, so its exact contours are, like so many agreements Scruggs has been in, subject to conjecture. 

In this new lawsuit, Scruggs says he doesn't owe the fees -- the former Scruggs Katrina Group owes them, because he made the agreement with the Rigsbys and hired the Zuckerman firm under authority of the SKG.   Without going back to check on every detail, just off the top of my head, I would say I think Scruggs has at least a point here, and he may be correct. The SKG certainly knew the Rigsbys were retained for a "sham consultancy" -- in the words of Judge L.T. Senter Jr.  -- and I think also the funds for the Rigsbys' $150,000-per-year "salaries" were advanced by Scruggs but ultimately paid by the SKG. 

The bigger question is whether Scruggs asked the rest of the SKG about the defense and indemnity agreement beforehand, if he was authorized as a joint venturer to bind them to such an agreement, and if they subsequently ratified the agreement by part performance. 

Disputes about fees are always interesting, because it is the only time you will see a lawyer denounce high fees.  Normally, you bring up the subject of a fee being too large to a lawyer, and the reaction is like you suggested he could save money on suits by buying only the coat but no pants -- just totally crazy.  In this lawsuit, Scruggs is saying $1.7 million in fees is way too high. (I'm sure Himself would never charge or accept massive legal fees). That is a lot of money, but the Zuckerman firm's rates are probably pretty high, and this is something that would have been known in advance.  Also, they probably had to do a lot of work and had difficult conditions to do it in.  We'll see.  I'm inclined to be sympathetic to lawyers who get stiffed on fees. 

Full post as published by Insurance Coverage Law Blog on July 07, 2008 (boomark / email).