Judge Hittner denies government’s motion to strike Wilson’s claim to Peters’s $425K

Recall that in December of 2008, the government filed an action about the money Ed Peters had turned over to them (they said it was what was left of his million dollar fee in Wilson v. Scruggs).  Wilson’s lawyers jumped into the case, claiming that the money should rightfully be his.  The government filed a motion to strike Wilson’s claim (which I described in detail, along with some details about the claim itself, here),   I described the gist of the governmetn’s position:

The Government’s response is all about how Wilson has no direct claim to the money, and at most a right to petition the Justice Department for payment as a victim.   The government’s memorandum states that Wilson’s claim is that the money would have been paid to him to settle the case if it had not been paid to Peters.   The argument is that Wilson has no standing to claim this money because he is at most an unsecured  creditors against Peters personally– that without a judgment, he has no direct claim against this money.  There are no cases cited by the government in the part of its memorandum making this argument.

I’ve never done legal work close to this issue, except the tracing issue that is implied by both side’s arguments.  Wilson is arguing that the money is tracably proceeds he’d have been paid if the scheme hadn’t been in place.  He doesn’t say the money came out of the fund that Scruggs was holding to pay him from the asbestos cases.  The Government is arguing that he doesn’t have claim that this particular money is his, there’s no direct claim.  I would guess that this is going to turn on that first linkage– whether Wilson really can say Scruggs moved this money from a “Wilson pile” to a “pay Peters to fix the case” pile and that makes it Wilson’s.

Wilson responded (described here) last Spring, and there the motion sat.  Meanwhile, the district judges in north Mississippi recused themselves from the case, and the Fifth Circuit assigned it to Judge David Hittner of Houston, Texas.  Today, Judge Hittner overruled the government’s motion to strike with essentially no explanation.  The order is here.  This means that the case will go forward, presumably.