In federal district court in Jackson, Judge Wingate is presiding over U.S.F.&G. v. the People’s Bank, a civil case arising out of the Paul Minor prosecution. Judge Wingate has taken the opportunity of motions by the People’s Bank side that he recuse himself and a motion by U.S.F.&G. to disqualify Oliver Diaz as counsel for Paul Minor to set down his view of the facts in the Minor case(s). The opinion is essentially a brief for the prosecution.
As one might guess from this description, he denies recusal and grants disqualification. I’m going to insert here a couple of cautionary notes to the reader: I’m describing what Judge Wingate says are the facts, supplemented with some observations of my own. I take a similar approach to other pleadings in the case.
It’s possible to hold in ones mind the separate thoughts that there is something really wrong with secret loans (not required to be repaid) to judges guaranteed by a lawyer whose cases the judge decides and that the way these prosecutions went down looks quite political.
This all began in 1998, when Paul Minor, representing the People’s Bank, sued U.S.F.&G. for failing an alleged duty to defend to other lawsuits. The case was to be resolved in a bench trial before Judge Wes Teel. While it was pending, in 2000, the Fifth Circuit certified to the Mississippi Supreme Court a question about duty to defend in other case, U.S.F.&G. v. Omnibank.* U.S.F.&G. was convinced that the Omnibank case might resolve the legal issue in the People’s Bank case and asked for a stay. Judge Teel granted a “short” stay, then lifted it. Thereafter, Judge Teel gave People’s Bank a summary judgment on liability, leaving damages to be decided, and then, the parties settled with U.S.F.&G. paying $1.5M to People’s Bank. In 2002, about a month after the People’s Bank case had settled, the Omnibank certified question was decided in favor of U.S.F.&G. The majority opinion was by Justice Waller. There were dissents by Justice McCrae (joined by Justices Diaz and Easley) and Justice Diaz (joined by Justices McCrae, Diaz, Easley and Graves). Essentially, the dissenting judges were of the view that the federal district judge who’d originally decided the case for Omnibank was correct.
Here’s how Judge Wingate describes what happened next:
The indictment [of Paul Minor, Judge Teel, and others] was an offspring of a routine, but surprise state audit of the Peoples Bank. The state auditor…
That would have been Phil Bryant’s office.
…noticed that a number of loans were not supported by requisite collateral. The state auditor also noticed that some of these loans were issued to judges. Peoples Bank was asked to explain these questionable loans and why they were collateral naked.
What followed was the Peoples Bank’s desperate attempt to satisfy the auditor’s inquiry, since a bank could face harsh penalties for misappropriating the money of shareholders. Paul Minor did not want his guarantees made public so he undertook efforts to have others substitute their names on the guarantees for his. He had appeared before Judge Teel in the Peoples Bank case and reaped a $1,500,000 settlement. He had appeared before Judge Whitfield in Archie Marks, et al v. Diamond Offshore Drilling Company, Cause No. A–2401–99–63, and been awarded a judgment of $3,750,000.00. Justice Oliver Diaz had sat on the appeal of Omnibank when that lawsuit’s ruling was pending.
The state auditor upon learning of Minor’s guarantees asked the United States Attorney…
That would have been Dunn Lampton.
…whether a lawyer could guarantee loans to judges before whom the lawyer was appearing. …
Does it seem sort of odd to take that sort of question to a U.S. Attorney? And odd that apparently the U.S. Attorney stands ready to provide that service to the state auditor’s office?
… The United States Attorney decided to investigate and discovered more guaranteed loans to judges. The ones to Judge Teel and Judge Whitfield were, however, the main focus of the indictment in question. Eventually, Judges Teel and Whitfield and Minor were convicted of felonies. Justice Diaz was acquitted. The United States Attorney’s Office dropped the charges against his wife, Jennifer Diaz.
Citing the U.S.F.&G complaint in the case before him, Judge Wingate wrote:
Minor had arranged for and personally guaranteed a loan from Peoples Bank to Judge Teel and provided Judge Teel with cash in order to induce Judge Teel to favor Minor, Minor and Associates, and their clients, including Peoples Bank. Judge Teel strongly urged settlement in the amount of $1,500,000 in favor of Peoples Bank, which was represented by defendant Minor and his firm, Minor and Associates, P.A. Judge Teel failed to disclose his financial relationships with Minor and Peoples Bank.
Plaintiffs allege that they requested Teel to stay the Peoples Bank case in order to await the decision in a substantially identical case pending in the Mississippi Supreme Court, United States Fidelity and Guaranty Co. v. OmniBank, No.2000–FC–01015–SCT, where the issue was whether the policy provided coverage for claims arising out of a bank’s business practice in force-placing collateral protection insurance. Allegedly, while serving as a Justice on the Mississippi Supreme Court, Oliver Diaz, co-defendant of Minor and Teel in the criminal case, wrongfully disclosed information directly or indirectly to one or more of the defendants in the present case about the status of and ruling in the Omnibank decision, and as a result, the defendants in the present case hurried settlement in Peoples Bank before the Supreme Court issued the Omnibank decision. Plaintiffs contend that had Teel honored their request and stayed the Peoples Bank case until after the Supreme Court issued the Omnibank decision, USF & G would not have paid Peoples Bank because under the Omnibank ruling, USF & G had no legal obligation to defend or indemnify Peoples Bank in the action arising out of the policy.
Wingate writes about evidence in the trial:
Testimony during Minor’s criminal trial indicated that on September 27, 2001, while the Omnibank decision was under consideration by the Supreme Court, Diaz met with Minor, in person, and then later that day made inquiry to Fred Banks, the writing justice, as to the status of the decision. Testimony also indicated that Diaz was informing Minor of the status of the case and, consequently, Minor was pressuring Teel to proceed hurriedly before the decision was issued. Former Harrison County Chancellor J .N. Randall testified during the criminal trial that during a discussion he had with Teel, “Judge Teel said [the Peoples Bank ] case had to be settled in a hurry because the [Ominibank ] decision [when issued by the Mississippi Supreme Court] would be adverse [to Minor].”
On December 12, 2001, Minor filed a motion for partial summary judgment on behalf of Peoples Bank. On December 14, 2001, Teel heard oral argument. On December 18, 2001, Teel entered an order granting Minor’s motion in favor of Peoples Bank. The order held that USF & G had a legal obligation to defend and indemnify Peoples Bank in the two cases at issue. The only remaining issue was damages, an issue that would be heard and decided by Teel. Teel held a settlement conference on December 21, 2001, during which he strongly suggested a settlement amount of $1,500,000. USF & G decided to settle as the judge “suggested” and by February 7, 2002, USF & G had paid $1,500,000 to Peoples Bank. The Mississippi Supreme Court issued the Omnibank decision on March 28, 2002, a decision which held that, in circumstances plaintiffs assert are similar to those in Peoples Bank, the insurer did not have a duty to defend. According to plaintiffs, had the Peoples Bank case been stayed as they requested until the Mississippi Supreme Court issued the Omnibank decision, the ruling in Omnibank would have precluded Judge Teel from ruling that USF & G had an obligation to defend Peoples Bank and urging USF & G to settle.
The judge overruled the recusal motion, noting that it was the third motion to recuse Minor had filed, that the motion, which was based on Minor’s assertion that Judge Wingate learned stuff about Minor that would prejudice him and that would not be admissible or even discoverable in the new case (what those facts are is not mentioned), and that there was press coverage suggesting that Wingate changed rulings between the first Minor criminal trial and the second in a way that suggested prejudice against Minor. Citing the “appearance of impropriety” standard, Minor argued that he’d made sufficient showing of that to require another judge to handle the recusal motion.
Wingate concluded Minor had not, noting that what he knew about Minor he learned through acting as a judge, and that things one learns as a judge cannot form the basis for recusal.
Wingate also disqualified Diaz as counsel for Minor because U.S.F.&G. intended to call him as a witness.
Almost immediately, Minor has moved to reconsider all of this, in a motion signed by Oliver Diaz. The arguments are largely not new, except that there is a sustained attack on Judge J.N. Randall, the witness who Judge Wingate cites as testifying that Judge Teel had said the People’s Bank case needed to be settled because Omnibank was about to be decided adversely. Beyond material obviously from the cross-examination file for Judge Randall (his drinking habits, that he goes fishing a lot), Minor’s motion states that the testimony Judge Wingate cited was before the grand jury and was later recanted. He notes, “This was indeed Mr. Randall’s testimony at one point in the criminal trial. That testimony would change.” Minor’s motion goes on to state:
During the criminal trial counsel for the defendants raised the strong presumption that any story Randall told about the Omnibank case was rank hearsay. Because of this concern, the Bench questioned Randall, who admitted that he knew nothing about Justice Diaz or what he had or had not done. In reference to the hearsay relied upon by the trial court in its Order the following colloquy took place:
THE COURT: All right. In your grand jury testimony, you mentioned some scuttlebutt concerning Justice Diaz. …
Now, the source of this information, do you recall who that was?
THE WITNESS: No. No, Your Honor. I don’t have—as far as Justice Diaz is concerned, I don’t have any independent knowledge of anything dealing with that one as far as he is concerned. That was just some scuttlebutt around the courthouse. And I—really and truly, I didn’t put a whole lot of faith in it.
Transcript at 3474-75 (emphasis added). The questioning in that criminal case was undertaken by the same trial judge as this civil matter. Under questioning from the trial court, Randall disclaimed any prior statement as a rumor which not even he believed.
The Court then admonished the witness that any second-hand rumors or scuttlebutt would be hearsay, and therefore wholly inadmissible. At 3476. Randall then said if he had anything to say about Justice Diaz, it would only be “good.” At 3476-77.
We also learn that Minor’s only lawyers at this stage are Chuck McRae and Oliver Diaz, although Hiram Eastland’s firm has not withdrawn from representing him.
There’s probably more to be gleaned from the judge’s order/opinion and the motion to reconsider, so I’ll include those, plus the third recusal motion with Paul Minor’s affidavit:
- Judge Wingate’s opinion order on disqualification
- Minor’s motion to reconsider the opinion order
- Minor’s affidavit and motion to recuse
*Most of the facts in this post are from Judge Wingate’s opinion and from Paul Minor’s motion to reconsider that opinion/order. A few– that Omnibank was certified from the Fifth Circuit, and that the certification occurred in 2000 and the decision in 2002, along with details about the votes in that decision– are from the Mississippi Supreme Court opinion in the Omnibank case, reported at 812 So.2d 196. I’m assuming folks will accept my statement of who the US Attorney and the state auditor were in the early 2000s.