HENRY T. WINGATE, District Judge.
Before the court are five motions. Plaintiffs Fidelity Guaranty Insurance Underwriters, Inc., and United States Fidelity & Guaranty Company have filed the following motions: a motion to disqualify counsel [docket no. 138]; a motion for entry of a case management order [docket no. 145]; and a motion for status conference [docket no. 165]. Defendant Paul Minor has filed a renewed motion for recusal [docket no. 151], and defendants Minor and Minor and Associates, P.A., have filed a motion to strike the plaintiffs' motion to disqualify counsel [docket no. 160].
This court has held a motion hearing as well as a status conference concerning the motions before the court and has reviewed the filings of the parties as well as the applicable law. This court addresses all pending motions in this matter herein.
The cause before the court involves three inextricably intertwined cases. The first case, filed in 1998, is a civil case, Peoples Bank, Biloxi, Mississippi v. United States Fidelity and Guaranty Company, et al., ("the Peoples Bank case") Civil Action No. C2402-98-925. Peoples Bank, located in Biloxi, Mississippi, filed an action in Harrison County, Mississippi, Chancery Court against United States Fidelity & Guaranty Company ("USF&G"), its insurer. In that lawsuit, Peoples Bank sought damages for USF&G's alleged failure to defend and indemnify the bank in association with two other lawsuits.
Representing Peoples Bank was the law firm of Minor and Associates, P.A., with Paul S. Minor serving as lead counsel. Wayne Drinkwater of Bradley Arant Boult Cummings, LLP, represented USF&G, an insurance company of Maryland citizenship.
Judge Walter Teel presided over the lawsuit. If the proceedings had developed into a trial, Judge Teel was to conduct a bench trial, not a jury trial; Judge Teel would be the sole finder of facts, as well as the judge of the law.
Attorney Minor and Judge Teel at the time had a financial arrangement whereby Minor had guaranteed the repayment of Judge Teel's loan from Peoples Bank. Neither Minor nor Judge Teel revealed to USF&G or its counsel their financial arrangement. In fact, the loan papers and the guarantee were maintained in a place where they could not be easily detected.
While this lawsuit was working its way to trial, another lawsuit, United States Fidelity and Guaranty Co. v. OmniBank, No. 2000-FC-01015-SCT ("Omnibank"), had ended up before the Mississippi Supreme Court. USF&G saw enough similarity of legal issues with those in the Peoples Bank case that USF&G asked Judge Teel to stay the Peoples Bank case until after the Supreme Court had announced a decision in Omnibank. Judge Teel ordered a short stay, but dissolved the stay before the Mississippi Supreme Court ruled.
One of the nine elected Mississippi Supreme Court Justices at the time was Oliver Diaz. Justice Diaz enjoyed a close friendship with Minor and allegedly had a hand in postponing the release by the Mississippi Supreme Court of the Omnibank decision.
The decision by the Mississippi Supreme Court in Omnibank was favorable to USF&G in Peoples Bank. The parties, however, had settled by this time. The parties agreed in the Peoples Bank case to settle the case with a $1,500,000 payment by USF&G to Peoples Bank.
The second case began in July 2003, when a federal grand jury indicted Paul Minor, counsel for Peoples Bank in the Peoples Bank case; Teel, a former Chancery Court Judge who had presided over the Peoples Bank case; John H. Whitfield, a former state Circuit Court Judge; Oliver Diaz, a former Mississippi Supreme Court Justice; and Jennifer Diaz, the former wife of Justice Diaz. The charges against each defendant varied and included racketeering, fraud, bribery and extortion.
The overarching interrogatory hovering over this criminal case was whether defendant Paul S. Minor had been buying justice. A prominent trial attorney, Minor had obtained a number of impressive jury verdicts and he had received accolades for his trial acumen and tenacity. This indictment, however, cast a huge cloud over his courtroom accomplishments, that is, whether he had earned his victories fairly.
The indictment was an offspring of a routine, but surprise state audit of the Peoples Bank. The state auditor 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 whether a lawyer could guarantee loans to judges before whom the lawyer was appearing. 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.
The third case, filed in October 2003, is the present case, in which USF&G and another insurance company, Fidelity Guaranty Insurance Underwriters, Inc. ("Fidelity Guranty") allege that the defendants in the present case — Minor; Minor and Associates, P.A., Minor's law firm; Teel; and Peoples Bank — committed foul play in Peoples Bank and caused USF&G wrongfully to pay a settlement amount of $1,500,000. This lawsuit relies heavily upon the events which led to the settlement of the Peoples Bank case and the proof in the criminal trial which led to the conviction of Minor and Judge Teel.
The above has been provided as a synopsis of the interlink among the three cases discussed. The discussion below of the various issues before the court will repeat some of the information revealed in the synopsis, but the synopsis as presented aims to ensure that the reader understands the chronology of the events and the parties' roles in the subject litigations.
On July 25, 2003, the grand jury for the United States District Court for the Southern District of Mississippi indicted Paul Minor, John H. Whitfield, Oliver E. Diaz, Jennifer Diaz, and Walter W. Teel in relation to a scheme in which all the defendants allegedly concealed the fact that Minor, a licensed attorney in Mississippi, guaranteed loans for Judges Whitfield, Diaz and Teel in order to influence the judges' actions concerning cases in which Minor was involved. The grand jury returned a superseding indictment on February 20, 2004
The counts against Minor included racketeering,
Whitfield, Circuit Judge for the Second Circuit Court District of Mississippi, which encompassed Hancock, Harrison and Stone Counties, Mississippi, was indicted for mail fraud, wire fraud, honest services fraud, and bribery.
The grand jury initially indicted Oliver Diaz for mail fraud and bribery. Under the first superseding indictment, Diaz subsequently was charged with extortion. At the time of the events mentioned in the indictment, Oliver Diaz served as a Justice on the Mississippi Supreme Court, elected in 2000, to serve a term of eight (8) years.
Jennifer Diaz was indicted for mail fraud and bribery. She was the former wife of Oliver Diaz. The government dismissed the case against Jennifer Diaz before trial.
Teel was indicted for mail fraud, honest services fraud, and bribery. Teel, during the events of the indictment, held an elected seat on the Chancery Court in the Eighth Chancery Court District of Mississippi, which encompassed Hancock, Harrison and Stone Counties, Mississippi.
On October 27, 2003, USF&G and Fidelity Guaranty filed the present case in this court against Peoples Bank;
Defendant Teel, as a Harrison County, Mississippi, Chancery Court Judge, presided over the Peoples Bank case, Civil Action No. C2402-98-925.
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.
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.
Plaintiffs raise the following claims:
Plaintiffs seek compensatory damages in an amount not less than $2,500,000, consisting of the $1,500,000 USF&G paid to Peoples Bank by reason of defendants' wrongful acts and $1,000,000 in damage to USF&G's reputation; punitive damages in the amount of $10,000,000; and declaratory relief.
The case was assigned to the undersigned. On December 3, 2003, Peoples Bank filed a motion to stay the case until the criminal proceedings against Minor and Teel concluded, asserting that the criminal charges Teel and Minor faced were predicated on the acts that plaintiffs allege gave rise to defendants' liability in the present action.
The jury trial of Whitfield, Teel, Minor, and Oliver Diaz commenced on August 4, 2005. On August 12, 2005, the jury reached a partial verdict.
Minor was tried for one count of racketeering, eight counts of mail fraud, one count of wire fraud, three counts of bribery and one count of extortion.
Whitfield was tried for three counts of mail fraud, one count of wire fraud, and one count of bribery. The jury found Whitfield not guilty as to the count of wire fraud and did not reach a verdict as to the remaining counts.
Teel was tried for two counts of mail fraud and one count of bribery. The jury did not reach a verdict as to any of those charges.
Diaz was tried for three counts of mail fraud and one count of bribery. The jury found Diaz not guilty on all counts.
On December 6, 2005, the government filed a third superseding indictment.
The second trial of Minor, Whitfield and Teel commenced on February 26, 2007. The jury found the defendants guilty on all counts,
This court lifted the stay in the present matter on October 30, 2007.
On February 4, 2008, this court granted plaintiffs' motion to amend,
The amount and type of relief requested is the same as in the original complaint.
This court has diversity jurisdiction under Title 28 U.S.C. § 1332. Section 1332(a)(1) states that this court "shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States." Section 1332(c)(1) provides in part that "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." USF&G is a Maryland corporation, and Fidelity Guaranty Insurance Underwriters, Inc., is a Wisconsin corporation. Defendants are all Mississippi citizens.
This court has federal subject matter jurisdiction over plaintiff's RICO claims under Title 28 U.S.C. § 1331, which provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." RICO is a criminal statute, Title 18 U.S.C. § 1962,
Finally, this court has jurisdiction of plaintiffs' state law claims under Title 28 U.S.C. § 1367(a), which states that "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy ..." The state law claims are fraud, conspiracy to defraud, fraudulent inducement, negligent misrepresentation, negligence, unjust enrichment, conversion, breach of the implied covenant of good faith and fair dealing, vicarious liability and respondeat superior.
Defendants Minor and Minor and Associates, P.A., filed the first motion for recusal in this case on August 9, 2008 [docket no. 90]. Defendants filed the motion pursuant to Title 28 U.S.C. § 455(a), which directs that "[a]ny justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." The goal of § 455(a) is to avoid even the appearance of impropriety. United States v. Bremers, 195 F.3d 221, 226 (5th Cir. 1999) (citing Liljeberg v. Health Svcs Acquisition Corp., 486 U.S. 847, 860, 100 L. Ed. 2d 855, 108 S.Ct. 2194 (1988)).
In his first motion, Minor referred to the undersigned having presided over both the 2005 trial of Minor,
Minor filed a second motion for recusal on November 11, 2010 [docket no. 151]. In that motion, Minor added to the arguments in his first motion, relying on Title 28 U.S.C. § 144, which states:
This court held a hearing on November 8, 2010, during which it heard arguments on the motion for recusal as well as other motions. At the conclusion of the hearing, this court denied this second motion for recusal, too. Minor's counsel had difficulty understanding § 144 and had failed to file an affidavit and certificate of counsel in compliance with the statutory filing requirements of § 144. The court advised Minor's counsel that they could refile their motion if they followed the strictures of the statute.
On November 11, 2010, Minor filed a third motion for recusal. The content of the second and third motions is the same.
The parties herein dispute what criteria Minor must satisfy in order to trigger the requirement that the undersigned send this motion for recusal to another judge to decide. Defendants repeatedly argue that § 144 requires that at the point the recusal motion is filed, the judge must transfer the motion to another judge to decide the motion. Plaintiffs respond that the undersigned must first determine: (1) whether the affidavit is both timely and sufficient and (2) whether the certificate of counsel states that the affidavit is made in good faith.
Section 144 prescribes that when a party "makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse party, such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding." (emphasis added). It is not the mere filing of an affidavit and certificate of counsel, as the defendant suggests, that warrants transfer. The transference of the case to another judge must be preceded by a determination that the affidavit and certificate of counsel comply with the requirements in § 144. When a party files a § 144 motion, the judge must pass on the sufficiency of the affidavit, but may not pass on the truth of the affidavit's allegations. Patterson v. Mobil Oil Corp., 335 F.3d 476, 483 (5th Cir. 2003) (citation omitted). Plaintiffs argue that: (1) the affidavit Minor filed is neither timely nor sufficient and (2) the certificate of counsel fails to state that the affidavit was made in good faith. This court agrees.
Plaintiffs argue that Minor's affidavit fails to meet the first requirement of § 144 — timeliness. The general rule on timeliness requires that "one seeking disqualification must do so at the earliest moment after knowledge of the facts demonstrating the basis for such disqualification." United States v. Vadner, 160 F.3d 263, 264 (5th Cir. 1998) (citing Travelers Ins. Co. v. Liljeberg Entrs., Inc., 38 F.3d 1404, 1410 (5th Cir. 1994) (affirming the district court's denial of disqualification motions for untimeliness). "[O]ne seeking disqualification must do so at the earliest moment after knowledge of the facts demonstrating the basis for such disqualification. Liljeberg, 38 F.3d 1404.
Minor's affidavit, filed on November 11, 2010, refers to the undersigned having presided over the 2007 trial and to the allegations by Minor, the media and others referenced in Minor's first motion for recusal as the grounds for his accusation of judicial bias. Minor's trial concluded on March 31, 2007.
Plaintiffs also argue that Minor's affidavit fails to meet the second requirement of § 144 — legal sufficiency. A legally sufficient affidavit must: (1) state material facts with particularity; (2) state facts that, if true, would convince a reasonable person that a bias exists; and (3) state facts that show the bias is personal, as opposed to judicial, in nature. Patterson v. Mobil Oil Corp., 335 F.3d at 483.
Plaintiffs argue that Minor's affidavit does not state facts with sufficient particularity in that he refers to the conclusions and opinions of others and to his opinion that he believes the judge cannot be fair. Plaintiffs direct the court to United States v. Haldeman, 559 F.2d 31 (D.C. Cir. 1976), which states:
(emphasis added) (internal citations omitted).
Minor's affidavit states that "Judge Wingate has a personal bias or prejudice against me as he presided over the criminal trial which directly relates to the conduct at issue in this civil proceeding."
The developed jurisprudence of § 144 is not friendly to Minor's motion. "[T]he judge is presumed to be impartial," and "unless facts are presented alleging `personal' as opposed to `judicial' bias, the judge need not recuse himself." United States v. Patrick, 542 F.2d 381, 390 (7th Cir. 1976). In the case of United States v. Seiffert, 501 F.2d 974, 978 (5th Cir. 1974), [the Fifth Circuit] recognized that mere prior knowledge by the judge of facts concerning a party is not in itself sufficient to require disqualification. Patrick, 542 F.2d 381, 390. "Moreover, facts learned by a judge in his judicial capacity cannot be the basis for disqualification." Id. (emphasis added) (citing United States v. Bernstein, 533 F.2d 775, 785 (2d Cir. 1976)). See also Unger v. Taylor, 368 Fed. Appx. 526, 536 (5th Cir. 2010) (Where the party alleged that the district court judge was biased because of his unfavorable rulings on the party's numerous previous motions, the alleged bias was determined to be "judicial," rather than "personal" in nature; thus, the affidavit did not meet the requirements of §144.)
Minor cites United States v. Merkt, 794 F.2d 950 (5th Cir. 1986). Minor notes that the case states "[i]f an affidavit filed under § 144 is timely and technically correct, the factual allegations must be taken as true for purposes of recusal," and "[t]he trial judge may pass only upon the legal sufficiency of the affidavit; he may not consider the truth of the matters asserted therein." Id. at 960 (citation omitted). This case, however, supports plaintiffs' argument that the undersigned should determine the legal sufficiency of the affidavit before a transfer of the motion is appropriate. Minor's abbreviated reading of the Merkt case also missed the statement that, "[u]nder both § 144 and § 455, the alleged bias or prejudice must be personal and it must stem from an extrajudicial source which would result in an opinion on the merits on some basis other than what the judge learned from his participation in the case." Id. at 960 (citing United States v. Reeves, 782 F.2d 1323, 1325 (5th Cir. 1986)).
Minor's affidavit is simply insufficient under §144; it utterly fails to meet the threshold for the undersigned to transfer the motion for recusal to another judge.
Section 144 states that "[the affidavit] shall be accompanied by a certificate of counsel of record stating that it is made in good faith." Former Justice Diaz, now representing Minor, begins his certificate by stating: "I, Oliver Diaz, am counsel of record and represent the Defendant, Paul Minor. I make this declaration in good faith." Diaz's certificate states that he makes his own declarations in good faith, and then Diaz goes on to summarize Minor's affidavit. The certificate never states that Minor's affidavit is made in good faith.
The Fifth Circuit has stated with regard to the requirement of the certificate of good faith that:
Beland v. United States, 117 F.2d 958, 960 (5th Cir. 1941). Diaz's certificate also fails to meet the threshold under § 144. Therefore, § 144 does not require the undersigned to transfer this case for consideration of Minor's motion for recusal.
As aforementioned, under both § 144 and § 455, in order for recusal to be required, the party seeking recusal must establish that the alleged bias or prejudice is personal and stems from an extrajudicial source other than what the judge learned from his participation in the case. Merkt, 794 F.2d at 960. Minor has failed to make such a showing. This court finds that under both § 144 and § 455, Minor's motion for recusal is baseless. Accordingly, the motion for recusal is denied.
As noted above, the Peoples Bank case was in the Harrison County Chancery Court before Teel when the parties in this matter settled in 2001. Also noted previously, at the time, Oliver Diaz was serving as a Mississippi Supreme Court Justice, and the Mississippi Supreme Court was considering Omnibank, a similar case, which plaintiffs claim would have controlled the outcome in Peoples Bank.
On June 18, 2001, USF&G requested a stay in the Peoples Bank case to await the Omnibank decision.
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.
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.
Plaintiffs have designated Diaz as a witness. After plaintiffs designated Diaz, on July 29, 2010, Diaz became counsel for Minor, resulting in a total of five persons representing Minor. Plaintiffs argue that Diaz is a necessary witness and is, therefore, disqualified from participating as counsel in this case.
The Rules of the Southern District of Mississippi specifically adopt the Mississippi Rules of Professional Conduct.
Plaintiffs contend that not one of the three exceptions of Rule 3.7 applies in this case.
Plaintiffs allege that Teel knew the status of the Omnibank decision before it was made public and that his knowledge motivated him to urge settlement in Minor's favor in the Peoples Bank case. Plaintiffs contend that Diaz should be disqualified because he is a necessary witness in that: (1) plaintiffs seek damages arising from Minor's improper influence over the state's civil justice system; (2) plaintiffs intend to question Diaz concerning the circumstances and timing of his inquiries with respect to the status of the Omnibank case and about any communication that he may have had with anyone about the same; and (3) Diaz is the only person with full, first-hand knowledge of his possible communication of the status of the Omnibank decision with Minor and any of the other defendants.
Diaz responds with four arguments for denying the motion. First, he argues that a judge cannot testify about mental processes in reaching a judicial opinion. "A judge may not be asked to testify about his mental processes in reaching a judicial opinion." Robinson v. Commissioner, 70 F.3d 34, 38 (5th Cir. 1995). Diaz contends that the plaintiffs seek to probe into his mental processes concerning his dissent in Omnibank.
The Fifth Circuit has stated with respect to the mental processes privilege, "a judge enjoys no special privilege from being subpoenaed as a witness." United States v. Anderson, 560 F.3d 275, 282 (5th Cir. 2009) (citing Gary W. v. Louisiana, Dep't of Health & Human Resources, 861 F.2d 1366, 1369 (5th Cir. 1988)); however, "it is imperative when [a judge] is called to testify as to action taken in his judicial capacity, to carefully scrutinize the grounds set forth for requiring his testimony." Id. If judges were subject to be called to testify as a result of every judicial action taken, "the judiciary would be open to frivolous attacks upon its dignity and integrity, and interruption of its ordinary and proper functioning." Id.
Plaintiffs do not seek information about the process by which Diaz reached his ultimate dissent in the Omnibank decision. Plaintiffs make no indication that they seek to inquire into Diaz' mental process with respect to any judicial action taken. They seek, instead, to obtain information related to his possible extrajudicial communications with Minor about the Omnibank decision. The mental processes rule is not applicable with respect to such communications.
Secondly, Diaz contends that the evidence plaintiffs seek to obtain from Diaz is outside the bounds of Federal Rule of Civil Procedure 26. Rule 26(B)(1) sets the scope of discovery, stating that "[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense. . ." (emphasis added). Diaz argues that USF&G seeks information from Diaz that is privileged under the Mississippi Code of Judicial Conduct and is not relevant.
Diaz contends that the information sought is privileged, according to the Mississippi Code of Judicial Conduct, Canon 3(B)(11), which states that "[a] judge shall not disclose or use, for any purpose unrelated to judicial duties, nonpublic information acquired in a judicial capacity." Diaz contends that this is the type of information about the Omnibank decision that plaintiffs seek. Therefore, Diaz argues, the information sought is privileged and is not discoverable.
Plaintiffs respond that the judicial canon does not apply to make the information sought privileged. They contend that discussions in which Diaz provided persons outside the court advance knowledge of the Omnibank status or outcome are not protected by the judicial canon as information "acquired in a judicial capacity."
Mississippi case law is void of interpretation or application of Canon 3(B)(11). This court finds that the Canon does not prohibit plaintiffs from seeking the information they desire to obtain. Plaintiffs seek information concerning the timing of Diaz' inquiries about the status of the case and whether he communicated that information. This court does not find that the information sought would require Diaz to share nonpublic information acquired in a judicial capacity. The information sought by plaintiffs is not privileged under Canon 3(B)(11). Should an infringement of this rule arise as the case proceeds, this court would zealously enforce this or any such rule as necessary.
Diaz also contends that the information sought is irrelevant, and not discoverable, because this case is not about Omnibank or Diaz. Diaz argues that no "nexus" exists between USF&G's complaint and Diaz' mental deliberation regarding the unrelated Omnibank decision. As explained, plaintiffs do not seek information regarding Diaz' mental deliberation with respect to the Omnibank decision.
This court finds that the information sought concerning Diaz' possible communication with Minor about the Omnibank decision is relevant in that plaintiffs allege in their complaint that said communication was as an integral part of the scheme of fraud the defendants committed in the Peoples Bank case. Plaintiffs allege a direct connection between the timing of Minor's inquiries within the Supreme Court about Omnibank, the defendants' advance knowledge of the Omnibank decision, and Minor and Teel's scheme to commit fraud. The information sought by plaintiffs is certainly relevant.
Finding no valid argument to persuade this court otherwise, this court concludes that the information sought by plaintiffs is not privileged and is relevant and is, therefore, discoverable under Rule 26.
Thirdly, Diaz avers that he should be able to represent Minor under the third exception of Rule of Professional Conduct 3.7, which allows a lawyer who is a necessary witness to act as an advocate in a case where "disqualification of the lawyer would work substantial hardship on the client." Rule 3.7(a)(3). This court is not persuaded that the disqualification of one of five lawyers retained by Minor would "work substantial hardship" on Minor. This argument is rejected.
Diaz also contends that his disqualification is contingent on the outcome of the balancing test in Liberty Mut. Ins. Co. v. Tedford, 644 F.Supp.2d 753, 768 (N.D. Miss. 2009), where the Fifth Circuit stated that "application of the disqualification rule requires a balancing of the likelihood of public suspicion against a party's right to counsel of choice." Diaz argues that Minor's right to have his counsel of choice outweighs any likelihood of public suspicion.
Plaintiffs respond that the Tedford balancing test in which the likelihood of public suspicion is balanced against a party's right to counsel of choice favors disqualification of Diaz because the appearance of impropriety is so great that it far outweighs any interest in Minor having Diaz as counsel. Plaintiffs state:
Plaintiffs add that the fact that Diaz did not appear as counsel for Minor until after USF&G disclosed Diaz as a witness heightens the appearance of impropriety. Applying the Tedford balancing test, this court finds that the factors resolve against Diaz participating as Minor's counsel.
Lastly, Diaz argues that he is not a necessary witness because he is not the only source from which plaintiffs can obtain the evidence they seek. Id. at 766. Diaz cites United States v. Starnes, 157 Fed. Appx. 687 (5th Cir. 2005) and Horaist v. Doctor's Hosp. of Opelousas, 255 F.3d 261 (5th Cir. 2001) for support. In Starnes, the Fifth Circuit held that "a lawyer is not `likely to be a necessary witness' when evidence pertaining to each matter to which he could testify is available from another source" or when the lawyer's testimony would be cumulative of other evidence. 157 Fed. Appx. at 693-94 (citing Horaist, 255 F.3d at 267).
The cases Diaz cite are distinguishable from the present case. The lawyer and possible witness in Starnes was potentially going to be called to testify as to a search in which he had participated. 157 Fed. Appx. at 694. The court concluded the lawyer was not a necessary witness because he was not alone during the search, and the plaintiff did not allege that the lawyer observed anything that was not observed by the other persons present during the search. Id. In Horaist, the court found that "[e]ach item of information that [the lawyer] could provide [was] already available from another source."
While various persons can testify to some portion of the conversations and actions at issue in which Diaz was involved, Diaz is the only person that can fully testify as to what he did, when, how often, with whom and what information was exchanged. Plaintiffs say they anticipate that Minor will attempt to assert his Fifth Amendment
Diaz contends that information plaintiffs seek is obtainable from other sources. Diaz does not, however, identify any such other source. Diaz is the only person in this case that has relevant, first-hand non-privileged knowledge of all the relevant details of all of his inquiries and conversations, conversations within the court as well as outside the court, concerning Omnibank.
"The rule of disqualification is not mechanically applied in this Circuit." FDIC v. United States Fire Ins. Co., 50 F.3d 1304, 1314 (5th Cir. 1995) (citation omitted). "All of the facts particular to a case must be considered, in the context of the relevant ethical criteria and with meticulous deference to the litigant's rights." Id. A litigant's right to counsel, however, is not absolute, and may be overridden for the sake of effective administration of the courts. McCuin v. Texas Power & Light Co., 714 F.2d 1255, 1263 (5th Cir. 1983). Having considered the facts of the case sub judice in the context of the law, this court finds that Diaz is likely to be a necessary witness and disqualification is warranted. Therefore, plaintiff's motion to disqualify counsel is granted.
For the foregoing reasons, this court DENIES the defendants' motion for recusal [docket no. 151] and GRANTS the plaintiffs' motion to disqualify counsel [docket no. 138]. Having granted plaintiffs' motion to disqualify counsel, this court DENIES the defendants' motion to strike plaintiffs' motion to disqualify counsel [docket no. 160].
This court has held a status conference in accordance with plaintiffs' request. Thus, this court GRANTS the plaintiffs' motion for status conference [docket no. 165].
Lastly, this court GRANTS the plaintiffs' motion for entry of a case management order [docket no. 145]. The parties will contact the assigned Magistrate Judge for a conference on such.
All three defendants appealed. On January 22, 2010, the Fifth Circuit vacated all the convictions related to federal program bribery under Title 18 U.S.C. § 666, affirmed all other convictions and remanded for resentencing [3:03-cr-120, docket no. 766]. The defendants each filed a petition for writ of certiorari in the United States Supreme Court. See Notices of Order Denying Petitions for Writ of Certiorari with respect to Minor and Teel, docket no.s 779 and 780. On October 4, 2010, the United States Supreme Court denied each petition. This court resentenced the defendants on June 13, 2011.
