usf&g response 121310 to paul minor motion to keep oliver diaz of counsel

IN THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF MISSISSIPPI

SOUTHERN DIVISION

UNITED STATES FIDELITY AND GUARANTY COMPANY and FIDELITY GUARANTY INSURANCE UNDERWRITERS, INC. PLAINTIFFS

VS. CAUSE NO. 1:08CV0242 HTW-LRA

THE PEOPLES BANK, BILOXI, MISSISSIPPI,PAUL S. MINOR, MINOR AND ASSOCIATES, P.A., and WALTER W. TEEL DEFENDANTS

PLAINTIFFS’ SUPPLEMENTAL REPLY BRIEF IN SUPPORTOF THEIR MOTION TO DISQUALIFY COUNSEL FOR PAUL MINOR

I. INTRODUCTION

USF&G’s Supplemental Brief elaborated on when an attorney is “likely to be a necessary

witness” for purposes of Rule 3.7, and demonstrated that Oliver Diaz’s unique personal participation

in events that have been put at issue in this litigation is sufficient to disqualify him as counsel for

Paul Minor. Rather than address these points, Diaz spends most of his supplemental brief creating

an excuse to thoroughly attack another witness – former Chancery Court Judge J.N. Randall – who

testified against Minor but who actually spoke well of Diaz. This strange assault is based on the

patently false predicate that USF&G seeks to disqualify Diaz based on a rumor that he – Diaz – was

the source of Judge Teel’s advance knowledge of the outcome of the Omnibank decision. USF&G

has never relied on this, or any, rumor to predicate Diaz’s disqualification. Diaz’s attempt to deflect

attention from his own participation in relevant events by trashing another witness is unfortunate and

completely misplaced. For the reasons stated below, it is now crystal clear that Diaz is disqualified

as counsel.

Case 1:08-cv-00242-HTW-LRA Document 162 Filed 12/13/10 of 12

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II. ARGUMENT

A. Diaz Ignores the Authority that Clearly Identifies Him as a Likely NecessaryWitness.

USF&G’s supplemental brief analyzed cases that apply Rule 3.7 to require counsel

disqualification where the lawyer’s conduct and communications have been “put at issue.” See

Docket #157 at 2-4. As explained, the fact that there are other participants to the same events does

not allow the attorney to remain as an advocate. Id. Tellingly, Diaz does not dispute that relevant

events in which he personally participated have been put in issue, and he does not even address this

authority. Rather, Diaz advances a standard – adopted in other jurisdictions – that Rule 3.7

disqualifies attorneys only if the lawyer’s testimony is “relevant, material and unobtainable

elsewhere.” Diaz argues that USF&G’s basis to disqualify is predicated on a “rumor” and therefore

fails the relevancy requirement. He also argues that the motion is defective because there are other

witnesses who can testify to the events about which Diaz has personal knowledge. Diaz misapplies

both requirements.

B. Diaz Has Relevant and Material Testimony to Provide.

There can be no serious dispute that Diaz can provide relevant, material information. Indeed,

his participation in conversations with Minor has already been the subject of admitted testimony, and

the role that the timing, status and outcome of the Omnibank decision played has been chronicled

in detail by the Fifth Circuit Court of Appeals in affirming Minor’s and Teel’s convictions.

USF&G’s supplemental brief discussed the authority that explained precisely why Diaz had “relevant

and material” information.

These cases demonstrate that Rule 3.7 cannot be avoided merelybecause other sources of information are available, or because the


See Diaz Supplemental Brief at 1 (“USF&G relies on discredited “scuttlebutt”); 3 (“USF&G1

makes a quantum leap from hearsay testimony from a discredited witness”); 4 (“The primary thrust. . . is a courthouse rumor”); 5 (“they are attempting to elevate this unsubstantiated courthousescuttlebutt to warrant . . . disqualification”); 6 (“USF&G cannot make the simple distinction betweenscuttlebutt hearsay and material information”); (“USF&G has only offered a discredited and recantedrumor”).

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defendant himself may be called to testify about the substance ofrelevant discussions with his counsel. As in the cases discussedabove, the disqualified attorney here – Diaz – and the defendant –Minor – are the sources of information concerning relevantdiscussions they had with each other. The events concerning theirdiscussions are squarely “in issue.” Diaz has relevant, first-handknowledge of Minor’s state of mind and the nature, timing andcontent of their discussions. Finally, the possibility that Minor mightassert the Fifth Amendment privilege at deposition or trial cementsthe notion that Diaz is “likely” to be a necessary witness.

Docket #157 at 4.

In his Supplemental Brief, Diaz completely ignored the actual basis for his disqualification,

and chose instead to attack the reliability of former Chancery Court Judge J.N. Randall. That Diaz

would find it necessary to assault Judge Randall is unfortunate. Diaz excuses the exercise under the

blatantly false statement that

The primary thrust of USF&G’s Motion to Disqualify is that formerChancellor J.N. Randall testified at the first criminal trial of PaulMinor that he heard a courthouse rumor that Judge Teel hadinformation about a pending Mississippi Supreme Court case. Fromthat bare rumor, USF&G carefully excerpted from trial testimony toattempt to snare Justice Diaz.

Diaz Supplemental Brief at 4. Diaz litters his supplemental brief with no fewer than seven

references to the “courthouse rumor” as being the genesis and sole basis of the motion to disqualify.1

This, despite the fact that USF&G has never mentioned any rumor – much less the rumor that Diaz

was the source of Teel’s advance knowledge -- in any of its pleadings or at the prior hearings. Diaz’s


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decision to frivolously re-cast the basis for his disqualification serves no logical purpose. Indeed,

the actual standard that Diaz seeks to apply is whether “the lawyer has relevant, material information

that is unobtainable elsewhere.” See Diaz Supplemental Brief at 2. Whether other witnesses possess

relevant, material information obviously has no place in the analysis.

Diaz’s deflection serves only to manufacture an excuse to publicly humiliate a witness who

dared to testify against Minor in his criminal trial. Though he recounts that Randall had nothing but

“good things” to say about Diaz, the reverse is certainly not the case. Diaz reviews every attack

made by Minor’s criminal attorneys against Randall, and attaches as exhibits the excerpts of the

testimony and proffers which delved into Randall’s personal failings. Diaz expressly labels Randall

an alcoholic, a depressive, and a cocaine and prescription drug abuser. Diaz’s mean-spirited assault

on the former judge is unfortunate, particularly given the fact that USF&G has never relied on the

“rumor” upon which Diaz justifies his attacks. The Fifth Circuit’s discussion of the facts supporting

Minor’s convictions provides insight as to why Diaz (and Minor) have gone out of their way to

attack Randall.

Former Chancery Court Judge J.N. Randall, who Diaz describes as “a discredited alcoholic

witness with a reputation for dishonesty,” was once counted by Minor as an ally. As the Fifth Circuit

recalled, Minor had Randall appointed to fulfill a vacated position as Chancery Judge and then

orchestrated the assignment of the Peoples Bank case to Randall, his “own judge of choice.”

Immediately upon filing the complaint, Minor again saw to it that hisown judge of choice was assigned to the case by filing a motion foran expedited hearing to schedule a trial before Judge J.N. Randall,who was appointed to the bench by the Governor largely at Minor’srecommendation.


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United States v. Whitfield, 590 F.3d 325, 340 (5 Cir. 2009). However, in the course of multiple,th

improper, ex parte discussions, it became clear to Minor that Judge Randall was not comfortable

handling the Peoples Bank case, and was reluctant to compromise his independent judgment. Minor

scolded Randall for refusing to do his bidding, and ultimately engineered a reassignment of the

Peoples Bank case to a judge who was more inclined to obey.

Randall did not prove to be as cooperative as Minor would haveliked. When USF&G moved to transfer the case to Circuit Court,Randall, who had never handled an insurance dispute before, grantedthe motion. Minor got “very upset,” and, in an ex parte conversation,convinced Randall to take the case back.

In discovery, Minor sought access to all of USF&G’s documentsrelating to Peoples Bank’s claim, but USF&G objected on the basisof attorney-client privilege and work product. Already overloadedwith work himself, Randall assigned the discovery dispute to Teel,who, on October 16, 2000, rejected USF&G’s privilege claims andordered all documents disclosed to Peoples Bank. In response,USF&G filed a motion to reconsider with Randall, and Randallgranted the motion and set aside Teel’s ruling. Minor was “extremelyupset” and immediately called upon Randall in his chambers foranother ex parte meeting. Minor upbraided Randall and convincedhim to reassign the entire case to Teel, and Randall obliged.

Whitfield, 590 F.3d at 340 (5th Cir. 2009).

Randall’s testimony at the criminal trial was damaging to Minor. Not only did Randall expose

how Minor manipulated judge selection in the Peoples Bank case, he provided another example of

how Minor placed judges in positions of indebtedness and then sought to abuse those relationships.

Unsurprisingly, Minor attacked Randall during the criminal trial. Now, without any direct connection

to the standard he wishes to apply to the disqualification issue, Diaz continues the campaign to expose

Randall’s personal failings under the pretext of placing in “appropriate context” Judge Randall’s

recollection of a “rumor” involving Diaz, Teel and the Omnibank case.


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To be clear, it is now Diaz and Minor that wish to call this Court’s attention to the Harrison

County Chancery Courthouse “scuttlebutt.” In his supplemental brief, Diaz attaches excerpts from

Randall’s testimony and from other witnesses that were called by Minor to discredit Randall. See

Exhibits A, B, and C to Diaz’s Supplemental Brief. These materials reveal that – outside the jury’s

presence – Minor sought to explore Randall’s understanding of a courthouse rumor. In response to

Minor’s counsel’s invitation, Randall acknowledged hearing that “Judge Diaz had either contacted

Judge Teel or Paul Minor to tell them that the ruling from the Supreme Court on a pending case was

going to be adverse to their position in . . . the USF&G case.” See Exhibit B to Diaz’s Supplemental

Brief at 3475. Randall recognized the rumor as inadmissible hearsay and he never attempted to

testify to it in the jury’s presence. Id. at 3476. Consistently, USF&G has never relied upon – or even

referenced – Randall’s recollection of any rumor involving Diaz and Omnibank.

Rather, in its initial brief, USF&G merely relied on Randall’s testimony that Judge Teel

admitted to him that Teel had advance knowledge of Omnibank and that this motivated Teel to

orchestrate the Peoples Bank settlement. See Docket No. 139 at 3. That evidence was not

speculation; it was an admission against interest and it was admitted into evidence. As he seeks to

do now, Minor sought to strike the testimony in his criminal trial under the argument that it was

“based” on the courthouse rumor. See Exhibit B to Diaz’s Supplemental Brief at 3477. The Court

overruled that motion, obviously recognizing that Judge Teel’s admission was different in character

from the courthouse rumor. Id. The Court nevertheless permitted Minor to use the rumor in an effort

to discredit Randall’s testimony. Id. Diaz’s excerpts do not reveal whether Minor made any such

attempt.


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C. Diaz Misconstrues When Evidence is “Unobtainable Elsewhere.”

According to Diaz, when other persons have knowledge concerning a relevant event, the

information is, by definition, “obtainable elsewhere,” and the lawyer is not disqualified. This notion

is directly contradicted by the authority discussed in USF&G’s Supplemental Brief, which Diaz

refused to address. Moreover, the authority that Diaz cites in his own Supplemental Brief contradict

this understanding.

Diaz argues, without authority, that a party seeking attorney disqualification must first exhaust

all other sources before the Court can conclude that the lawyer is a “necessary witness.” See Diaz

Supplemental Brief at 6. In World Youth Day v. Famous Artists Merchandising Exch., 866 F. Supp.

1297 (D. Colo. 1994), upon which Diaz relies, the lawyer made a similar argument that the motion

to disqualify him was premature. Specifically, the lawyer argued that “the substance of [his]

testimony may become moot, irrelevant or provided by other witnesses by the time this case is ready

or trial.” The Court rejected this argument for lack of any authority that the exhaustion of other

sources was a prerequisite. World Youth Day, 866 F.Supp. at 1302. Indeed, the Court noted that the

lawyer “should have already disqualified himself because it is clear that [the other party] reasonably

believes [the lawyer] is a necessary trial witness. In addition, the question is not whether [the lawyer]

will be called to testify at trial, but whether he ‘is likely to be a necessary witness.’” Id. The Court

held that the attorney’s testimony could not be “obtained elsewhere” since he had “first-hand non-

privileged knowledge of many relevant and material facts at issue in [the] case” and because he and

another individual were the only two participants in numerous and lengthy telephone negotiations.

Id.


The cases cited by Diaz in which disqualification was deemed improper were decided on2

grounds that have no bearing on this case. See, e.g., Macheca Transport Company v. PhiladelphiaIndemnity Insurance Company, 463 F. 3d 827 (8 Cir. 2006) (disqualification improper where partyth

seeking disqualification never identified subjects of expected testimony and because there was noindication by any party that lawyer was an intended witness.); Humphrey v. McLaren, 402 N.W. 2d535 (Minn. 1987) (litigation was “simple” and relevant evidence was limited to “minutes ortranscripts of board meetings,” and none of attorneys general sought to be disqualified werenecessary to prove these objective facts) in State of New Hampshire v. Van Dyck, 827 A. 2d 192, 194(N.H. 2003) (lawyer was determined to be unnecessary witness when his proposed testimony was“merely peripheral.”).

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Similarly, in Beller v. Crow, 274 Neb. 603 (Neb. 2007), another case upon which Diaz relies,

the Nebraska Supreme Court found that other witnesses could not duplicate the attorney’s unique

perspective of the operational facts. Beller, 274 Neb. at 610. The attorney in Beller was one of several

witnesses to the same events. Despite the existence of other sources, the court found that the

attorney’s active participation and close personal relationship with Beller gave him a unique

perspective that other witnesses could not provide. Id. at 609-610. Just as in Beller, Diaz had a close

personal relationship with Minor and was a participant in relevant and material events. As did the

attorney in Beller, Diaz has a unique perspective of operational facts which makes his testimony

“unobtainable elsewhere.”

Diaz’s reliance on Northbrook Digital LLC v. Vendio Servs., 625 F. Supp. 2d 728, 765 (D.

Minn. 2008), is also puzzling, since there the Court – on its own motion – reasoned that the lawyer’s

personal involvement in relevant events triggered Rule 3.7. See Northbrook Digital, 625 F. Supp 2d

at 765 (“there is little question that he is a necessary witness in the current litigation.”). In sum, much

of the authority upon which Diaz relies actually demonstrates that the instant circumstances require

his disqualification. 2

Diaz cites two Fifth Circuit decisions – U.S. v. Starnes, 157 Fed. Appx. 687, 693-94 (5 Cir.th


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2005) and Horaist v. Doctor’s Hosp. Of Opelansas, 255 F.3d 261 (5 Cir. 2001) – for the propositionth

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.” As demonstrated in Horaist, this simply

means that disqualification is not warranted when the lawyer’s testimony would be cumulative. See

Horaist, 255 F.3d at 267 (lawyer’s knowledge of objective facts which could be supplied by other

witnesses would only be “cumulative” testimony, and thus an inappropriate basis to disqualify him).

This is not such a case.

To be sure, there is an important distinction between a lawyer’s mere observation of objective

facts which can be supplied through the testimony of other witnesses, and on the other hand,

subjective evidence resulting from the attorneys’ actual participation in relevant events. As to the

latter, by definition, the testimony sought cannot be “cumulative” or “obtainable from other

sources.” See Liberty Mutual Ins. Co. v. Tedford, 644 F. Supp. 2d 753, 766 (N.D. Miss. 2009)

(lawyer’s advice and consultation could not be duplicated or supplied by other witnesses); National

Corporate Tax Credit Fund v. Busching, 2006 U. S. Dist. LEXIS 48389 *3 (on Judge Barbour’s own

motion, counsel disqualified where his personal relationship with client and “resulting personal

knowledge of the subject issues render him a likely trial witness.”); First Nat'l Bank v. Lustig, 1993

U.S. Dist. LEXIS 12812 (E.D. La. Sept. 16, 1993) (“While some of Ardis’ testimony may be available

from other sources, evidence of his non-objective actions by definition cannot be supplied by other

sources.”). In the instant case, Diaz’s testimony does not merely relate to events that he and others

observed. Rather, Diaz has unique information relating to events that he created – relevant

communications that he had with Minor and relevant actions that he took. By definition, Diaz’s

testimony cannot be “cumulative,” or “obtainable elsewhere.”


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The instant circumstances present an additional concern that Diaz may actually be the only

witness who will testify concerning his extra judicial conversations about the Peoples Bank and

Omnibank cases. It is now clear from the statements made at the last hearing on this matter that at

least one participant – Wes Teel – seeks to invoke the Fifth Amendment and refuse to testify.

Though his counsel will not commit to a position, Minor can be expected to do the same. As noted

by the Court in United States v. Franklin, 177 F.Supp. 2d 459, 464 (E.D. Va. 2001), the possibility

that other witnesses may refuse to testify only heightens the need for disqualification in this instance.

CONCLUSION

Oliver Diaz and Paul Minor have demonstrated a penchant for using their own attacks on

judges to manufacture positions on disqualification. These attacks are counter productive and have

no place in the analysis of whether disqualification is proper. The bottom line is that Diaz was a

participant to events that are relevant, material, and otherwise “at issue” in this litigation. By any

recognized standard, Diaz is “likely to be a necessary witness” and should not participate as counsel.

RESPECTFULLY SUBMITTED, this the 13 day of December, 2010.th

By: /s/ O. Stephen Montagnet, III O. Stephen Montagnet, III (MB#10049)

W. Thomas McCraney, III (MB #10170) Neil J. Dilloff (admitted pro hac vice)

PLAINTIFFS USF&G’S ATTORNEYS

OF COUNSEL:

MCCRANEY MONTAGNET & QUIN, PLLC602 Steed Road, Suite 200Ridgeland, MS 39157Telephone: (601) 707-5725Facsimile: (601) 510-2939


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Neil J. DilloffDLA PIPER US, LLP6225 Smith AvenueBaltimore, Maryland 21209-3600Telephone: (410) 580-3000Facsimile: (410) 580-3001


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CERTIFICATE OF SERVICE

I, O. Stephen Montagnet, III, of counsel for Plaintiffs, do hereby certify that I have this dateelectronically filed the foregoing pleading with the Clerk of the Court and served a copy of theforegoing pleading electronically to ECF participants of record.

This the 13 day of December, 2010.th

s/ O. Stephen Montagnet, IIIO. STEPHEN MONTAGNET, III


usf&g response 121310 to paul minor motion to keep oliver diaz of counsel

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