IN THE CIRCUIT COURT OF HINDS COUNTY, MISSISSIPPI FIRST JUDICIAL DISTRICT THE STATE OF MISSISSIPPI and STACEY PICKERING in his capacity as Auditor for the State of Mississippi, Plaintiffs vs. THE LANGSTON LAW FIRM, PA, JOSEPH C. LANGSTON, and TIMOTHY R. BALDUCCI, Defendants LUNDY & DAVIS AND AYLSTOCK, WITKIN, KREIS & OVERHOLTZ Intervenors Civil No. 251-07-1258CIV REPLY IN SUPPORT OF MOTION TO LIFT STAY Stacey Pickering, in his capacity as State Auditor for the State of Mississippi (the State Auditor files this Reply in Support of Motion to Lift Stay, and would show as follows: 1. The Langston Law Firm concedes that the stay previously entered by this Court pending the ruling of the United States District Court for the Southern District of New York should be lifted. In its opinion and order of November 17, 2008, the District Court affirmed the United States Bankruptcy Court, in favor of this matter now proceeding in the State of Mississippi. 2. In another attempt to delay the these proceedings, the Langston Firm now requests that the State Auditor s pending Motion for Summary Judgment be stayed pending discovery, while at the same time its own pending Motion for Partial Summary Judgment be set for hearing before the Court. However, the parties have by their respective motions for judgment as a matter of law
effectively conceded that the sole issue of whether the Langston Firm violated Miss. Code Ann. 7-5-7 is purely a legal one requiring no further discovery. 3. In Pursue Energy Corporation v. Mississippi State Tax Commission, 816 So.2d 385 (Miss. 2002, the Mississippi Supreme Court affirmed the Attorney General s payment of special assistants under a contingency fee retention agreement only because the retention agreement was modified to allow for legislative review prior to payment of any amounts. The Mississippi Supreme Court noted the following in allowing the payment of private attorneys hired by the Attorney General: It was understood by all that Blair [the attorney] would not be paid out of any tax monies recovered. Instead, it was contemplated that if recovery was had, the Attorney General would apply to the Legislature for an appropriation to pay the firm an amount to be measured by the terms of the retention agreement. The Legislature could in its discretion appropriate all, part, or none of the Attorney General s recommendation for attorneys fees, but in no event were they to be paid directly out of any tax monies recovered. Pursue Energy Corp., 816 So. 2d at 387. 4. In reaching its opinion, the Mississippi Supreme Court relied solely upon the sworn testimony of Attorney General Mike Moore regarding the legal procedure that must be followed for compensating private special assistants, such as the Langston Firm, under a contingency fee retention agreement. A copy of that supporting sworn testimony is attached hereto as Exhibit 1 and incorporated herein by reference. The Attorney General s sworn testimony in Pursue Energy Corp. was as follows: If any severance and/or income tax monies are ultimately recovered by the State due to the legal efforts of Mr. Blair, attorneys fees for Mr. Blair will not be paid out of the tax monies so recovered. This fact was understood by all, including the firm of McDaniel and Blair, P. A. Instead, it was contemplated that if recovery was had the Attorney General would apply to the Legislature for an appropriation to this Office to pay the McDaniel and Blair firm an amount to be measured by the terms of the -2-
Retention Agreement. The Legislature could in its discretion appropriate all, part, or none, of the Attorney General s recommendation for attorneys fees. This office will work to see that compensation is appropriated. However, in no event are attorneys fees for Blair to be directly paid out of any tax monies recovered. This testimony from the Attorney General was the underlying basis for the Mississippi Supreme Court s affirmation of compensation to private special assistant attorney generals. 5. As established by the record of appropriations and expenditures from the Legislature, the special assistants to the Attorney General in Pursue Energy Corp. were in fact subsequently paid by approval and appropriation from the Legislature. A copy of the record of appropriations is attached as Exhibit 2 and incorporated herein by reference. Since the Office of the current Attorney General requested and assisted in the approval and appropriations process, the Attorney General is fully aware of the procedure that must be followed but was bypassed in the MCI/Worldcom settlement. 6. It is undisputed that the correct legal procedure as outlined by the Attorney General was not followed or provided for in the MCI/Worldcom settlement. The Langston Firm s arguments for further delaying the hearing or ruling on the State Auditor s pending Motion for Summary Judgment merely concern the issue of whether summary judgment is appropriate under the standard of Miss. R. Civ. Pr. 56. The State Auditor has fully set forth in his Motion for Summary Judgment the reasons that there are no material issues of fact and resolution of this case revolves on a single 1 issue of law. Accordingly, the State Auditor requests that his Motion for Summary Judgment be heard and a ruling subsequently entered without further delay. 1 As fully set forth in the State Auditor s Motion for Summary Judgment, there are no equitable defenses to an illegal contract or any estoppel against the State as a matter of law. -3-
7. Since the parties agree that the stay should be lifted in this matter, the State Auditor s Motion for Summary Judgment is now ready for hearing and adjudication by this Court, and the State Auditor respectfully requests that the Court schedule a hearing on the merits of the pending motions as soon as is reasonably practical for the Court. 8. Further, Defendant Langston has requested that his Cross-Motion for Summary judgment be heard by the Court. In Langston s Cross-Motion part of the relief requested is for this Court to allow Langston to conduct discovery. Plaintiff Pickering respectfully request that the Court deny this request and set all dispositive motions for hearing as soon as possible. WHEREFORE, the Motion To Lift Stay should be granted and the State Auditor s pending Motion for Summary Judgment set for hearing as soon as practical. THIS the day of December, 2008. STACEY PICKERING in his capacity as Auditor for the State of Mississippi By: Arthur F. Jernigan, Jr., Esq. OF COUNSEL: Arthur F. Jernigan, Jr. (MSB No. 3092 Craig M. Geno (MSB No.4793 Samuel L. Anderson (MSB No. 9785 HARRIS JERNIGAN & GENO, PLLC 587 Highland Colony Parkway Post Office Box 3380 Ridgeland, Mississippi 39157 (601 427-0048 (601 427-0050 -4-
CERTIFICATE OF SERVICE I, Arthur F. Jernigan, Jr., do hereby certify that I have caused to be served this date, via Hand Delivery, a true and correct copy of the above and foregoing instrument to the following counsel of record: C. York Craig, III Fred Krutz, III Daniel J. Mulholland Forman Perry Watkins Krutz & Tardy, LLP 200 S. Lamar Street, Suite 100 Jackson, MS 39225-2608 Shawn S. Shurden Geoffrey C. Morgan Special Assistant Attorney General Office of the Attorney General th 12 Floor Sillers Building 550 High Street Jackson, MS THIS, the day of December, 2008. Arthur F. Jernigan, Jr. -5-