Efforts to seize assets of former HealthSouth CEO Richard Scrushy re: $2.87-billion judgment renew memories of my nutty chat with Judge Allwin Horn

Judge Allwin Horn

 

Part Three

We wrote last week about former HealthSouth CEO Richard Scrushy and accusations that he is hiding millions of dollars related to a $2.87-billion judgment against him. In Part One of a three- or four-part series that began last Thursday (5:25/23), I reported that Scrushy had denied wrongdoing and said he welcomes court-ordered disclosures because opposing counsel "will find nothing. It’s totally made-up, false information that never should have been put out.”

In Part Two, we focused on Donald Watkins' op-ed piece stating that efforts to collect on the Scrushy judgment had turned into a $100-million gravy train for Birmingham law firm Bradley Arant. Watkins noted that an investigation by the US. Securities & Exchange Commission and a shareholder-derivative lawsuit might be necessary to bring Bradley Arant's "open-ended" collection scheme to a halt.

Along the way, I noted that the latest events renewed my longstanding suspicions that justice was not done in the  Scrushy civil matter, which concluded in June 2009 with a judgment against the former HealthSouth chief of almost $2.9 billion. Why did I find the outcome of the Scrushy trial, along with the latest efforts to seize his assets, troubling?

It's because I had an unpleasant encounter with Judge Allwin Horn, in a matter separate from the Scrushy case, shortly before he retired in 2009. Horn summoned me to his office, and I sat about an arm's length from him, on the other side of his desk. He gave me the impression that his mental acuity was clouded, and his integrity was . . . well, I wasn't sure  it existed to any significant degree -- at least for a man entrusted with presiding over a court of law. I remember thinking, "This guy has no business overseeing any legal case, much less the Scrushy lawsuit -- a complex matter involving billions of dollars. Horn retired from the bench on June 1, 2009, just 17 days before announcing the Scrushy verdict on June 18, 2009.

The peculiarities with Horn begin right there. A judge retires 17 days before announcing the verdict in one of the most high-profile corporate cases in Alabama history? That becomes more troubling when you consider that the Scrushy case was a bench trial, with no jury and Horn sitting as the lone decision maker. Are we to believe The Alabama Court System could not find an active judge, one not retired, to handle this matter? According to published reports, both sides agreed to a bench trial, without coercion -- and that allowed Horn to act as a one-man decision maker, without the presence of a jury. Is it true, however, that both sides willingly agreed to this arrangement?

Some of the oddities hit close to home for our Legal Schnauzer family, as I noted in an April 30, 2009,  post titled "Good Riddance to a Bad Judge--One Who Has Ties to the (Don)  Siegelman Case."Here is how I got intertwined with Allwin Horn:

News came recently that Alabamians soon will have one less bad judge to worry about. That's because Jefferson County Circuit Judge Allwin Horn is retiring, effective June 1.

That's good news because we've seen Horn in action, and he's a lousy judge. It's frightening to think Horn has played a major role in a multimillion-dollar lawsuit, one that has connections to the prosecution of former Alabama Governor Don Siegelman.

Former HealthSouth Corp. CEO Richard Scrushy, the codefendant in Siegelman's criminal case, has long been embroiled in a civil case in state court. The case is styled Tucker v. Scrushy, and Horn has been right in the middle of it.

Tucker v. Scrushy started in 2002 when HealthSouth shareholder Wade Tucker filed a derivative claim on behalf of the company in state court. Several settlements have been announced in the consolidated case, but I believe it still has not been fully resolved.

Will Horn take more more action in the case prior to his June 1 retirement date? (Answer: Maybe, but he definitely took action after he was retired.)

What convinced me that Horn was a bad judge. This is how I spelled it out in the April 2009 post:

How do I know Horn is a bad judge? I've had the misfortune of watching him work in an up-close-and-personal way. I've been in his office two or three times for "conferences." Just thinking about that experience makes me want to take a shower.

How bad is Horn? So bad that he can't even follow his own orders. Here's the story:

Horn "handled" my legal-malpractice case against Birmingham attorney Richard Poff. The case shouldn't have been all that difficult. Poff took $4,500 of my money, did virtually no work on my case, and lied to me about how he planned to handle the matter.

Specifically, Poff had assured me that we would conduct discovery in the lawsuit involving my troublesome neighbor, Mike McGarity. We would conduct depositions to provide information both for my defense and for the countersuit I had filed against McGarity.

After assuring me of that, Poff then became incommunicado for months. He failed to return numerous phone messages. He quit responding to e-mail messages. Finally, as the trial date was just a week or two away, Poff informed me that we didn't need to conduct discovery, that we would go to trial without it.

For a lawyer to say he is going to trial without conducting discovery is like a football coach saying he's going to play a game without his offense. He will just let the other team have the ball all the time and try to win only with a defense. It's preposterous, and if Poff's actions don't amount to legal malpractice, it's hard to imagine what would.

I found out later that Poff was going through an ugly divorce at about the time he was representing me, and court papers in the divorce case indicate he had a gambling problem. Maybe that's where my $4,500 went.

Bankruptcy is a complex area of law, and it was a central issue in my dispute with Richard Poff before Judge Horn:

In addition to his divorce, Poff also was going through bankruptcy, which complicated my legal-malpractice case against him. Court documents in the bankruptcy case also indicated Poff had a gambling problem. (Yep, that's probably where my money went.)

Poff sought to have my malpractice claim discharged as part of his bankruptcy case and, contrary to law, Horn let him get away with it.

How could that happen? Poff is pretty much a loathed figure in Birmingham legal circles because he blew the whistle on what appeared to be a corrupt local law firm in the 1990s. That tells you a lot about the legal profession. One of its members brings unethical behavior to light and winds up being hated for it.

I hired Poff strictly because of his role in the whistleblower case. I had already had one lawyer (Jesse P. Evans III and his sidekick Michael Odom) cheat me, so I was determined to get an honest lawyer this time. I figured Poff was the most honest guy around.

Looks like I was wrong about that. Perhaps Poff had tired of beating his head against the legal establishment and decided it was better to join them than to fight them. You can read about my experiences with Evans/Odom and Poff at this post, titled "Lawyers Take Money, Don't Take Responsibility." That title also tells you a lot about the legal profession.

Allwin Horn taught me how far the legal establishment will go to protect one of its own--even one of its own who is largely despised within the profession.

How goofy was Horn's handling of the Poff matter? The judge, it turns out, could not even follow his own orders. (I'm not making this up.):

Horn insisted that I had to go to bankruptcy court and get permission to proceed with my legal-malpractice claim in state court. But Poff had not included me as a creditor in his bankruptcy case, so I had no standing to do anything in that court.

In fact, as we showed in a post about one year ago, Horn stood the actual law on its head. Under Watson v. Parker (264 B.R., 685, 2001), the burden was on Poff, not me, to reopen his case in bankruptcy court if he wanted to try to have my claim discharged. If Poff didn't do that, under the law, my case was to proceed in state court.

When I pointed out the actual case law to Horn, he said it was his "impression" that I needed to seek permission in bankruptcy court. And if I didn't like that, I could appeal him.

Isn't that impressive? Horn essentially was saying, "I don't know what the law is, and I'm too lazy to look it up, so I'm going to guess. And if you don't like the results of my guess, you can waste taxpayer money by filing an appeal to a court that almost certainly won't bother to look up the law either."

Justice in America. Ain't it grand?

At one point, Horn looked like he had been persuaded by my arguments and was actually going to follow the law in my case against Poff. I had filed a motion, citing Watson v. Parker and asking the court to correct its order that I had to get permission in bankruptcy court to proceed with my state claim. My motion stated in part:

Watson outlines the procedure for reopening a bankruptcy case: "Only a debtor, creditor, or trustee has standing to move for the reopening of a the case." (See Bankruptcy Rule 5010, Fed R. Bankr. P.5010 or Alpex, 71 F. 3d 356.) Shuler obviously is not a debtor or trustee in Poff's case, and Shuler is not listed as a creditor. Therefore, Shuler does not have standing to do anything regarding Poff's bankruptcy case.

The law was clear, and even Poff didn't dispute it, so it appeared that Horn was going to actually do the right thing. In an order dated April 24, 2008, Horn wrote:

This matter comes before the Court on Motion for Correction of Order filed by Plaintiff on March 26, 2008. As the Court file does not clearly reflect that Plaintiff's legal-malpractice claim was listed by Defendant as a potential claim in Defendant's bankruptcy proceeding, Plaintiff's referenced motion is hereby set for Hearing before the undersigned on May 28, 2008 at 8:30 A.M. in Room 350 of the Jefferson County Courthouse. At the Hearing, Defendant is hereby ORDERED to present to the Court certified copies of Defendant 's bankruptcy case so the Court may determine whether the Plaintiff's legal-malpractice claim was included in said bankruptcy filing.

Something to note: I was ordered to appear (and I did), and Poff was ordered to appear (and he did not). I was ordered to do nothing, other than to appear at Horn's office (which I did), and Poff was ordered to produce certain documents (which he did not because he wasn't there.). You might think I would earn a few points with Horn simply by doing what I was told to do. But it soon became apparent I would get no justice in Horn's court, no matter what I did. And that's why I've long had doubts about how the Scrushy matter was handled. From my April 2009 post:

Horn's order was strange because Poff had already admitted in court documents that my legal-malpractice claim was not listed in his bankruptcy proceeding. I wasn't sure why a certified copy of the bankruptcy documents was necessary to prove something Poff had already admitted. The judge seemed to finally recognize that I couldn't go to bankruptcy court and do anything, and I'm guessing Horn knew that all along.

I figured I would show up for the May 28 hearing and go along for the ride. Things finally seemed to be moving in a lawful direction, and I'd seen judges make all sorts of bizarre rulings, so I decided not to worry about the hints of nuttiness in Horn's order.

Little did I know that the nuttiness with Horn was just beginning.

When I showed up at Horn's office last May 28, the first sign that something was up came when I noticed that Poff was nowhere to be found. When I was ushered into Horn's office, along with some apparent staff member I'd never seen before, the judge informed me that he was sticking with his "impression" that I had to seek permission in bankruptcy court to pursue my state case.

Even after all the crap I'd been through with judges, I was dumbfounded.

"What about the certified material you had ordered Poff to produce?"

Horn indicated that his mind was made up.

"Why does Poff not have to do what you ordered him to do?"

Horn indicated that he wasn't going to give any explanations.

"My claim was not included in his bankruptcy case--Poff has already admitted that--so you know I can't go to that court and seek permission for anything. You indicated in your order that you know what the law is. Why aren't you following the law?"

Horn didn't like the tone of that question. And he hinted that if I asked more questions, I was likely to be introduced to a security guard.

Was the mysterious staff member present because Horn thought he needed "security" in case I reacted badly to being cheated? That's how it looked.

Horn wound up dismissing my case, without prejudice, which means the case can be re-filed in the future. Meanwhile, I had to give Horn points for creativity. I had seen judges abuse the law in a variety of ways, but I'd never seen one that couldn't even follow his own order. That was a new one.

As for Poff, he has a variety of legal troubles. He is battling a legal-malpractice claim from another former client, a Mobile man named Gregory Dennis. Jefferson County Circuit Judge Robert Vance, a Democrat by the way and a Don Siegelman appointee, has handled Dennis' case. And Vance apparently pulled the same stunt on Dennis that Horn tried to pull on me. . . . 

Dennis went to bankruptcy court and tried to get Poff's case reopened. I've checked the court file several times, and it appears that officials in bankruptcy court have blocked Dennis every step of the way. . . . 

As for Horn's change of heart last May 28, contradicting his own order, it was a case of curious timing. I had been wrongfully terminated from my job at UAB just nine days earlier, on May 19. Makes me wonder if the forces who cost me my job also influenced Horn to cheat me.

Was Horn doing more than just trying to protect Richard Poff? I think the answer might be yes.

We've noted in a recent series of posts that a growing body of evidence indicates my termination might have been tied to stories I had written about HealthSouth litigation in federal court. And Horn is overseeing HealthSouth litigation in state court? What a coincidence.