AG Uses Personal Insurance for Legal Bills | Eastern North Carolina Now

    Publisher's note: The author of this post is Don Carrington, who is executive editor for the Carolina Journal, John Hood Publisher.

    Approach allows Cooper to keep hefty fee amount secret

Attorney General Roy Cooper
    RALEIGH  -  Attorney General Roy Cooper's use of a personal liability umbrella insurance policy to pay for his defense in a 13-year-old defamation lawsuit allows him to keep confidential how much he has paid lawyers for his defense, something he could not do if he were using a campaign account or legal defense fund.

    Raleigh attorney Gene Boyce and three other attorneys filed the suit in November 2000, alleging that a Cooper campaign ad had defamed Boyce and his law firm. During the course of this litigation, at least nine attorneys from three separate law firms have been involved in representing Cooper, and the other defendants  -  his campaign organization and campaign worker Julia White.

    Cooper's current lead attorney, Allison Van Laningham, did not respond to questions about attorney fees for the 13-year-old case, but a retired attorney familiar with the case says that Cooper's legal expenses to date should exceed $400,000.

    Boyce is seeking a jury trial, and both sides will be participating in a Dec. 6 pretrial conference in front of a Wake County judge.

    The involvement of Cooper's insurance company surfaced publicly through a 2005 complaint to the State Board of Elections filed by retired Raleigh attorney Bernard Harrell. He had noticed that Cooper's campaign committee was not reporting any legal expenses related to the Boyce lawsuit and believed that legal services associated with the lawsuit should be accounted for publicly.

    After investigating the matter, the State Board of Elections ruled that, according to North Carolina law, legal defense activities such as Cooper's did not have to be reported through the normal campaign reporting procedures.

    But it was Harrell's complaint that forced Cooper's campaign attorney to reveal exactly how Cooper was paying attorneys for his defense against the Boyce lawsuit.

    "Upon receipt of the complaint, Mr. Cooper placed his personal insurance carrier on notice of the claim against him and his committee, and his carrier retained counsel to provide a defense to Mr. Cooper, which defense could best be effected by representation of both Mr. Cooper and the Committee. More specifically, legal counsel was retained by Mr. Cooper individually and his insurance carrier, not the Committee," wrote Cooper's political committee attorney John Wallace in March 2005 in response to the Elections Board inquiry.

    Wallace also stated that Julia White's legal expenses were being covered by her umbrella policy with St. Paul Guardian Insurance Company.

    Carolina Journal asked Harrell to estimate how high Cooper's legal fees may have mounted since the inception of the lawsuit. "Having examined the documentation, including petitions to the United States Supreme Court, I formed an opinion that the legal fees in the Cooper matter are in excess of $400,000. The case is now remanded back to the Superior Court of Wake County for a scheduling conference. It follows that legal expenses will continue," he said.

    The ad

    In 2000, Cooper was the Democratic Party's nominee for attorney general. His main opponent was Republican Dan Boyce. Cooper won that election by nearly 136,000 votes out of 2.85 million ballots cast  -  a margin of 51-46 percent. He was re-elected in 2004, 2008, and 2012.

    One week before the 2000 election, Cooper's campaign started running a television ad that read: "I'm Roy Cooper, candidate for attorney general, and I sponsored this ad. Dan Boyce: His law firm sued the state, charging $28,000 an hour in lawyer fees to the taxpayers. The judge said it shocks the conscience. Dan Boyce's law firm wanted more than a police officer's salary for each hour's work. Dan Boyce  -  wrong for Attorney General."

    Cooper's political committee paid more than $1 million to air the ad multiple times on 28 North Carolina television stations.

    But the ad contained statements that were not true. When the advertisement was running, Dan Boyce, his father Gene, Philip Isley, and Laura Isley were partners at the Boyce & Isley law firm in Raleigh. Dan Boyce did not work on the Smith case, the lawsuit the ad referenced. The Boyce & Isley law firm had not been created. Gene Boyce and attorneys from the Womble Carlyle Sandridge & Rice law firm filed the Smith lawsuit.

    In addition, Gene Boyce was not the candidate, and he did not charge $28,000 an hour to the taxpayers in the Smith case. Legal fees in class-action lawsuits are set by the judge, and the final payment to the attorneys was much lower than the amount alleged in the ad.

    Case history

    Boyce's lawsuit alleges that Cooper and his 2000 campaign committee ran a political ad that was defamatory and constituted an unfair and deceptive trade practice, and that they participated in a conspiracy to violate a North Carolina law prohibiting false ads during election campaigns.

    A Wake County judge dismissed the initial complaint in April 2001 for "failure to state a claim upon which relief can be granted." Gene Boyce did not give up.
In September 2002, the North Carolina Court of Appeals issued a ruling on Boyce's appeal of the initial hearing. The court concluded that the "plaintiff's complaint presented a sufficient claim upon which relief could be granted for defamation and unfair and deceptive trade practices," and "that the trial court erred in dismissing plaintiffs' complaint."
The case has been before state and federal appellate courts on eight occasions. In May 2012, the U.S. Supreme Court  -  for a second time  -  denied Cooper's request to review the matter and end the case in his favor. Each appellate court decision has moved the plaintiffs toward their goal of a jury trial.

    Gene Boyce has been practicing law since 1956. He served as assistant chief counsel to the Senate Watergate Committee, working with U.S. Sen. Sam Ervin, D-N.C., on the investigation of President Nixon's 1972 presidential campaign.

    Umbrella policies

    Umbrella policies are designed to provide an extra layer of protection beyond the coverage included in a person's automobile and homeowners or renters insurance. A typical umbrella policy may protect the policyholder from claims such as slander, libel, or defamation of character. Protection in the event of claims for those matters could be stated in the policy.

    Cooper's 2000 umbrella policy through Travelers, as reviewed by CJ, did not include the terms libel or defamation under coverage.

    Current umbrella policies appear to be clearer on libel and defamation issues.

    Insurance industry literature suggests that the changes were made to protect from defamation lawsuits unpaid bloggers and others leaving comments on social media sites.

    Promotional information posted on the Travelers website says the following: "As a Travelers auto insurance customer, you can add an additional layer of personal liability protection with Travelers umbrella insurance. Umbrella insurance offers an extra layer of liability coverage, which can help if you ever find yourself responsible for unexpected damages that exceed the limits of your auto, home or boat policies." Another statement lists, "Coverage against libel, slander, defamation of character and invasion of privacy," in a summary of items covered.

    A current umbrella policy sold by GEICO (owned by this author) covers "Personal injury," which is defined as follows: "Mental or bodily injury, shock, sickness, disease or death including care and loss of services; or injury arising out of ... libel, slander, defamation, humiliation, or a publication or utterance in violation of a person's right of privacy not arising out of any business pursuit of any insured."

    Cooper's annual premium when the lawsuit was filed was $135. The policy required him to maintain insurance on all vehicles and homes leased or owned. The section titled "Duties After Loss" also requires the insured, "in case of an 'occurrence' which may involve this policy," to, at the insurance provider's request, "help us ... to make settlement."

    The limit of liability is $1 million. Cooper purchased the Travelers Umbrella Policy through BB&T Insurance Services in Rocky Mount. A supervisor for BB&T Insurances Services told CJ she could not comment on individual policies, so it is unclear if Cooper or Travelers has changed the terms of the policy or the premiums he must pay to maintain coverage.

    Cooper's legal team

    The full extent Cooper's legal team to date is unclear, but in a 2005 letter to the State Board of Elections, his campaign attorney John Wallace stated the following:

    "The Travelers has engaged the firm of Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P. the Committee is informed that the individual attorneys at Brooks Pierce include, but may not be limited to Jim W. [Philips], David Kushner, and Henry Frye. The firm of O'Melveny & Myers, L.L.P. has also appeared by and through Walter E. [Dellinger], Matt Shores, and Pam Harris. Ms. White's carrier engaged the firm of Smith Moore, L.L.P. The Committee is informed and believes that [Alan] W. Duncan, James G. Exum, and [Allison Van Laningham] have appeared in the action. The Committee is informed and believes that other attorneys in each of the firms may have also participated in the defense of the claims asserted in the action."
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