Trinity East Lawsuit Depicts City Hall as that Proverbial Wringer in which not To Get Caught

Categories: Schutze

Drill down into the Trinity East lawsuit against the City of Dallas, and it tells one hell of a story about how Dallas City Hall really operates. The question is whether or not to believe it.

wringer.jpg
Library of Congress
This is a wringer. Now think about your appendages. Now think about Dallas City Hall.

That story started in 2007 when the city was facing a $90 million budget shortfall in an operating budget of about $1.8 billion. Dallas City Manager Mary Suhm was looking for cash, and she got it -- $19 million from Trinity East alone -- by selling gas drilling rights on city-owned land to several companies.

See also: Trinity East Is Suing the City of Dallas For Reneging on Fracking Leases

The City Council said there could be no "surface drilling" in parks, meaning no drilling rigs standing on parkland. She could sell somebody the right to put a rig on some other kind of city land and drill sideways under a park, but there could be no rigs on the park itself.

Suhm said she got it. But then she went ahead and signed a contract with Trinity East explicitly including parkland, and she signed a letter of agreement with them saying she was "reasonably confident" she could win them the right to put up rigs and to surface drill on those park sites. At that point Trinity East wrote the city the check for $19 million.

But in August 2013, Suhm failed to get the votes she needed at council, and Trinity East was effectively denied the right to drill on those park sites. So Trinity is now suing the city for violating its contract but also for fraud, basically painting the whole deal as a scam.

And here is where it gets squirrelier and squirrelier. The only reason anybody even knew Suhm was trying to sell surface drilling rights in park land was that council members Scott Griggs and Angela Hunt basically whacked the information out of the city secretary with pickaxes and dynamite. Suhm was doing everything she could to keep the deal quiet, and it sure looked like Trinity East was too.

The leases the city signed with Trinity East gave specific locational descriptions for all of the drilling sites that were not on parkland but referred to the two parkland drilling sites only by vague nicknames. Weird, eh? Wouldn't you think Trinity East would want to see those sites nailed down better in the contract? They nailed everything else down. Why refer to the two park sites only by code names?

In a May 15, 2013, interview with a Dallas Observer reporter, the president of Trinity East referred coyly to "certain documentation" he held dealing with "a discussion with the city" that led him to believe he was entitled to drill the way he wanted. OK, but if Trinity East had a written agreement with the city, why did that have to be a closely guarded secret?

Dallas council member Philip Kingston has suggested that both parties, Trinity East and Suhm, kept the deal secret because they knew their entire agreement was "ultra vires," a legal principle meaning they all knew Suhm, now retired, was doing something outside and beyond her authority as city manager. Kingston thinks the city should at least consider that as a defense. The city would tell Trinity East, in effect, "You did a secret deal with Suhm that she and you knew was dirty when you did it. If you don't like what you got, sue her, not us."

He knows he won't get very far with that idea because most of the council is cowed by the staff, and the staff's main loyalty is to itself. No way are they ever going to betray Suhm.

I don't know from ultra vires. It's over my head. But if I put myself in Trinity East's position, I feel a certain sympathy. They come into this big organization called Dallas City Hall to do a deal with the CEO. Of course they're going to take the CEO's word for how her organization works. If she says the deal has to be secret, they'll either not do the deal or do it and keep it secret.

If she says she can take care of the board and they give her a check for $19 million based on that assertion, they must believe she can take care of the board. If she says later, "Oops, it wasn't supposed to be a secret, and I couldn't take care of the board, and your $19 million is bye-bye," then they feel they have been screwed.

Whether that makes them right in the lawsuit, I do not know. I can only draw one principle out of it for sure. City Hall is like an old-fashioned washing machine: No matter what else, keep your appendages far from the wringer.



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17 comments
everlastingphelps
everlastingphelps topcommenter

Ultra vires is a very weak doctrine, and there's a huge problem with applying it -- the city took the money.  You can't claim that your agent was acting beyond their authority while you are cramming the cash into your pockets.  When you took the money, you knew what it was for, and took it anyways.

Cliffhanger
Cliffhanger

Sigh. Dallas, where we can't even do corruption right.

putt4do
putt4do

What company in their right mind would pay $19M for something that was not concrete/actionable/enforceable?


Mary Suhm would have been relied on to have such power, it is a City Manager run system. 


I haven't looked into this matter that much other than reading Schutze, so for what little I know, my bet is on Trinity.  

oakclifftownie
oakclifftownie

So how is it that folks who are paid handsomely to understand this for a living find themselves standing over here with a briefcase full of empty promises ?

And their 19 million dollars gone down that rabbit hole over there  ?

TheCredibleHulk
TheCredibleHulk topcommenter

Probably why MS got her tits the hell out of there.

holmantx
holmantx topcommenter

Grandma is going to get her tit in a wringer over this one.

primi_timpano
primi_timpano topcommenter

I would think a contract of this size would normally have reps, warranties and covenants attesting to its validity and enforceability, which provisions would be affirmed by the city's attorney. Their absence would be very strange, so much so it would seem to indicate Trinity East knew it had no guarantee to use park land.

holmantx
holmantx topcommenter

Can we just get her under oath?  Let's see if she'll testify or depose.  I bet she'll lawyer up.  

For me, the crucial question is - 

did you promise to facilitate at the same time promising the council you would block it?

This is where the rubber meets the road on Fraud.  Did she just do it for the money?  Intentional Bad Faith?

Or did we cheat them fair and square?

ruddski
ruddski

Any day now, expect a press conference at which Mary Suhm will announce, in all sincerity:

"I am not a crook".

Whether there will be a subsequent flashing of a double V for Victory sign is anyone's guess.

Guesty
Guesty

Jim,


I think the question is whether Trinity East knew it did not have any enforceable agreement that it would get an SUP.  I think the letter to Suhm hurts them a great deal because it acknowledges that it has received no promise of a SUP.  All it had was a mineral lease and a promise from Suhm that her office would give it the ol' college try for the SUP.  And by all accounts, Suhm did just that and came very close to squeezing it through.  In some respects, it doesn't matter that Suhm didn't have authority to promise or SUP or that Trinity East knew Suhm didn't have that authority (I think both are facts are true) because there is no promise of an SUP.  But even if you decided Suhm somehow promised the SUP would be approved, the fact that Trinity East knew she didn't have authority to promise an SUP would bar its claims against the City.  


I would normally side against the City on a deal like this on both ethical and business grounds, even if the City's position is legally sound.  I question whether it isn't in the City's best interest to return the $19 million even if it is legally justified in keeping the money.  Anyone doing business with the City in the future will have to really question whether it can trust the people its dealing with.  


But in this case, I think that Trinity East knew what it was doing with Suhm wasn't above board, and in fact probably thought that the best way to get its SUP without making waves in the public was to avoid actually contracting with the City for the SUP or directly going to the City Council for the approval it knew it needed.  If you get down in the gutter to do a deal you know isn't legally enforceable to avoid subjecting an issue of obvious public importance to public examination, I don't have much sympathy for you if things go south and you loose your shirt.     


So I say a pox on both of their houses.    

dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

What you left out was the interview from 2012:http://blogs.dallasobserver.com/unfairpark/2012/05/trinity_east_largest_dallas_ga.php

What we determined was that the Trinity East deal with Suhm was never about gas drilling in Dallas next door to the new Soccer Complex. Nor anywhere for that matter as we don't have that much underneath us. Instead it was to create a new pipeline network with that location being the "hub" for all of the transportation lines needed to make much more money for Trinity East rather than drilling which is too speculative at this time. We know it would have run from the University of Dallas up to Farmers Branch and god knows where else. There was speculation that if they got the approval, that they would then flip it to XTO/EXXON for a bigger profit with no overhead other than getting the approval itself. But with City staff not talking without a subpoena to force them to spill the beans, and Tom Blanton, CEO of Trinity East now dead, and Suhm being in an underground bunker, there's very little chance you will ever get the full story.


It's like the film, Chinatown...... but with gas.

dallasdrilling.wordpress.com
dallasdrilling.wordpress.com

@primi_timpano If this goes to trial(depending on how much TE wants as a settlement) all bets are off on both sides, and there will most likely be more docs revealed and testimony to be heard from both sides. 

Mary will be forced to come out of the bunker.

The Observer should sponsor the popcorn machine out in the hallway as it will be a big moneymaker for us attendees.

Guesty
Guesty

@holmantx  "did you promise to facilitate at the same time promising the council you would block it"


Even if she did, it appears that she was lying to the council, not to Trinity East.  She apparently tried to cram through the SUP.  So it seems like the council, not Trinity East, would the the right people to have a beef with Suhm if she indeed did both things.  

holmantx
holmantx topcommenter

@Guesty @holmantx  

No.  Did she issue a letter promise to facilitate as an inducement to motivate TE to convey $19 million they otherwise would not have (conveyed)?  And did she, at the same time (prior to and after the letter promise to facilitate) state she would not allow drilling on that site?  Yes or no?

Aside from the evidence that the council ordered her to approach TE, et al, to lease city land.  TE and others did not approach the city.  The city sought them out.

It appears that it was for the sole purpose of bilking TE out of a lot of money ALL BECAUSE the City needed money real bad at the time.  A desperate act..  According to her written words and oral communications to the council that was the only reason.  Bad Faith.


holmantx
holmantx topcommenter

@Guesty @holmantx  

That's not the question and you know it.  Did she issue an inducement to get the money while at the same time saying her office would block it?

It is not true she "did everything in her power" if she clearly articulated she would not only NOT help but would block it.

You are dodging the only issue at hand.

Guesty
Guesty

@holmantx @Guesty  Suhm did everything in her power to get an SUP.  Trinity East knew she couldn't actually approve the SUP herself and did the deal knowing it was contingent on the council approving an SUP.  What was promised that wasn't delivered?

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