The city of Weslaco’s lawsuit against the Massachusetts construction firm it claims bilked the city out of millions during the rehabilitation of Weslaco’s water treatment facilities will move forward after the state’s highest court declined to hear the firm’s appeal.
On Friday, the Texas Supreme Court denied a petition by CDM Constructors to overturn a decision by the 13th Court of Appeals, which earlier this year found that Weslaco’s lawsuit against the firm has merit to continue.
That decision — rendered by the appellate court in April — was itself an affirmation of an August 2019 ruling by the 139th state District Court denying CDM’s motion to dismiss the lawsuit.
Reached by phone Friday, Orlando Garcia, the lead attorney representing Weslaco, said he was “elated” by the state Supreme Court’s decision.
“We’re just really excited that the right decision came down,” Garcia said.
“And it was a decision, even though it was one by omission. It was an affirmation of the 13th Court of Appeals’ decision, which I’ll remind you, is one stating that the city has clear and specific evidence of every single element of every cause of action that it brought,” he said.
Typically, only a handful of cases each year will make it before the nine justices who sit on the state’s highest court. Those the court does choose to hear usually involve novel questions of law, conflicting rulings among appellate courts on similar legal issues, or another critical issue.
With the Supreme Court denying CDM’s petition, it has essentially agreed the lawsuit has legs to stand on.
“That means we are standing on two feet when we go back to state court,” Garcia explained.
Neither the Supreme Court’s denial, nor the appellate court’s decision to remand the lawsuit to state court reflect an opinion about whether Weslaco will emerge victorious. Rather, the decisions are affirmations that the city has sufficient basis to make a plausible argument in court, where a jury will ultimately decide the case.
And that’s precisely what Garcia is eager to do — put the case before a jury.
SERIES OF SUITS
This lawsuit isn’t the first Weslaco has filed about the water treatment plants.
Some eight years after the rehabilitation began in 2008, city officials began to notice financial irregularities. Those irregularities led Weslaco to withhold payment from and later sue San Antonio-based firm, Briones Consulting and Engineering, along with its principal, Rolando Briones.
The two sides reached a $1.9 million settlement in January 2018.
That October, Weslaco filed another suit — this time against CDM Constructors, a subsidiary of CDM Smith.
In this second lawsuit, the city again named Briones and his firm as defendants, but also a Weslaco-based engineering firm, LeFevre Engineering.
Court records show Weslaco has tried unsuccessfully to issue process service against Briones and LeFevre. When CDM appealed the lawsuit, it put a temporary halt to further attempts at serving those defendants, Garcia said earlier this year.
The city’s civil lawsuit against the construction firms continued to evolve the following year, when federal prosecutors announced the existence of a criminal bribery case against several people tied to the project.
In April 2019, prosecutors unsealed a 74-count superseding indictment against former Weslaco City Commissioner John Cuellar, former Hidalgo County Precinct 1 Commissioner Arturo “A.C.” Cuellar, Weslaco businessman Ricardo “Rick” Quintanilla, and Daniel J. Garcia, an attorney.
Just days before the indictment was unsealed, two other public officials pleaded guilty to federal programs bribery — Gerardo “Jerry” Tafolla, who was then the Weslaco District 4 commissioner, and Leonel Lopez Jr., who at the time served as the Rio Grande City municipal judge.
After news of the federal charges broke, Weslaco amended its lawsuit to add the two Cuellars, Quintanilla and Lopez as defendants.
Since the start, CDM has denied the allegations, going as far as filing a $2 million counterclaim against Weslaco. A message left with a CDM attorney seeking comment was not returned as of press time.
However, in June 2019, CDM sought to have Weslaco’s lawsuit tossed, citing the state’s anti-SLAPP statute, the Texas Citizens Participation Act. When the court denied the motion to dismiss in August 2019, CDM appealed the ruling to the 13th Court of Appeals.
CDM made three arguments in its appeal. The first was that its actions related to the water plant project constituted protected speech on a matter of public concern.
The second was that the company’s clandestine communications with some of the people who are now facing federal criminal charges meant that Weslaco was not the intended audience of those communications and therefore not subject to an exception for commercial speech.
The appellate court agreed with CDM on those two arguments, but not the third — that Weslaco didn’t have a prima facie case to make at all. The three-judge panel found the city does have enough to move forward with a trial.
SUPREME COURT
In its petition for review, the company challenged the lower court’s finding that Weslaco has “clear and specific evidence of a prima facie case for each and every element of the challenged claims” named in the lawsuit.
CDM argued that Weslaco’s reliance on affidavits from two people — co-defendant Lopez, as well as Weslaco City Attorney Juan Gonzales — were “deficient” and failed to support the city’s fraud allegations.
Much of CDM’s 26-page petition is spent attempting to pull apart the affidavits — particularly Lopez’s — and the city’s reliance on them to make its case.
In late November 2020, however, Lopez died of cancer.
News of the severity of Lopez’s illness prompted both the city and federal prosecutors to try to preserve his testimony before his death. A federal judge denied the government’s request, and Weslaco retracted its own request when Lopez died just one day after the city filed it.
Lopez’s testimony was expected to play a key role in the lawsuit and the criminal trial, which is set to go forward in September.
In both courts — the civil and the criminal — defense attorneys have tried to leverage Lopez’s death in support of their clients, including an attempt last week to exclude certain character witnesses, and to limit the testimony of others from the pending criminal trial.
The judge denied those motions.
Similarly, Lopez’s death had an impact on the civil lawsuit.
“They were trying to make a big deal out of what I would call just a hiccup. And they blatantly said the case died with Mr. Lopez,” Garcia said of CDM’s petition to the Supreme Court.
“There are lots of things that the city is going to rely on to tell Mr. Lopez’s story,” he said.
But beyond the issue of Lopez’s death, CDM’s petition also raised questions regarding decisions made by both Weslaco in its lawsuit, and by prosecutors.
CDM questioned why Weslaco has chosen to not name Tafolla as a defendant in the lawsuit, despite naming others implicated in the criminal case.
And though the lawsuit makes mention of a former CDM employee whom Weslaco claims was integral in the alleged fraud scheme — Mari Garza-Bird — as well as Rolando Briones, neither are facing criminal charges in the federal case.
Likewise, prosecutors haven’t filed charges against CDM, either.
“But despite an extensive federal investigation resulting in multiple criminal indictments and guilty pleas, neither of the CDM Parties nor any employees have ever been charged or even notified that any is a target of the investigation,” CDM argued in its petition.
Now that the Supreme Court has declined to hear CDM’s appeal, however, Garcia is keeping his eyes forward.
“We’re gonna hit the ground running to tell the city’s story and hold the parties accountable, including the CDM parties, who are the appellants,” the attorney said.
