A state appeals court has ruled that the city of Weslaco’s lawsuit against the firms that rehabilitated its water treatment plants can move forward, more than a year-and-a-half after one of those firms sought to have the case tossed.
The 13th Court of Appeals issued its ruling last Thursday, finding that the city has enough evidence to pursue its lawsuit against Massachusetts-based firm, CDM Constructors, and a host of other defendants, despite CDM’s assertion the suit should be dismissed because its actions were protected under the Texas Citizens Participation Act.
“Accordingly, having found that the City established a prima facie case under the TCPA as to appellants’ (CDM’s) challenged claims, we overrule appellants’ third issue,” reads the end of the court’s 20-page memorandum opinion.
The appeals court win brings what city officials hope will be one step closer to justice in a saga that has stretched on for more than a decade — back to 2008, when the water plant project was in its infancy.
“The mayor and commission, when they decided to do this, was for a number of reasons,” Weslaco City Manager Mike Perez said of the lawsuit.
“One was they truly believe that the ratepayers in Weslaco are paying far more for a piece of work that cost more than what it should have cost,” he said.
The $38.5 million rehabilitation of the city’s water and sewer treatment plants got its start in 2008, when the city hired several firms to handle the large-scale project. But by 2016, questions over financial irregularities led the city to withhold payment from one of those firms, San Antonio-based Briones Consulting and Engineering, and its principal, Rolando Briones.
The city later reached a $1.9 million settlement with Briones in January 2018.
Later that year — in October 2018 — Weslaco filed another suit, this time naming as defendants CDM Constructors and its related entity, CDM Smith, along with Briones, his company, and Weslaco-based firm, LeFevre Engineering.
Neither Briones nor LeFevre have yet received service of the lawsuit, court records show.
By April 2019, federal prosecutors revealed they were pursuing a criminal case against several individuals tied to the water plant project, including former Weslaco city commissioner John Cuellar, former Precinct 1 Hidalgo County commissioner Arturo “A.C.” Cuellar, Weslaco businessman Ricardo “Rick” Quintanilla, and former Rio Grande City municipal judge Leonel Lopez Jr.
Once news of the federal charges broke, the city moved to amend its lawsuit to name the men as defendants, as well.
Through it all, CDM has denied the city’s allegations, instead filing a counterclaim asserting Weslaco still owes the company more than $2 million in payment for work already completed.
In June 2019, CDM asked the court to dismiss the city’s lawsuit using the state’s anti-SLAPP statute, the Texas Citizens Participation Act, which is meant to deter people from filing frivolous litigation.
CDM argued the city’s lawsuit violated its right to free speech on a matter of public concern, something protected by the TCPA.
The 139th state District Court disagreed, denying the firm’s motion to dismiss in August 2019.
CDM appealed the decision the following month, but it wasn’t until January of this year that the court took the appeal into consideration.
The appeals court analyzed three arguments by CDM — the first two that their actions constituted protected free speech and that their actions were protected by an exception for commercial speech.
The court found CDM’s arguments on those two points convincing and agreed with CDM.
The court also found that CDM’s communications with the people who are now charged with federal crimes meant the city of Weslaco was not the intended audience for those communications, and therefore were not subject to the commercial speech exemption.
“Specifically, the City argues that the communications were directed to the City from others on behalf of appellants. Appellants, in contrast, argue that the alleged statements complained of by the City were made to separate individuals and other businesses, not the City itself, and therefore were not made to an intended customer,” the opinion reads.
“We conclude the City failed to establish the commercial speech exemption,” it further reads.
Orlando Garcia, the attorney who is representing Weslaco in the lawsuit, explained that, rather than serve as an admission of guilt, CDM’s free speech arguments represent a legal maneuvering often used in TCPA cases.
“The allegations of fraud and bribery conspiracy, according to the CDM entities, under the TCPA are protected free speech and protected right of association. Now that sounds ridiculous, but it’s legal maneuvering that’s designed to use the broad language of the statute to protect the company,” Garcia said.
Since the water plant project involved the city of Weslaco, and communications in the alleged fraud scheme occurred between individuals who served on the Weslaco City Commission who now face or have pleaded guilty to federal criminal charges, Garcia had hoped the court would find the city was CDM’s “intended audience.”
“The question then becomes what is the city? Because we do know that members of the city commission were involved in the scheme,” Garcia said.
“They ultimately found that due to the clandestine nature of these communications, that that provision, that exception didn’t apply,” he said.
CDM’s third argument was that the city did not have a prima facie case — did not have enough evidence to pursue the lawsuit in the first place.
Though the appeals court agreed with the company on its first two arguments, it found the city does have a viable case to argue at trial.
For Garcia, the court’s latter finding is a big deal.
“That is actually the most encouraging for me and for the city. And we’re extremely proud and encouraged in moving forward, because it bodes well for our case,” Garcia said via phone Thursday.
“Ultimately, what the court held is that, okay fine, you weren’t able to jump this hurdle and you weren’t able to jump that hurdle, but the third component of the TCPA is whether or not the city can come forth with evidence of a prima facie case on their claims. And that’s what the court held,” he said.
Weslaco’s yearslong fight to recoup the money it says it lost to the alleged scheme is not over yet. CDM may choose to appeal the 13th Court’s decision to the Texas Supreme Court.
But Garcia remains undeterred.
“We’ve got to stay steadfast and strong towards our objective, which is to obtain justice for the city,” he said.
Perez, the city manager, said city leaders are fully aware of how long the case may continue to take.
“The mayor, the city commission and I know that this is going to be a hard road and a long road for us that we’re on,” Perez said.
“We’re hoping that at some point, we’ll have our day in court and we’ll be able to demonstrate to the jury and to the public what was done and how it was not right,” he added a moment later.