REPUBLIC POWER SUES THE CITY OF LUBBOCK FOR 9 MILLION

In a twist of irony that could only occur in the politics of our city, the Lubbock City Council met behind doors on March 5, 2012 to discuss the Republic Power Partners lawsuit filed against the city. Former judge Sam Medina, who as District Judge signed a judgment authorizing the WTMPA to form High Plains Diversified and gave it the ability to issue public debt, is now the City Attorney advising the City Council on how to defend Republic’s suit against the city; a suit which alleges that Republic invested 9 million in the power project only because it relied upon Medina’s ruling that it could issue public debt. Where else but Lubbock could this be happening?

Another twist of irony is the quote from Mayor Tom Martin regarding the lawsuit in today’s edition of the Lubbock Avalanche-Journal, “I think it’s totally without merit; we intend to obviously fight it.” This is the same Tom Martin who enthusiastically indorsed the Hi-Plains / Republic Power Partners deal only one year ago and told a local talk radio host that it was a good public-private partnership with little risk to the Lubbock taxpayer.

Republic decided to go ahead with the lawsuit even though it must be anticipating that the city will raise the “Kent Hance” defense to get the case thrown out of court. As most of you know, the Kent Hance defense came about when it was used by Tech in the Mike Leach suit against Texas Tech. Leach acknowledged that the general rule in Texas is that public entities like Tech are immune from suits for breach of contract. However, Leach alleged an exception to the rule stating that because Tech acted in bad faith in terminating him, immunity does not apply and he should be able to get a jury trial on the bad faith issue and if successful, the doctrine barring suit does not apply. The Court of Appeals wrote an opinion stating that regardless of how badly the public entity treats you, you still cannot sue them. The Texas Supreme Court approved the Court of Appeals opinion and refused to hear the case. Thus, the Kent Hance defense has been approved as a powerful new weapon that public entities will use when sued for breach of contract. Expect it to be raised early and often in this case.

My take on this case is that Republic Power Partners is not going to go away quietly. They have the money and time to fight the city on equal terms. And like most lawsuits in which the city is involved, expect to see this one hang around a long time sucking tax payer money and time from the city like a giant mosquito. The investors in Republic Power Partners are very rich and politically connected and don’t like to lose. And they really, really don’t like it when they are made to look foolish. Republic Power Partners feel like the city supported their deal when it was politically feasible to do so, and then pulled the rug out from under them at the first sign of political heat. Don’t underestimate Republic Power Partners’ ability to use their money and political power to shoot down the Kent Hance defense and get their day in court. If that day occurs, anything can happen.