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SOS wins major court victory in fight to survive

Wednesday, September 10, 2008 by Mark Richardson

A Travis County District Judge has tossed out the original ruling from a 2004 court case that forced the Save Our Springs Alliance into bankruptcy court last year. District Judge Margaret Cooper ruled late Monday that a judgment forcing SOS to pay nearly $300,000 in attorneys’ fees to a developer was void.

 

Cooper overturned the original judgment after ruling that Visiting Judge Bill Bender of Seguin was not qualified under state law to hear the case. The ruling 4ifies the $294,000 fees plus interest and allows SOS to petition the Bankruptcy Court to remove Bill Gunn and the Lazy Nine Municipal Utility District from its list of creditors.

 

“There will be an appeal, but we are confident Judge Cooper got it right,” said SOS Alliance attorney Phil Durst. Cooper ruled that that Bender’s ruling was “void and of no force and effect.” 

 

Attorney Mike McKetta, who represented the Lazy 9 Municipal Utility District in the original court case, said he also did not have any additional information about what may have influenced Judge Cooper’s ruling. “We respect her decision, but we disagree,” he said. McKetta indicated the Lazy 9 MUD would likely appeal the decision to the 3rd Court of Appeals in Austin.

 

SOS filed the original lawsuit in 2003 to block Gunn’s Lazy Nine MUD from building the Sweetwater subdivision near Bee Cave in western Travis County, saying that the legislation allowing formation of the MUD was unconstitutional Early work on the subdivision resulted in pollution of Bee Creek. To date, according to SOS, no lots have been sold and no homes have been built in the subdivision.

 

Monday’s ruling comes just three weeks after a devastating ruling in federal Bankruptcy Court that dismissed the SOS reorganization plan. Federal Bankruptcy Judge Craig Garlotta ruled on Aug. 14 that SOS missed a key deadline for filing a portion of its reorganization plan.

 

That ruling left SOS vulnerable to Gunn’s attempts to collect the judgment. However, the bankruptcy judge gave SOS permission to litigate this issue. If Judge Cooper’s ruling stands it will remove the only major creditor who has not agreed to work with the organization in resolving its debts.

 

Durst said, “This allows SOS to concentrate on protecting the environment and serving as a voice for the community.”

 

In the case to overturn the original ruling SOS’s Durst argued last week that Visiting Judge Bill Bender was not qualified to hear the case because under Texas Law, a sitting judge defeated in a primary or general election may not sit in a case where either party objects to him.

 

According to court papers, the Texas State Bar suspended Bender’s law license in 1978 when he conspired with a client to collect state-funded indigent fees when the client was already paying him for representation. Despite that, Bender was elected as a State District Judge in Seguin in 1994. However, when it was discovered that the State Bar had disciplined him, he was defeated in the Republican Primary in 1998. He has been accepting visiting judge appointments ever since.

 

However, according to the pleadings, even under questioning, Bender failed to disclose or misled the attorneys in the case when he said that he was qualified to hear the original case in 2004. According to the transcript, Bender said, “My title is Senior District Judge…” But he could not have been a Senior District Judge—a term reserved for judges who have retired—because Bender was defeated after only one four-year term.

 

According to the SOS web site, its lawyers claimed it proved beyond dispute that Gunn created his “Lazy Nine Municipal Utility District” in violation of the Texas Constitution by failing to give the required notice of the proposed district to Travis County and to the public. However, a court of appeals ultimately decided that this violation was not subject to judicial review and upheld Gunn’s award of attorney fees against SOS as within the trial court’s discretion. The Texas Supreme Court refused to hear the case.

However, the courts never considered Bender’s status as a visiting judge because SOS did not discover that Bender had misrepresented his status until after the appeals had run. 

 

Because of the judgment and subsequent bankruptcy case, SOS has found it difficult in recent months to raise funds to pursue its work as an environmental advocate for issues affecting Barton Springs and its watershed.

 

“We have continued to do our conservation work during this long ordeal, but we are ready to have this behind us,” said Bill Bunch, executive director of the SOS Alliance.

 

SOS officials will hold a news conference at 11am outside Barton Springs Pool today to discuss the case and what the future holds for the organization.

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