Debt Collection

A collection agency hired to track down ticket scofflaws is suing the city of Houston, claiming that the chief administrator of the municipal courts reneged on an agreement to renew the company's contract after he induced it to spend more than $200,000 to upgrade its operation.

The company, West Capital Financial Services Corporation, alleges that Larry Miller, director of the city's Municipal Courts Department administration, promised to renew West Capital's contract with the city to collect delinquent traffic, parking and other municipal tickets if the company met certain requirements.

West Capital officials claim they satisfied Miller's demands, including leasing larger office space and buying additional computer equipment. But, Miller, whose department administers the city's two delinquent ticket collection contracts, is nonetheless preparing to cancel West Capital's deal and award it to another collector. Proposals have been accepted from several firms, and City Council is expected to vote to approve a new contractor later this month.

"We met and exceeded their goals, and they raised them. And we met and exceeded those, and they raised them again," says Richard Howell, a Houston attorney representing San Diego-based West Capital. "We just want to be treated fairly. And we do not want Larry Miller calling the shots."

The lawsuit follows months of increasing tension between Miller and West Capital, which in June 1993 won the contract to collect "old warrant" cases that have been delinquent for more than 210 days. Less than a year after winning the contract, West Capital was bringing in about $170,000 a month in revenue for the city -- about 27 percent more than the original goal the city had set for the company.

But according to Mike Joplin, West Capital's president, Miller began putting undue pressure on West Capital last spring, when he started raising the firm's revenue goals. At the same time, Miller gradually began cutting back on the number of tickets assigned to West Capital for collection. In October, he abruptly cut the company's ticket assignment from the city by about 500,000 -- a move that resulted in an immediate 60 percent drop in the city's monthly revenue from West Capital.

In December, Miller and then-city attorney Benjamin Hall met with West Capital officials and, citing the firm's failure to meet its higher goals, told them to subcontract out a portion of the contract to a company owned by Nation of Islam minister Robert Muhammad, who serves on Mayor Bob Lanier's ministers advisory committee. When West Capital refused to hire Muhammad, who had just started his company in hopes of getting the city's business, Miller and Hall threatened to cancel West Capital's contract ["Boss Hall," December 22, 1994].

Joplin countered by vowing to expose Hall and Miller's attempt to force West Capital to use a subcontractor handpicked by city officials. Miller backed off and restored West Capital's ticket assignment to original levels. Since then, the company's revenue to the city has climbed steadily. In March, West Capital's collection effort netted about $167,500 for the city, more than enough to meet Miller's latest goal for the company.

In the meantime, the company has moved into a new 3,800-square-foot office and purchased new furniture and computer equipment for 36 employees it planned to hire -- all because Miller told them that was the only way they could avoid losing the contract.

"It's nothing but a bald-faced spanking to make a commitment to me, we do it, and then he comes back and says, 'Nah, it's not enough,'" Joplin says. "We didn't even bother to respond to the request for proposals [for the new contract] because Miller told me, 'Don't worry, I'll renew your contract."

Miller has ignored West Capital's correspondence, Joplin says, and has not returned his phone calls seeking a meeting. Miller did not return phone calls from the Press, either.

In an April 26 letter to Mayor Lanier, West Capital attorney Howell said that he fears Miller wants to replace West Capital with another company "more favored to Mr. Miller." While Howell did not name that company, Miller is also in charge of administering a second collection contract held by Municipal Collections Inc. That firm was started by a friend and former associate of Miller's and former political and business associates of Lanier. Municipal Collections also employs Miller's sister-in-law, who is married to an assistant manager working under Miller in the municipal courts administration. Municipal Collections' contract was recently renewed by Miller.

"It's typical politics," Howell says.
Howell called the lawsuit filed against the city last week "real generic" and said he hopes it will motivate the city to put aside its differences with West Capital and discuss renewing the firm's contract. If that doesn't happen, Howell says, the suit will be amended to include more specific allegations against the city. He also said Miller could be named as a defendant.

Dave Walden, Lanier's co-chief of staff, confirms that the mayor's office received a letter from Howell notifying him of the lawsuit. But Walden says a meeting between West Capital and the city is unlikely.

"I'm not going to meet with them, the mayor's not going to meet with them," he says. "There is another side to this whole deal. I think they were canceled for legitimate reasons, specifically non-performance.