By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
Pat Moran says both the family pipeline and the utility company steadily lost value under Wooten's management. Industry competitors began calling, he says, and inquiring why the pipeline wasn't being marketed and why a favorable gas purchase contract was allowed to expire. According to the Morans, Wooten and First City then began a push to have the estate sell Moran Utilities to Entex, which offered $6.8 million, an amount Pat Moran considered grossly under the company's market value.
His brother Bill Moran, a financial analyst, put together a counter-offer from some family members to buy Moran Utilities from the estate at a slightly higher price than what Entex had offered. When Entex made a second offer, the family again topped it. At that point, the negotiations, in which V&E represented the estate, were called off.
The Morans say they were unaware at the time that both V&E and the bank had ties to Entex. First City had made credit advances to Entex to facilitate the purchase of Moran Utilities, and Pat Moran later learned that First City Bancorporation and the V&E Lawyers Retirement Plan had a limited partnership whose purpose was to purchase Entex oil and gas properties and lease them back to Entex.
Eventually, Entex withdrew its offer for Moran Utilities.
Then, in 1988, the family began hearing disturbing rumors that Seagull Energy and a senior attorney at Vinson & Elkins had the estate's pipeline "in the bag," says Ann Moran. When she questioned First City managers about the report in a telephone conference, her worries were dismissed as "paranoia," she says.
Several months later, Seagull made an offer of $30 million for the utility company and the pipeline. Entex, the Morans say, was an undisclosed partner in the offer, with its eyes on the utility.
V&E asked to represent the estate and offered a disclosure letter mentioning that the firm also represented Seagull, Pat Moran says. But the Morans say the firm never disclosed that managing partner Attwell was on the Seagull board, owned 20,000 shares of stock in Seagull valued at $600,000 and had actually voted to submit Seagull's bid for the Moran companies. In addition, three other members of the Seagull board also sat on the boards of First City Bank or First City Bancorporation. John McDonough and First City representatives, two-thirds of the estate's executors, moved forward with the sale.
Pat Moran then sued his co-executors to stop the sale; they countersued to force the sale on a 2-to-1 vote.
Today, Attwell says that under then-acceptable legal standards, there was nothing wrong with his having an interest in a company seeking to buy assets of the estate, since he was not directly involved in the representation of the estate. Moreover, Attwell says, he did not know the details of the Seagull offer when he voted to approve its bid and thereafter did not participate in any deliberations on the purchase of the Moran companies. Additionally, he says a letter was sent to the estate beneficiaries during the recapitalization of First City that disclosed his presence on the Seagull board.
"If anybody had ever asked me, are you a director of Seagull, own stock in Seagull, serve on committees, I would have said, 'Certainly,' and give them the particulars in all respects."
Pat Moran dismisses that argument as belatedly self-justifying.
"Essentially, they're saying, 'This is a part of the public record. That Attwell was on the board and he owned these shares.' Well, yeah it is. It is a matter of public record. Guess where? The SEC in Washington," he says. "You're supposed to run an asset check on your lawyer? It is self-dealing for a lawyer to participate as an officer or shareholder of an entity that is buying assets from that beneficiary's estate."
Pat Moran's lawsuit against his co-executors and their countersuit ended in a mid-trial settlement in 1990. Under the deal, he, McDonough and First City resigned as executors, River Oaks Bank became the estate administrator, and First City paid an undisclosed amount to the Moran estate. The executors released each other and their individual lawyers from future claims, but Vinson & Elkins was not released by anyone. Later in the year, Entex finally bought Moran Utilities for $15.2 million -- some $8.4 million more than its original offer. The pipeline company, Morgas, was sold for $21.5 million to KSC Energies, with limited family participation. After their grandfather's estate was settled, the Morans say, the employee pension funds he had mandated had lost half of their value as a result of mismanagement in the eighties.
The Morans then took their battle to another front, with Vinson & Elkins as the target. Pat Moran had fallen seriously ill with a blood clot in a lung in early 1990, forcing him to take a back seat to Ann in the fight. He assigned his interest in any future claims against the law firm to his sister, a move that allowed Ann to discover a natural calling as a crusader against perceived injustice. She says she made the decision to go after the law firm after consulting with a Boston probate lawyer who was appalled at V&E's apparent conflicts of interest.