By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
A long-standing court battle between a pair of high-profile Houston attorneys has ended with a jury deciding that the lawyer who should be punished is the one who breached his contract first and who also defamed his adversary along the way.
Gary Pitts, a well-respected lawyer who practices mostly in federal court, sued Arthur Schechter, philanthropist, who is a good friend and supporter of Bill and Hillary Clinton and former ambassador to the Bahamas.
Pitts filed suit in 2005, saying Schechter had breached their contract. According to their agreement, Pitts would refer breast implant clients to Schechter, who would then sue the manufacturer of the implants. In return, Schechter and Pitts would split the attorney's fees along an agreed-upon percentage. Pitts claimed Schechter wasn't paying him the full amount owed.
Initially, Pitts claimed that Schechter had simply violated their contract, a charge that Schechter later volleyed right back at Pitts, but as time passed, the allegations and the pile of documents in the lawsuit started to mount, and the accusations became increasingly nasty and personal.
In the end, the jury sided in February with Schechter, awarding him a total of more than $3.5 million, including attorney's fees, says Schechter's lawyer, Dale Jefferson.
"The jury found that while both parties breached the contract," Jefferson says, "Pitts breached the contract first. And Schechter's breach, which was afterwards, was excused."
Pitts's attorney, Steven Smith, did not return phone calls from the Houston Press.
Only a slice of the award, however, was for the contract violation. The bulk of the money was for defamation, says Jefferson.
As first reported in the Press ["Big Boobs," by Chris Vogel, November 29, 2007], Schechter claimed in court records that Pitts engaged in a "defamation campaign" against him. Schechter asserted that Pitts slandered him at a 2002 Houston City Council meeting, when at the time the council was in the process of appointing Schechter as chairman of the board of the Metropolitan Transit Authority.
According to court records, Pitts told the council that about ten years earlier, Schechter — the former presidential campaign chairman in Texas for Bill Clinton, who later appointed Schechter ambassador to the Bahamas — had "bragged to me about something that he did on behalf of [Bill] Clinton, that, in my opinion, was ethically questionable." Pitts later alleged in court records that Schechter had said he'd destroyed a tape that showed Clinton at a party where illegal drugs were being used.
Pitts said in a deposition that the reason he addressed the city council was that he "came to understand [that Schechter] had ambitions of using the chairmanship for Metro to run for the mayorship," and as a "citizen," he wanted the council to look deeper into Schechter before naming him head of the transit authority.
Jefferson says Pitts's accusation was simply untrue.
"Ultimately," Jefferson says, "what the jury found was that the statements that Pitts made were false, that the statements that Pitts made were defamatory and that the statements Pitts made were made with actual malice. The fact that the jury found falsity and malice on a unanimous basis speaks volumes as to the falsity of Mr. Pitts's unfortunate comments."
Pitts's comments to the city council did not sway its decision, and its members did appoint Schechter to the position with Metro.
In addition, Jefferson says, the jury decided that Pitts continued to republish the false allegation by failing to file a video of the city council meeting and copies of his statement under seal in the court record, thus making them available to the public.
"When Pitts started telling people after the fact what he said," says Jefferson, "that constituted republication. The jury found that Mr. Pitts violated the court's protective order by not filing the DVD and statement under seal...When the Houston Press article appeared, that article constituted a republication. And the jury agreed. Our position was that it was not the Houston Press's fault."
The Press had obtained copies of the court documents containing the allegations from the office of presiding State District Court Judge Randy Wilson.
Other allegations in the court files included Schechter accusing Pitts of mocking Schechter's title of U.S. ambassador and then collecting newspaper clippings about Schechter comprised of photos of Schechter and his wife at a gala and an article about Schechter with former Texas Governor Ann Richards traveling with Bill Clinton on a foreign diplomatic trip.
One of the more bizarre and personal accusations Pitts alleged in court records was that the reason Schechter was refusing to pay Pitts was that Schechter falsely believed Pitts disliked Jewish people.
Again, Jefferson says Pitts's accusation could not be further from the truth.
"As we were going through some records," says Jefferson, "we came across records in Mr. Pitts's file that we felt were highly probative as to Mr. Pitts's background and his propensity to make the kind of wild allegations that he made. Remember, when you have a defamation plaintiff who is any type of public official, like Arthur Schechter, that law requires that it not be enough that the statements are just false; you have to prove both falsity and malice. And in this case, the jury found that unanimously."