Like a smorgasbord of day-old party appetizers, the quarter-billion-dollar Hobby Airport food and beverage contract of "Food Fight 2" fame is not getting any more delectable with the passage of time. After a federal judge's preliminary rulings in litigation brought by loser CA One against the City of Houston, the contract may soon become downright inedible.
In the conclusion to a bitter political fight last September, City Council gave a 9-6 nod to the local Four Families consortium over the administration-recommended CA One. Lawyers for CA One went to federal court to overturn the decision, arguing that the city had violated state laws on both open meetings and competitive bidding.
The city sought dismissal of the case. But in an unexpected series of opinions issued at a preliminary hearing last month, Judge Sim Lake sided with CA One on three crucial issues. Lake ruled that the city had violated the state's open meetings law by not giving adequate notice before the contract was amended at the council table so it could be awarded to Four Families. The city's claim that it did not violate bid laws because it was not spending any money on the contract "does not make sense," according to the judge. And he rejected the city's contention that CA One did not have standing to file the lawsuit because it was not a taxpayer in Harris County.
The city's own private counsel in the case, David Holman, delivered the bad news in a confidential letter to City Attorney Anthony Hall -- correspondence that was obtained by The Insider.
"What this means is that Judge Lake has ruled the City violated the Open Meetings Act," wrote Holman, noting that such a violation made it likely the judge would void the contract at a later date. Currently, the case is in the discovery phase with a trial set for September 12.
The judge upheld the CA One position that the city's commitment to build out areas at the airport for the food vending operations contradicted the contract's provision that there would be no expenditure of city funds. Under state law, if the city spends more than $25,000 in furtherance of a contract, it must accept the low bidder -- in this case, CA One.
CA One attorney Paul Coggins says the city's tactic was a blatant end run around the state competitive-bidding laws.
"The city's position was basically that even if we're making expenditures in connection with a contract, as long as we put in the contract language that says we're not making expenditures under the contract, then we're home free," contends Coggins, a former U.S. attorney in Dallas.
"So a city, by sticking a provision in the contract, could basically repeal the competitive-bidding statute that is set up to prevent fraud and all sorts of horrible things being done at City Hall."
According to Coggins, this is the first lawsuit CA One has ever filed against a municipality over a losing bid. "They felt what was done here was absolutely wrong They just want a level playing field. That's all they've ever asked for here."
Coggins says Lake "got to the heart of the legal matter very quickly and clearly understood what was required under the open meetings act and the competitive-bidding statute."
Holman, on the other hand, advised Hall the judge was wrong in his rulings, "but at least we know where he is headed In light of Judge Lake's anticipated orders, I feel it is incumbent upon us to suggest that 4 Families and CA One meet very soon to resolve their differences."
Two city councilmembers on opposite sides of the contract vote got different messages from the rulings. District H Councilman Gabe Vasquez is chairman of the council's Regional Planning and Economic Development Committee that conducted hearings on the city's original recommendation of CA One. He believes the city can solve its open-meetings problem by simply taking another contract vote after giving adequate legal notice. He also contends the city can make the case in court that it did not violate competitive-bidding laws because any expenditures were in furtherance of increasing overall airport use, rather than specifically benefiting food vendors.
If City Council did anything in error, Vasquez figures the blame falls on the Lee Brown administration for giving bad advice on the day of the vote. "The city attorney said we were doing everything legal," recalls Vasquez, "and the mayor said we were doing everything legal, and so council proceeded."
Vasquez is troubled by attorney Holman's suggestion that the contract bidders sit down and work out a new deal.
"By my understanding, the suit is between CA One and the city, and Four Families is not named or a defendant in any way, shape or form. So it makes me question why that was included in the letter."
Vasquez suggests someone could be trying to undermine the city's case in court.
"Let's play conspiracy theory here," says the councilman. "Who is David Holman, and why is he making that recommendation? Was he told to put that in there? Did he come up with it on his own? Why doesn't he say the city and CA One should sit down and resolve their differences, 'cause we're the combatants, so to speak, in the lawsuit?"
Holman did not return an Insider call seeking answers to those questions.
At-Large Position 1 Councilwoman Annise Parker voted against the contract with Four Families, and says council went about it the wrong way.
"We threw out the vendor that had been recommended [CA One], but kept their contract and substituted the second vendor [Four Families] into that contract," explains Parker. "I was deeply troubled by that. I think council would have been on much stronger ground if we had said, 'Okay, we don't like this deal, so you, vendor, you take your deal and go and we're going to go with the other vendor.' "
Parker agrees with Vasquez that it was inappropriate for Holman to suggest that the vendors huddle and hammer out a deal to avert a trial.
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"While we give a lot of latitude to our outside counsel, I'm shocked he would suggest that the parties try to get together and work things out, considering that one is not suing the other and the losing bidder is actually suing the city to overturn our position."
Parker says she is duty-bound to stand behind the city position now, even if it is wrong. CA One attorney Coggins expects to call councilmembers as witnesses if the case goes to trial, so The Insider put Parker on a hypothetical witness stand and asked her whether she believes council violated the Texas Open Meetings Act and state bidding laws.
"My answer in court," replied the councilwoman, "would be, 'Yes, I do believe that, and I think it was inappropriate for council to vote as we did.' "
With testimony like that coming from a defendant in the case, perhaps Holman's proposal is right -- making legal peace rather than war is the sanest course of action after all.