UPDATED HCC Wants to Seal Records in Lawsuit Claiming Trustees Treated Bond Money Like a "Private Slush Fund"

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In the ongoing legal fight against its former top lawyer, Houston Community College yesterday filed a motion to seal court records that it claims fall under attorney-client privilege. If successful, the move would likely allow one of the nation's largest publicly-funded community college systems to shield certain internal emails, memos or other communications filed in court from public scrutiny as its case against former general counsel Renee Byas winds through the legal system.

It's unclear what, if anything, already filed in the case would be retroactively sealed if HCC has its way (HCC's lawyers have yet to respond to a request for comment *See HCC's comment at the end of this story).

At issue in HCC's legal fight is why the college really fired Byas last year. According to the college, Cesar Maldonado "lost faith" in Byas just weeks into his new gig as HCC chancellor and in June 2014 decided to put Byas on administrative leave while the college investigated "the validity of her contract." HCC ultimately fired Byas saying her contract extension with the college was invalid because she signed and turned it back into HR five days late; HCC also argued that while its board chair signed Byas' contract extension, the full board didn't approve it.

After Byas' contract was upheld in an administrative hearing mediated by former Texas Supreme Court Justice Tom Phillips, the college opted to sue Byas, asking a judge to void her contract (HCC also asked that Byas be forced to pay any legal fees HCC accrued in the process of suing her).

Naturally, Byas sees things differently. In October she came out swinging, filing a countersuit against the college claiming her firing was "HCC's attempt to silence a public servant who refused to let HCC's Board of Trustees use a $425 million public bond project as a private slush fund."

Byas alleges that HCC trustees wanted to skirt the rules for handing out bond contracts, and that trustees bristled at one new rule in particular: instead of handpicking the numerous contractors for each of the $425 million bond's 14 major construction projects, the new rules required that the board tap 14 "construction managers at risk," general contractors large enough to put up a $2 million bid bond. Those firms would then tap the numerous local subcontractors to finish the job.

Meaning there would be a buffer between trustees and the millions that would need to be doled out to local subcontractors. Meaning the trustees - if they wanted to - would have a hard time micromanaging the bond and shuffling contracts to friends and family, apparently a recurring issue with HCC's board.

Byas says HCC terminated her because she wouldn't play ball, and because she eventually talked to the FBI when federal investigators came sniffing around HCC in 2013 (Byas says she even secretly recorded conversations with trustees and documented "numerous instances" in which they pressured her to break the law).

Whatever internal records come out of HCC during this legal fight are critical to understanding exactly what happened with Byas and why she was fired. If HCC is telling the truth, those records could very well show that trustees simply weren't thrilled with Byas' performance and convinced their new chancellor to fire her.

But if Byas is right...

Part of what makes Byas' allegations remarkable is the timeline of the whole thing. Right as trustees, according to Byas, were begging her to bend the bond rules, another trustee was already under investigation for trying to get one of the bond's construction firms to hire a close friend as a subcontractor. HCC had already hired an outside lawyer, Michelle Morris, to monitor the bond awards, and Morris grew concerned when one of the HCC-tapped construction firms hired a little-known company to do "public outreach" for $1.4 million. When Morris learned that the company was really owned by a close friend of HCC trustee Carroll Robinson, and that the company had no experience in PR or community relations, the concern grew. Eventually, people started to tell Morris the company was "sent" by Robinson (see this Chron story from 2013).

So Byas launched an investigation, hiring law firm Gardere Wynne Sewell, LLP to look into whether Robinson tried to shuffle bond money to a buddy. Byas, in her countersuit, says trustees regularly pressured her to fire Gardere and kill the investigation; she refused.

So the morning Byas was put on administrative leave, then board trustee Neeta Sane emailed Gardere investigators telling them to share everything with a new lawyer hired by the board, Vidal Martinez, who would oversee the Gardere investigation. In the email Sane calls Martinez an attorney that "has been retained by the Board of Trustees of the Houston Community College System as Special Counsel in matters relating to the November 2012 $425M Bond Program." (That final Gardere report, which was finished under Martinez, concluded that there was no reliable evidence that Robinson tried to help a close friend bag a huge contract.)

That email, at the very least, appears to show that the Gardere investigation -- the one that effectively cleared a trustee suspected of meddling in the bond-award process -- was put under the watch of a new, board-appointed attorney the very same morning Byas -- who, if you believe her, faced mounting pressure by the same board to kill that investigation -- was being shown the door.

That's the email that was sent to us after we first spoke with Byas' attorney, Rusty Hardin, in October. And that's the email that HCC doesn't want us to have.

In it's motion yesterday to seal records, HCC cites the email as evidence that Byas "has leaked at least one document containing privileged communications to local reporters in attempt to obtain favorable coverage." HCC claims Byas got that email by essentially stealing a bunch of documents and communications from her HCC computer after she was put on leave and told to stay away from the computer.

Which is just flatly untrue, says Hardin. That email -- evidence, HCC claims, that Byas was willing to swipe attorney-client privileged documents from HCC on her way out in order to share them with the press -- was actually introduced by HCC as an exhibit during the administrative hearing in which HCC tried to justify firing Byas.

"These guys are crazy... It's one of their exhibits," Hardin told the Press Wednesday. "What they're complaining about is a document they introduced at a hearing trying to justify firing her. And now they want to complain about it becoming public. That's an insane position."

Moreover, it's particularly galling, Hardin insists, for HCC to complain that documents from a public institution might become public record throughout the course of a lawsuit that HCC initiated. "They're like the kid who killed his parents and then complains about being an orphan," Hardin said.

In its motion to seal records, HCC states: "It is the College, not Byas, who is the legal owner of these documents and the holder of the privileges that attach to them." Perhaps. But isn't it ultimately the public, not HCC, who truly owns those records?


Updated 12:10 p.m.: Ayesha Najam with Gibbs & Bruns LLP, a firm hired by HCC to handle the Byas case, emailed us this response:

"Under Texas Law, HCC, like any entity or individual, is expected to protect from disclosure communications it has with its own legal counsel. That is a fundamental right, the purpose of which is to allow individuals and entities to seek and obtain effective legal representation. In addition, by statute, there are certain categories of documents, which are set forth in our Motion, that HCC is expected to maintain as confidential and are thus exempt from public disclosure. As stated in our Motion, "[Ms.] Byas has rejected the College's reasonable request to enter into a narrow protective order . . . ." Accordingly, we have presented the issue to the Court and look forward to its consideration our concerns."

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