PSJA construction lawsuits under scrutiny

By Berenice Garcia

Lawsuits filed by the Pharr-San Juan-Alamo Independent School District against architects, engineers and construction companies have come under scrutiny as representatives of those companies have called upon the school board to drop the allegedly frivolous lawsuits.

Currently, the district is involved in at least 15 lawsuits claiming negligence on the part of various contractors and subcontractors but, during a board meeting held Thursday evening, representatives of various contractors spoke against the litigation during the meeting’s public comment portion, calling it frivolous.

“These lawsuits are detrimental to the architectural profession in the Rio Grande Valley, especially now at a time when a pandemic has already hit home and hit hard both at a personal and business level,” said Maria Sustaeta, executive director of the Lower Rio Grande Valley chapter of the American Institute of Architects.

“The impact of these lawsuits on our local architecture firms, the firms that design your schools and the architects that you know and work with is far greater than any settlement,” Sustaeta said. “My only hope today is that if the community can unite and agree that what is most important here is the higher understanding of not just what is at stake but what is right and what is just and that the doors of communication remain open.”

Josue Reyes, president of D. Wilson Construction Co., argued that over the 10 or more projects the company has worked on for the school district, they had never failed to respond when a warranty issue was presented to them.

“Furthermore there are no recent requests by PSJA to address any related building deficiencies in our current records,” Reyes said. “We stand behind our work, we always will, and we love to address those construction issues when alerted by our clients. Litigation has never been needed.”

Reyes mentioned that during the last legislative session, state lawmakers passed H.B. 1999, known as the “Right to Repair” act. The law requires a governmental entity to allow a contractor to inspect and correct their work before that entity is able to file a claim against them.

“There’s a reason the legislature supported this bill as frivolous claims prevalent in the Valley have hurt the small businesses who build our local schools, pushing them to pay higher insurance premiums or having their insurance underwriters discontinue coverage altogether,” Reyes said.

“There are better ways to resolve these types of issues without suing our entire industry in the Valley,” Reyes continued. “The ‘Right to Repair’ act provides a pathway for resolution and I think all of us wait patiently for your call for any legitimate issue you have with our past performance.”

Following the public comments, the board trustees met in executive session to discuss the pending litigation regarding the district buildings. They took no action on the matter.

An attorney for the school district, Benjamin Castillo, said he could not speak on the issue because he’s unable to comment on pending litigation.

However, the situation has caught the attention of a state lawmaker who is questioning how another piece of legislation applies to the school district’s contracts with the attorneys hired to prosecute these cases.

On Feb. 1, state Rep. Terry Canales, D-Edinburg, requested an attorney general opinion on whether H.B 2826, which amended Section 2254 of the Texas Government Code, applies to contracts entered after the amendment went into effect in September 2019.

The amendment states that before a political subdivision, such as a school district, can enter into a contingent fee contract for legal services, it must publish findings supporting the need for the contract.

A contingent fee contract, according to the bill, is for legal services in which the payment of legal fees is at least partly contingent on the outcome of the lawsuit or other service for which the attorneys were hired.

Such a contract must be approved in an open meeting and must be approved by the state attorney general.

In his request for an opinion, Canales questioned whether an existing contract that changes the scope of work is void under the Section 2254 of the government code.

“For example, if a political subdivision contracted with attorneys before September 1, 2019 to pursue a multimillion-dollar lawsuit for alleged defects in the construction of a specified elementary school, can the political subdivision amend that contact after September 1, 2019 to allow the attorneys to pursue other multimillion-dollar lawsuits for alleged defects in the construction of other school buildings?” Canales wrote. “Or, instead, is the amendment void and unenforceable?”

When asked what prompted this request for an opinion, Canales responded via email that, though a lawyer himself, he had “major concerns about lawyers who abuse the system to enrich themselves.”

“Construction Defect Lawyers are unnecessarily drumming up litigation, by and through school districts, which for the most part are vexatious and frivolous claims,” Canales wrote. “These lawyers pour over the construction contracts, and look for anything they can find, then sue everyone under the sun, whether or not they had anything to do with the alleged problem or not.”

He added the unintended consequences of such lawsuits would only hurt school districts and the taxpayers who fund them by raising construction costs, insurance premiums and, ultimately, property taxes.

Canales also pointed specifically to the situation with the PSJA school district as an example of the onslaught of litigation being filed in the Rio Grande Valley.

“Last session, legislation was passed to create more fairness in this process. Yet, lawyers have sought loopholes to subvert the law,” Canales wrote in response to what were the main concerns regarding amendments to existing contracts. “The law says you need AG approval for these types of contracts with attorneys going forward, so lawyers are trying to bootstrap themselves to older contracts claiming they are grandfathered, and therefore not subject to the new law.”

“It’s possible that these loopholes are not legal,” Canales added, “and therefore, the contracts with the school districts are void as a matter of law.”

The school board trustees are set to discuss and possibly take action on the lawsuits during their next board meeting Tuesday.