BOk is still after Tulsa's money

See below for updates, including audio from my interview on KFAQ today and the request for action and the resolution that the City Council will consider tomorrow night.

You may have thought the Great Plains Airlines fiasco was far behind us. Three years ago, then-Mayor Bill LaFortune tried to convince the City Council to pay the Bank of Oklahoma the $7 million (plus) owed by the Tulsa Airport Improvements Trust as a result of their complicated (and illegal) financing deal for the bankrupt airline. LaFortune backed down because of a City Attorney's opinion that the City was not liable for the money and paying a settlement would expose the City's elected officials to a qui tam suit from taxpayers, making them personally liable for misappropriation of funds and subject to removal from office. (My Urban Tulsa Column from November 17, 2005, goes into all the gory details.)

But BOk is coming after your tax dollars once again. Today in District Court, the Tulsa Industrial Authority filed an amended petition in its lawsuit CJ-2004-6124, adding the City of Tulsa as a defendant on the grounds of "unjust enrichment." This equitable claim, I am told, creates an excuse for Mayor Kathy Taylor to say that the City is at legal risk for this debt and therefore the City could legitimately pay it. Rather than vigorously defend against this claim and see if it will hold up in court, Taylor wants to short-circuit the legal process, wave the white flag, and hand over the money. Our money, to be specific.

In 2005, the request to the City Council to repay the debt was preceded by a PR campaign, including an op-ed by John Brock in the Tulsa World. This time, they're trying to sneak it through. Here's what's on the agenda for tomorrow, at the Thursday, June 26, 5 p.m., pre-meeting of the Tulsa City Council:

1. Resolution authorizing payment in full of a judgment settlement, from surplus monies in the Sinking Fund for Case No. CJ-2004-6124: Tulsa Industrial Authority (TIA) vs. Tulsa Airports Improvement Trust (TAIT), City of Tulsa, et al. (Emergency Clause) 05-916-10

And on the 6 p.m. regular meeting agenda:

3. b. [Mayor's Items] Resolution authorizing payment in full of a judgment settlement, from surplus monies in the Sinking Fund for Case No. CJ-2004-6124: Tulsa Industrial Authority (TIA) vs. Tulsa Airports Improvement Trust (TAIT), City of Tulsa, et al. (Emergency Clause) 05-916-10

There had to have been a lot of coordination between the Mayor, the TIA, and the BOk to make all this happen so quickly. The resolution authorizing payment couldn't go forward until the City was added as a defendant to the lawsuit. Isn't it nice to know our Mayor is assiduously looking for ways to give our tax dollars away to private interests?

"Surplus monies in the Sinking Fund" doesn't mean we have extra cash laying around. It means your property taxes will go up to pay for this, as is the case for all judgments against the City.

Reading the definition of unjust enrichment, it's hard to see how the City could be found liable:

1. Was the defendant enriched?
2. Was the enrichment at the expense of the claimant?
3. Was the enrichment unjust?
4. Does the defendant have a defense?
5. What remedies are available to the claimant?

The City wasn't enriched. That should end the matter right there.

In a nutshell, here's what is happening: BOk made a bad loan to finance Great Plains Airlines. GPA went bankrupt, but BOk still wants to recover its money. On August 7, 2006, BOk sued PriceWaterhouseCoopers, for professional negligence. The case was settled out of court within the month.

TAIT doesn't have to resources to pay back BOk, nor does TIA, so BOk is hunting around for someone with deep pockets to hold liable. That would be the City of Tulsa.

Why won't BOk just write this off as a bad lending decision on their part? It may be because the corporation and its officers would be liable under FIRREA, federal lending regulations put in place following the collapse of the Savings and Loan industry. S&Ls used federally-insured funds to make bad loans to insiders. When the borrowers defaulted and the S&Ls folded, the taxpayer was left holding the bag.

Even though it appears that BOk officials ignored plenty of warning signs, they approved the loan and did not call it when GPA's financial problems surfaced. Nevertheless, they want the taxpayer to wind up holding the bag.

One more thing: Shouldn't the public have time to examine this deal before the Council approves it? And shouldn't we know how much of the loan BOk has recovered through the bankruptcy court, the PriceWaterhouseCoopers lawsuit, or other means?

MORE: I've found some web references to laches as a defense against claims in equity, a category that includes a claim of unjust enrichment. Wouldn't waiting four years after filing the initial lawsuit constitute laches?

More on equitable remedies from Wikipedia:

Equitable principles can also limit the granting of equitable remedies. This includes "he who comes to equity must come with clean hands" (ie the court will not assist a claimant who is himself in the wrong or acting for improper motives), laches (equitable remedies will not be granted if the claimant has delayed unduly in seeking them), "equity will not assist a volunteer" (meaning that a person cannot litigate against a settlor without providing the appropriate consideration e.g Money) and that equitable remedies will not normally be granted where damages would be an adequate remedy.

AUDIO: I was on KFAQ's Chris Medlock Show this afternoon, along with Medlock's fellow former councilors Roscoe Turner and Jim Mautino. All three were on the City Council in 2005 the last time a mayor tried to pay off BOk. Here's Hour 1 and here's Hour 2.

DOCUMENTS:

Here is the backup material for the item on the Council's agenda. First, the Request for Action from interim City Attorney Dierdre Dexter to pay $7.1 million from the sinking fund :

REQUEST FOR ACTION: RESOLUTION

DEPARTMENT: LEGAL
CONTACT NAME: Deirdre O. Dexter (ga)
ADDRESS: City Hall, Room 316
TELE: 596-7717

[...]

SUMMARY:

Re: Tulsa Industrial Authority v. Tulsa Airports Improvement Trust, City of Tulsa, et al. CJ-2004-6124

The Tulsa Airports Improvement Trust and City have agreed to settle the above case. In the lawsuit, Plaintiff TIA, by and through Bank of Oklahoma as attorney-in-fact, alleged that TAIT breached an obligation to purchase property from TIA and alleged a claim of unjust enrichment against the City of Tulsa. Plaintiff's Second Amended Petition seeks, as of March 31, 2008, the amount of $11,648,294.00 plus additional accrued and accruing interest and costs. It is anticipated that the parties' settlement will be approved and a Journal Entry of Judgment will be filed on Thursday, June 26, 2008. At that time, a copy of the Judgment will be provided. Attached for Council and Mayoral approval is a resolution authorizing payment from the sinking fund. If the Judgment is not entered, no action will be requested.

BUDGET: FINANCE DIRECTOR APPROVAL:

FUNDING SOURCE: $7,100,000.00 Sinking Fund

It is the recommendation of the Legal Department that the Finance Department be directed to make a wire transfer
from funds available in the Sinking Fund in payment of this judgment.

REQUEST FOR ACTION: All department items requiring Council approval must be submitted through Mayor's Office.

Council review and approve the Resolution authorizing payment from the sinking fund. Mayor approve and direct that Finance to make a wire transfer in the amount of $7,100,000.00 to the Bank of Oklahoma, attorney-in-fact for Tulsa Industrial Authority.

Dexter was previously employed by Frederic Dorwart Lawyers. The firm is the legal counsel for Bank of Oklahoma Financial Corporation. Dorwart is also the attorney of record for the Tulsa Industrial Authority for this lawsuit.

And here is the