Wainwright v. Tyler

• Decision Date: 27 June 2018
• Docket Number: No. 52,083–CA,52,083–CA
• Citation: 253 So.3d 203
• Parties: Michael H. WAINWRIGHT and T. Scott Pernici, Plaintiffs–Appellants v. Ollie TYLER and Brian Crawford, Defendants–Appellees
• Court: Court of Appeal of Louisiana — District of US

253 So.3d 203

Michael H. WAINWRIGHT and T. Scott Pernici, Plaintiffs–Appellants

v.Ollie TYLER and Brian Crawford, Defendants–Appellees

No. 52,083–CA

Court of Appeal of Louisiana, Second Circuit.

Judgment rendered June 27, 2018

HARPER LAW FIRM, APLC, By: Jerald R. Harper, Shreveport, Anne E. Wilkes, Counsel for Appellants

PETTIETTE, ARMAND, DUNKELMAN, WOODLEY, BYRD & CROMWELL, L.L.P., By: Edwin H. Byrd, ABRAMS & LAFARGUE, L.L.C., By: Julie Mobley Lafargue, Shreveport, Counsel for Appellees

Before MOORE, GARRETT, and McCALLUM, JJ.

GARRETT, J.

The plaintiffs, Michael H. Wainwright and T. Scott Pernici, filed a defamation suit against the defendants, Ollie Tyler, Mayor of Shreveport, and Brian Crawford, Chief Administrative Officer for Shreveport. The defendants filed a special motion to strike the petition under La. C.C.P. art. 971, which was granted by the trial court. The petition was stricken and the defendants were also awarded attorney fees. The plaintiffs appeal. For the following reasons, we affirm.

FACTS

In order to understand the chain of events leading up to this litigation, some background information gleaned from the record is necessary. The City of Shreveport was made subject to a consent decree requiring it to repair the city water and sewerage infrastructure. The city sought to obtain some funding for the project through the Louisiana State Bond Commission. In connection with this process, a new billing structure was implemented through city ordinances. Pernici, a Shreveport businessman who had previously served on the Architect and Engineer Selection Committee for the city, claimed that in 2015, he could not reconcile his water bill with the new rates set in the ordinance. He contacted Wainwright, a former Shreveport resident who now lives in North Carolina. Wainwright is a lawyer and was a former lobbyist for the city. They claimed that they determined how the billing errors were made and how to correct them. Based upon their experience and other contingency fee contracts the city had routinely awarded in the past, they thought the city would be willing to pay them 25% of the additional revenue gained for the first four years after the billing error was corrected.

The plaintiffs contacted Justin Haydel with Manchac Consulting Group, Inc. ("Manchac"). According to the plaintiffs, Haydel was an expert in municipal water systems and billing, and they sought his expertise to be sure they correctly interpreted the ordinance, identified the billing error, and "identified the likely party responsible for the error."

Manchac sought a meeting with William Bradford, the city attorney. Before informing the city of the billing error, Manchac required that Bradford sign a nondisclosure agreement ("NDA"), which would prevent the city from using any of the information without paying for it. Bradford signed the NDA. The plaintiffs later claimed that they were undisclosed principals to the NDA.¹ Manchac then made a presentation with the information regarding the billing error.

On June 8, 2016, Manchac repeated the presentation, this time to Bradford, Crawford, and Barbara Featherston, Director of the Department of Water and Sewerage. Crawford and Featherston signed the NDA before the presentation. Manchac also presented a Revenue Enhancement Agreement, which included the proposal for payment for information about the billing error and possible future involvement by Manchac with the city water department.

After the presentation, Charles Grubb, a former Shreveport city attorney under several administrations, corresponded with Bradford on behalf of Manchac in an attempt to negotiate payment for the information. In a letter dated July 18, 2016, Grubb indicated that the city had proposed paying 10% of the new revenues derived from correction of the billing error, from February 15, 2015, to July 1, 2016, a period of approximately 18 months. Grubb offered a counterproposal stating that Manchac would be willing to accept two payments of $250,000 each, along with contracts for engineering and consulting work on the sewerage project. The city was given until August 12, 2016, to accept the offer. When it did not do so, the offer was withdrawn.

According to the plaintiffs, after Manchac's presentation, the city immediately used the "privileged" information to correct the underbilling, without permission and without payment. They claim the error was corrected, beginning with the August 2016 water bills.

On August 29, 2016, Wainwright emailed a lengthy, single-spaced letter to Tyler.² He stated that he was contacted by "an acquaintance" who thought there was something wrong with the water billing, and they discovered the problem. They then enlisted the aid of Manchac and Grubb, and presented the information to the city. In his letter, Wainwright said:

I researched the ordinance language as well as the motivation for adoption of the new rate structure. I concluded the City was not only in violation of its own ordinance, but that error was resulting in revenue shortfalls that impacted the City's debt servicing of the bond financing used to fund remedial actions to comply with the City's consent order regarding water & sewerage upgrades.

According to Wainwright, correction of the error would result in more than $1.6 million in additional revenue to the city in the next year. Wainwright stated:

At the onset we understandably anticipated that the City would be elated to learn that by correcting its previously unknown error, the City could immediately increase its revenue by tens of thousands of dollars every year for the foreseeable future.... Our expectation was that the City would be only too happy to reasonably compensate us by paying a reasonable percentage of this "new found" money for a limited time period.....

Our original proposal was to give the City the option to either adopt or reject the findings and recommendations. If the City elected to reject, no compensation would be due, but if the City adopted/implemented the recommendations, we would be paid ¼ of the savings or enhanced revenue realized by the City for the initial four year period. Candidly, we felt the City would accept this proposal. It was inconceivable that any entity, including the City would not jump at an opportunity to substantially increase its revenues in exchange for paying a reasonable, time-limited percentage of those revenues....

The letter outlined the difficulties that had been encountered in striking a deal with the city and the belief that the city had used the information to correct the billing error without paying for the information. The letter alluded to "political fallout" that would occur if it became known that high-volume water users were undercharged, while low-volume users were charged the full amount. Wainwright proposed that the city execute an agreement implementing the proposed payment plan in exchange for the retroactive authorization of the right to use the information. Wainwright continued:

Frankly, I am both mystified and shocked by the City's bad faith conduct and it's [sic] blatant, willful violation of the NDA. We came to the City with the expectation of receiving thanks for making it possible for the City to quietly, and discreetly correct a very costly error. Such correction will literally mean millions of new dollars to the City coffers. Instead we have been dismissed, or characterized as adversaries, because we had the audacity to request a reasonable compensation that would be paid out of a portion of the first four years' of new dollars. Remember, we did not create the problem, the City did. And the City did not find the solution, we did. And, absent our bringing the error to the City's attention, these huge loses [sic] would have gone on and on.

Wainwright concluded the letter with the following paragraph:

Absent such an agreement, we will reluctantly accept an adversarial role because it is the only position the City has left us. Unfortunately, fulfilling that role will not be possible without all of this being made public. That in turn, will inevitably draw the attention and interest of those who have been adversely affected by the shortfall in revenue and to others who will find it irresistible for their own political gain. It's hard to believe the City has distorted our good intentions into this.

That same date, Tyler sent an email to Bradford, Crawford, and Featherston, forwarding Wainwright's letter. The email provided as follows

Attorney Bradford:

Please see the attachment in the email below. It appears that we are [being] blackmailed by this company. Please peruse it very carefully with Mr. Crawford and Ms. Featherston. We need to get in front of this situation.

I suggest we think about sharing the information regarding the water billing error with Council members. I don't like being bullied [or] blackmailed. Do you have any other legal advice for me?

Wainwright and Pernici are involved in a business entity called Sand Beach Properties, LLC ("Sand Beach"). In October 2016, Sand Beach filed suit against the city for breach of the NDA. Although that suit is separate from the matter at issue here, which was not filed until March 2017, it also involves the water billing issues.

According to Tyler's affidavit submitted in this suit, Wainwright made a public records request to the city in August 2016 for documents related to the billing error. Tyler's email, set forth above, was included in the documents produced by the city. On October 12, 2016, the Shreveport Times ("Times") published a story outlining the billing error and how it was brought to the attention of city officials, including the demand for payment and the plaintiffs' involvement. In the article, Tyler is quoted as saying that the demand for payment amounted to being "blackmailed." Public records documents were used in writing the story. The record is unclear about how the Times reporter came into possession of the public records documents and the email at that time. In any...