MBIA lawsuit against Sports Authority dismissed

I haven’t seen a story about this in the print edition for whatever the reason.

A state district court judge on Tuesday ruled that the Harris County-Houston Sports Authority cannot be sued by the company that insures the $1 billion in debt that the agency services on local sports stadiums.

Bond insurer MBIA, with the National Public Finance Guarantee Corp., sued the Sports Authority in state district court in January, requesting that the cash-strapped agency be forced to collect more money to cover its obligations. Other local entities were listed as defendants, including the Harris County Sports & Convention Corp., the county agency that manages Reliant Park.

In granting two pleas to jurisdiction, 215th District Court Judge Elaine Palmer also ruled that the Sports Corp. cannot be sued. The Houston Texans and Livestock Show & Rodeo were also listed as defendants in the lawsuit.

Attorneys representing both sides made their cases in front of Palmer on Friday with the Sports Authority arguing it is immune from suit as a governmental agency created by the state Legislature.

Some folks from MBIA reached out to me a couple of weeks ago, presumably because I’d been blogging about this and had expressed some befuddlement about the finer points of the issues. As a result of that conversation, I now have a copy of the original complaint and response filed by MBIA, and a slightly better understanding of the whole thing as well. Though I am not a lawyer in addition to not being a finance guy, I confess that I am somewhat uneasy with the idea of a quasi-government entity like the Sports Authority being granted immunity like this. Hypothetically speaking, what if there had been an allegation of actual malfeasance? What would be the recourse in a case like that? I suppose the answer is that the County Attorney would investigate and hand things over to the DA if appropriate. While I have no doubt that Vince Ryan and his staff would be more than equal to that task, it seems there might be the potential for a conflict of interest. I don’t know. Any lawyers out there want to offer an opinion on this?

Anyway. I also received the following statement from Kevin Brown, a spokesman for National:

National and MBIA respect but disagree with the Court’s decision. This ruling raises a red flag for anyone doing business with governmental entities in Texas and calls into question whether their contracts are enforceable. We intend to appeal promptly and look forward to presenting our arguments to the Court of Appeals.

So it ain’t over yet. I’ll let you know when I hear more.

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2 Responses to MBIA lawsuit against Sports Authority dismissed

  1. mollusk says:

    “Thou shalt not sue the King without his permission, for the King can do no wrong” is a holdover from English common law, though we now call it sovereign immunity. It’s a very convoluted area, particularly in the realm of contracts with government and quasi-government entities. There is a patchwork of statutes that have been enacted over the years allowing suits in particular types of situation (for example, motor vehicle accidents) or as to certain kinds of entity, but unless your claim and/or defendant falls into one of those slots, you’re toast.

  2. Pingback: MBIA appeals lawsuit dismissal – Off the Kuff

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