philip kingston's petition against the police and fire pension system

8/18/2019 Philip Kingston's Petition Against the Police and Fire Pension System

http://slidepdf.com/reader/full/philip-kingstons-petition-against-the-police-and-fire-pension-system 1/15

VERIFIED RULE 202 PETITION PAGE 1

CAUSE NO. _______________

§§

§

§§

§

§

§§

IN THE DISTRICT COURT OF

DALLAS COUNTY, TEXAS

_____ JUDICIAL DISTRICT

IN RE: DALLAS POLICE AND FIRE

PENSION SYSTEM

VERIFIED RULE 202 PETITION TO TAKE DEPOSITIONS

Philip T. Kingston (“Kingston”) files this Verified Rule 202 Petition to Take Depositions

and would respectfully show the Court as follows:

1. Kingston seeks to investigate potential claims against the Dallas Police and Fire

Pension System (“Pension System”) and potential claims the Pension System may seek to assert

against him.

I.

IDENTIFICATION OF PARTIES

2.

Petitioner Kingston is a Dallas resident, a Dallas City Council member, and on the Board

of Trustees of the Pension System.

3. The Dallas Police and Fire Pension System has its principal place of business at 4100 Harry

Hines Boulevard, Suite 100, Dallas, Texas 75219, and its telephone number is (214) 638-3863.

4. Pursuant to Rule 202.2(f)(1), the following persons are expected to have interests adverse

to Petitioner: Pension System Board Chairman Lt. Samuel Friar, executive director Kelly

Gottschalk, general counsel Joshua Mond, and Vice Chaiman Lee Kleinman. Each may be reached

through the Pension System at the address and telephone number above. Additionally, Steven C.

Sandborg, managing director of sales and operations at Museum Tower, 1918 N. Olive Street,

Dallas, TX 75201, (214) 954-1234, is expected to have an adverse interest.

DC-16-03750

Anna

DALLAS

3/31/2016 3

FELI

DISTRI




5. Venue is proper in this Court under Rule 202 because the witnesses reside or have their

principal place of business in Dallas County. Tex. R. Civ. P. 202.2(b)(2).

II.

BACKGROUND

6. The Pension System is a governmental pension fund established by the State of Texas in

1933 that provides pension and related benefits to its members who are firefighters and police

officers employed by the City of Dallas. The benefits are funded by contributions from members

and the City of Dallas, along with investment earnings. The Pension System holds various

investments, including Museum Tower, a 42-story residential tower located in downtown Dallas.

Due to past performance, the Pension System is also engaged in major financial restructuring that

could include a change to the cost-of-living adjustment (“COLA”) members receive.

7. Kingston is a Dallas City Council member appointed to the Pension System’s Board of

Trustees by Dallas Mayor Mike Rawlings. As a trustee, Kingston is charged with adequately

representing the interest of plan participants and their beneficiaries and defraying reasonable

expenses of administering the system, yet Kingston and other trustees have not received the

information and documents from the Pension System necessary to fully carry out their

responsibilities.

8. On March 13, 2016, Kingston appeared in an interview broadcast on WFAA-TV, during

which the subjects of the Museum Tower and the COLA were raised, among other issues.

Kingston answered questions put to him by the program’s host during the 4-minute interview.

9.

At a Pension System Board meeting on March 24, Board Chairman Lt. Samuel Friar raised

the possibility of censuring Kingston for his comments. Because Friar failed to adequately notice

the issue, however, the measure was moved to a special meeting set for April 1.




10. On March 25, Kingston wrote Pension System executive director Kelly Gottschalk, general

counsel Joshua Mond, and Friar asking for 15 categories of documents relevant to his duties as a

trustee and the potential censure. Kingston attached a copy of the relevant Texas Attorney General

Opinion KP-0021,which states that “a member of a governing body has an inherent right of access

to the records of that body when requested in the member’s official capacity and for the member’s

performance of official duties.” Kingston also requested a public hearing and deliberation

pursuant to the Texas Open Meetings Act.

11. Late on March 29, 2016, Kingston finally received a cherry-picked selection of redacted

documents responsive to certain categories of his requests. Some categories were denied

altogether, and Chairman Friar said he was withholding “sales contracts, sales data, names of

brokers, prospects or anything else that is sensitive” from Kingston’s review.

12. The documents indicate that the Board will discuss “the potential violation of fiduciary

duties” by Kingston. The documents also indicate that the Board will be asked to choose between

four options at its April 1 meeting: 1) do nothing, 2) vote to censure Kingston, 3) request a public

apology on television with Kingston reading from a script preapproved by the Board, or 4) request

Kingston’s resignation from the Board.

13. On March 30, 2016, Kingston, through his attorney, sent a letter to Chairman Friar

demanding that the issue be taken off the agenda until the Pension System complies with Texas

law regarding notice requirements for the meeting and providing requested information (attached

hereto as Exhibit A). To date, there has been no response.

III.

SUBSTANCE OF, AND REASON FOR SEEKING, THE PENSION SYSTEM’S

TESTIMONY

14. Kingston seeks to investigate potential claims against the Pension System for violations of

Texas law as it has refused his requests for documents necessary to adequately represent the




interest of plan participants and their beneficiaries. Kingston further seeks to investigate potential

claims the Pension System may seek to assert against him for breach of fiduciary duty and business

disparagement. Rule 202 depositions “are governed by the rules applicable to depositions of

nonparties in a pending suit.” Tex. R. Civ. P. 202.5. Thus, Kingston seeks production of

documents or tangible things and deposition testimony under Tex. R. Civ. P. 205.1(c). See also

In re Woodlands Country Club, No. 09-07-352-CV, 2007 WL 2493497 *1-2 (Tex. App.—

Beaumont September 6, 2007, no pet.) (allowing reasonable requests for production).

15. Kingston seeks deposition testimony from the Pension System regarding:

a.

Information wrongly withheld from trustees;

b. Efforts by trustees to censure Kingston or force him to resign;

c. Any evidence of potential breaches of fiduciary duty or business disparagement byKingston or other trustees;

d. Sales data and other financial information relevant to any breach of fiduciary dutyclaim, including detailed information on any claimed lost sales;.

16. In addition, Kingston requests production of the following documents and things from the

Pension System:

a. Unredacted copies of “sales contracts, sales data, names of brokers, prospects or

anything else that is sensitive” that are responsive to Kingston’s March 25 document

requests;

b. All documents and communications regarding the effort to censure Kingston or forcehim to resign; and

c. A copy of the Pension System’s directors’ and officers’ liability (D&O policy).

III.

THE BENEFIT OF ALLOWING THE DEPOSITIONS OUTWEIGHS THE BURDEN OR

EXPENSE OF THE PROCEDURE

17. The benefit of this discovery is it will allow Kingston to investigate whether the Pension

System has violated its duty under Texas law to fully and adequately provide records necessary for




trustees to perform their official duties and whether it has any actionable claims against him for breach

of fiduciary duty or business disparagement.

18. As noted, Kingston has repeatedly requested the documents necessary to perform his duties

as a Pension Board trustee, but has been repeatedly denied the information. Kingston has also,

through his attorney, sent a letter to Chairman Friar demanding, among other things, that the

Pension System provide the documents he requested. Kingston has attempted to resolve these

issues in good faith prior to filing this Rule 202 Petition.

19. Finally, without this Rule 202 discovery, Kingston would be forced to file a suit based on the

facts he has already uncovered and seek discovery in order to fully investigate potential claims. This

potentially wastes not only Kingston’s time and resources, but that of the Pension System as well.

Thus the burden of a narrowly tailored deposition and document production is low when compared

to the benefits. Kingston has sought to utilize less burdensome and expensive procedures to resolve

these issues, and the Pension System has not cooperated. Accordingly, Kingston is forced to seek a

Rule 202 pre-suit deposition of the Pension System in order to investigate the parties’ potential claims.

IV.

PRAYER

20. For these reasons, Philip Kingston respectfully prays that the Court set a date for hearing

on this petition, and after the hearing enter an order: (1) authorizing him to take the deposition of

the corporate representative of the Dallas Police and Fire Pension System and (2) ordering the

Pension System to produce the documents and things requested herein.




Dated: March 31, 2016 Respectfully submitted,

James M. StantonState Bar No. 24037542

[email protected]

Sean W. KellyState Bar No. 24065550

[email protected]

STANTON LAW FIRM PC

9400 North Central Expressway

Ste. 1304

Dallas, Texas 75231

Telephone: (972) 233-2300Facsimile: (972) 692-6812

ATTORNEYS FOR PETITIONER



Exhibit A



S TANTON LAW FIRM PC

J AMES M. STANTONFORMER S TATE DISTRICT J UDGE

BOARD CERTIFIED - C IVIL TRIAL LAW TEXAS BOARD OFLEGAL SPECIALIZATION

[email protected]

March 30, 2016

Via electronic mail: [email protected] Lieutenant Samuel FriarChairman, Dallas Police & Fire Pension System Board of Trustees

4100 Harry Hines Boulevard, Suite 100

Dallas, Texas 75219

Dear Lieutenant Friar:

I represent Pension Board trustee Philip Kingston; please direct all futurecommunication regarding this matter to me. I write regarding the special Pension

Board meeting you have scheduled for this Friday, April 1, 2016, where you intendto discuss certain media statements by Mr. Kingston and trustees’ rights to

investment information. Until you comply with Texas law regarding noticerequirements for the meeting and providing requested information to Mr. Kingston

and the other trustees, the topics should be removed from the agenda. As referencedin your March 23, 2016, E-mail message with Kelly Gottschalk and Steven

Sandborg, Mr. Kingston is entitled to see all the “[g]reat ammunition” you plan to

“fire” at him “at the right time during the meeting.”

First, you have withheld, in violation of Texas law, information from Mr.Kingston and the other trustees. As you know, Mr. Kingston requested certain

documents ahead of this meeting and has not been provided with a completeresponse. Specifically, you are withholding “sales contracts, sales data, names of

brokers, prospects or anything else that is sensitive” from Mr. Kingston’s review. Irefer you to Texas Attorney General Opinion KP-0021 (a copy of which is attached

to this letter), which states that “a member of a governing body has an inherent rightof access to the records of that body when requested in the member’s official

capacity and for the member’s performance of official duties.” By this letter, I amdemanding to receive unredacted copies of all documents withheld from his request

in order to comply with his responsibilities as a trustee of the Board by noon

tomorrow, March 31, or Mr. Kingston will seek judicial process to obtain thedocuments he needs to adequately represent the interest of plan participants and their

beneficiaries. I believe that necessary information has been withheld from Mr.

mailto:[email protected]






9400 N CENTRAL EXPRESSWAY | SUITE 1304 | DALLAS, TX 75231 | D: (972) 233-2301 | F: (972) 692-6812

_______________________________________________________

WWW.STANTONTRIALFIRM.COM

Kingston and other trustees, revealing a continuing and troubling lack oftransparency by the Pension System.

Second, yesterday you provided written accusations that you believe Mr.

Kingston may have violated his fiduciary duty by making certain statements to themedia. Even though such suggestion is little more than a disagreement over the

Board’s investment direction, the fact you put such an assertion in writing makes itnecessary to request a current copy of the Pension System’s directors’ and officers’

liability insurance policy (D&O policy) ahead of Friday’s meeting. Please send acopy to me by noon tomorrow.

Finally, I ask that you please notify Joshua Mond that he, as general counselof the Pension System, has a fiduciary duty to the Board, not to individual trustees.

To the extent he seeks to represent the interest of one trustee over another, he is

disqualified in this matter. Please also ensure that all communications including, butnot limited to, phone records, electronic mail, text messages, voicemail messages,and meeting notes are preserved in accordance with Texas law, and please

immediately notify all Board trustees, the Board’s staff and the Board’s counsel ofthis request to preserve evidence.

Sincerely,

James M. Stanton

Enclosure

cc: Joshua Mond, [email protected]







Mr. Wallace Hall

Member, Board

of

Regents

The University of Texas System

Ashbel Smith Hall, Suite 820

201

West 7th Street

Austin, Texas 78701

Dear Mr. Hall:

KEN PAXTON

ATTORNEY GENERAL

OF

TEXAS

May 12, 2015

Opinion No. KP-0021

Re: Authority of the University of Texas

System Board of Regents to prohibit a regent

from accessing records in the possession

of

the University (RQ-0020-KP)

You ask two questions related to the authority of the University of Texas System ( the

System ) Board

of

Regents ( the Board ) and the Chancellor of the System to prohibit a regent

from obtaining documents in the possession of the University.

1

Before we address these

substantive questions, we must address a procedural question raised by the System and the Board.

The System and the Board suggest that [a]n individual Regent is not authorized to seek an opinion

of

the Attorney General in his official capacity without the consent

of

the Board. System Brief

at 2. In subsection 402.042(b) of the Government Code, the Legislature has authorized specific

individuals who may request an opinion from the attorney general, including, among others:

(1)

the governor; (2) the head

of

a department of state government; (3) a head or board

of

a penal

institution; (4) a head or board

of

an eleemosynary institution; (5 the head

of

a state board; [and]

(6) a regent or trustee of a state educational institution.

TEX.

Gov T CODE

ANN.

§ 402.042(b)

(West 2013). Pursuant to this language, in most instances a single member that is not the head of

a multi-member board is not authorized to seek an opinion of the attorney general individually.

The plain language of subsection 402.042(b)(6), however, does not create such limitations with

regard to state educational institutions.

2

See Prairie View A M Univ v Chatha

381

S.W.3d 500,

See Letter from Bill Aleshire, Counsel to Wallace Hall, Regent, Univ.

of

Tex. Sys., to Honorable Ken

Paxton, Tex.

Att y

Gen. at I (Apr. 20, 2015), https://www.texasattomeygeneral.gov/opinion/requests-for-opinion

rqs. After the System and the Board suggested that a regent may not ask for an attorney general opinion through

private counsel, you submitted an identical letter directly requesting the opinion in your capacity as a regent. Letter

from Wallace L Hall, Regent, Univ. of Tex. Sys., to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (May 6, 2015),

https://www.texasattomeygeneral.gov/opinion/requests-for-opinion-rqs ( Request Letter ). See Letter from Daniel

H. Sharphom, Vice Chancellor and Gen. Counsel, Univ. of Tex. Sys., and Francie A. Frederick, Gen. Counsel to the

Bd. of Regents, Univ. of Tex. Sys., to Honorable Ken Paxton, Tex. Att'y Gen. at 2-3 (May 4, 2015) (on file with the

Op. Comm.) ( System

Brief ).

2

The System and the Board contend that a prior version of he statute allowed only the heads of boards of

various institutions including regents and trustees of State education institutions. System Brief at

3-4.

However,



Mr. Wallace Hall - Page 2

(KP-0021)

507 (Tex. 2012) ( The plain language of a statute is the surest guide to the Legislature's intent. ).

That the Legislature limited the authority to request opinions to the heads ofother entities suggests

that it knew how and could have done so with regard to regents of educational institutions

if

that

was its intent.

See Zanchi

v.

Lane

408 S.W.3d 373, 380 (Tex. 2013) (holding that the Legislature

demonstrated that it knew how to require service

of

a document to mirror service by citation

because it had done so in article 59.04 of the Code

of

Criminal Procedure but not in the Medical

Liability Act). Thus, under the plain language of subsection 402.042(b)(6), any individual who

serves as

a

regent or trustee of a state educational institution is authorized to request an attorney

general opinion. TEX Gov'T CODE ANN.§ 402.042(b)(6) (West 2013).

You explain that as a member of he System's Board, you have concerns about the System's

student admissions practices, and you have requested records and working papers the System holds

of an independent investigation related to the same. Request Letter at

1

You advise that to date,

none

of

the records have been provided. Id. at 2 You first ask whether the Board has authority

to prohibit, by rule or otherwise, a regent from obtaining access to and copies of records in the

possession

of the University that the regent believes are necessary to review to fulfill his duties as

a regent. Id. at

1

You emphasize that you are asking about access by a regent in his official

capacity, distinguishing such access from a request made as a member of the public under the

Public Information Act.

Id.

at 3;

see

Tex. Att'y Gen. Op. No. JM-119 (1983) at 2 ( when a trustee

, acting in his official capacity, requests information maintained by the district, he is not a

member

of

the 'public' for purposes of the Open Records Act ). Thus, we look to law outside of

the Public Information Act to answer your questions.

The government of the System is vested in a board of nine regents appointed by the

governor with the advice and consent of the senate. The board may provide for the administration,

organization, and names of the institutions and entities in The University ofTexas System in such

a way as will achieve the maximum operating efficiency

of

such institutions and entities.

TEX

EDUC CODE ANN

§ 65.11 (West 2002). Furthermore, the Board is charged with setting campus

admission standards consistent with the role and mission of the institution and considering the

admission standards

of

similar institutions nationwide having a similar role and mission. Id.

§ 51.352(d)(4) (West 2012).

The Board has authority to promulgate and enforce such other rules and regulations for

the operation, control, and management

of

[the System] as the board may deem either necessary

or desirable. Id § 65.31(c) (West 2002). Pursuant to that authority, the Board has promulgated

rules concerning access to information by members of he Board.

3

Relevant to your inquiry, Board

Rules provide that Members of he Board ofRegents are to be provided access to such information

as in their individual judgments will enable them to fulfill their duties and responsibilities as

the Texas Supreme Court construes codified changes intended to be nonsubstantive according to their plain terms.

See e.g. Fleming Foods

of Tex.

Inc. v. Rylander

6 S.W.3d 278, 286 (Tex. 1999) ( We are compelled to conclude

that when, as here, specific provisions

of

a 'nonsubstantive' codification and the code as a whole are direct,

unambiguous, and cannot be reconciled with prior law, the codification rather than the prior, repealed statute must

be given effect. ).

3

See

The Univ.

of

Tex. Sys., Rules and Regulations

of

the Bd.

of

Regents, https://www.utsystem.edu/board

of-regents/rules ( Board Rules ).




(KP-0021)

Regents

of

the U.T. System. Board Rule 10101 §

3 1

(emphasis added). Board Rule 10801,

section 5.4 outlines a specific process by which a member of the Board or the Chancellor may

request information. The rule begins with a statement that the process is not intended nor will it

be implemented to prevent a member

of

the Board from access to information or data that the

Board member . . . deems is necessary to fulfill his or her official duties and responsibilities.

Board Rule 10801 § 5.4.1. The rule further provides:

Within 5 business days

of

the receipt of a Regent's information

request, the Chancellor's Office will provide the requesting Regent

with an estimated date for delivery or production. . . . In the rare

circumstance when there are concerns about a Regent's request, the

matter will be discussed with the Regent . . . .

f

concerns about a

request for information or data are unresolved following discussion

with the Regent, the matter will be presented to the Board as quickly

as possible For the purpose

of

a Board vote on this issue, the

vote

of

any two or more Regents in support

of

the request is

sufficient to direct that the request will be filled without delay.

Board Rule 10801 § 5.4.5.

Rules adopted by a university system's board of regents in the exercise of the board's

delegated authority have the force and effect of law. See Foley v. Benedict

55

S.W.2d 805, 808

(Tex. 1932) (orig. proceeding) (stating that rules

of

the board are of the same force as would be

a like enactment of the Legislature ). Courts will not interfere with rules of a board of regents of

a university in the absence ofa clear showing

of

arbitrary action or abuse ofdiscretion. Id at 808-

09. The rules of a board of regents of a university system, however, may not be contrary to the

constitution or statutes.

See R.R. Comm n v. Lone Star Gas Co.

844 S.W.2d 679, 685 (Tex. 1992)

(stating that a state agency's rules must be consistent with state law).

The Legislature has not expressly conferred upon regents the right to access documents in

possession of a university. However, [e]ach member of a governing board has the legal

responsibilities of a fiduciary in the management of funds under the control of institutions subject

to the board's control and management.

TEX Eouc

CODE

ANN

§ 51.352(e) (West 2012); see

also

Board Rule 10101 § 3 1 (requiring regents to become knowledgeable in some detail

regarding the operations, management, finances, and effectiveness

of

the academic, research and

public service programs of the U.T. System ). That the Legislature has charged the regents with

administration of the System, including its admissions process, and has imposed fiduciary

obligations upon the regents individually necessarily implies that regents may have access to

System information and records. f

Chavco

Inv.

Co.

v.

Pybus

613 S.W.2d 806, 810 (Tex.

App.

Houston [14th Dist.] 1981, writ refd n.r.e.) (holding that a director of a corporation has a right to

inspect the corporate books and records).

While we have found no Texas court decisions directly addressing the issue in the context

of

university regents, Texas attorneys general have consistently concluded that a member of a

governing body has an inherent right of access to the records

of

that body when requested in the

member's official capacity and for the member's performance

of

official duties. Tex.

Att'y

Gen.




(KP-0021)

Op. Nos. GA-0138 (2004) at 3, JC-0283 (2000) at

3-4,

JC-0120 (1999) at 3, JM-119 (1983) at 3

In addressing a request for audit information by a member

of

the board of trustees

of

a community

college district, this office explained that a member of that board has an inherent right of access

to such records, at least when he requests them in his official capacity. Tex. Att'y Gen. Op. No.

JM-119 (1983) at 3. The chancellor in that situation claimed that, as custodian ofrecords, he could

decline to furnish to ny requestor records that he determined were protected by law. Id at 1

Contrary to that claim, this office explained that a chancellor's ability to prevent a district trustee

from obtaining those records would create an anomalous situation in which a district employee

could prevent such trustee from discharging his official duties. Id at

3

Access to records is a necessary part

of

a board

member's

fulfillment of his

or

her duties.

While a governmental body may adopt reasonable procedures with regard to the timing, copying,

and process for review of records, a governmental body cannot adopt a policy that prevents a

member

of

the body from performing the duties of office. Tex. Att'y Gen. Op. No. JC-0120

(1999) at 3; see Tex. Att'y Gen. L0-93-069, at 5 ( we believe the legislature would have expressly

authorized the board to adopt rules limiting the board members' access to the board 's personnel or

investigative records if it had intended the board by majority vote to limit an individual member's

access to those records ). The Board 's own rules acknowledge this principle by providing regents

access to such information as in their individual

judgments

will enable them to fulfill their duties

and responsibilities as Regents of the U. T. System. Board Rule 10101 § 3

1

(emphasis added).

Thus, unless a state

or

federal law requires otherwise, a court would likely conclude that the Board

may not prohibit an individual regent from obtaining access to records in the possession of the

System that the regent believes are necessary to fulfill his duties as a regent.

Your second question asks whether the Chancellor has authority to prohibit the regent

from having access to or obtaining copies of records that the regent believes are necessary to

review to fulfill his duties as a regent. Request Letter at 1 You explain that the System has in

the past withheld some

of

the information you have requested because the documents included

student records that the Chancellor has determined are protected under the Family Educational

Rights and Privacy Act ( FERPA ). Id at

2

Although an assessment

ofFERPA's

application to

a given set ofrecords is beyond the scope of this opinion,

4

we note that FERPA also provides that

nothing in [FERP

A]

shall

be

construed to prohibit State and local education officials from having

access to student or other records which may be necessary in connection with the audit and

evaluation of any federally or State supported education program.

5

20 U.S.C.A. § 1232g(b)(5)

(West 2010).

4

See Letter from LeRoy S Rooker, Dir., Family Policy Compliance Office, U.S. Dep't of Educ., to

Katherine M Cary, Chief, Open Records Div., Office

of

the Tex. Att'y Gen. at 3-4 (July 25, 2006) (on file with the

Op. Comm.) (stating that the Office

of

the Attorney General

is

not generally authorized to obtain and review specific

documents to determine the applicability ofFERPA).

5

To the extent that some

of

the requested documents involve student records protected under FERPA,

FERPA requires that any data collected by [state educational authorities] shall be protected

in

a manner which will



Mr Wallace Hall - Page 5

(KP-0021)

S U M M R Y

Unless a state or federal law requires otherwise, a court

would likely conclude that the Board of Regents of the University

of

Texas System may not prohibit an individual regent from

obtaining access to records in the possession

of

the University that

are necessary to fulfill his duties as a regent.

A court would likely conclude that the Family Educational

Rights and Privacy Act does not allow a university to withhold

student records from state or local education officials that are

necessary in connection with an audit and evaluation

of

a state

supported education program.

CHARLES

E

ROY

First Assistant Attorney General

BRANTLEY STARR

Deputy Attorney General for Legal Counsel

VIRGINIA K HOELSCHER

Chair, Opinion Committee

Assistant Attorney General

Very truly yours,

KEN P XTON

Attorney General of Texas

not permit the personal identification of students and their parents by other than those officials, and such personally

identifiable data shall be destroyed when no longer needed for such audit, evaluation, and enforcement of Federal

legal requirements. 20 U.S.C.A. § 1232g(b)(3) (2010).

philip kingston's petition against the police and fire pension system

Documents