UPDATED -- City of Port Arthur, marketer battle over contract in trial

David Yates Feb. 7, 2008, 3:54am

Mark Sokolow

The city of Port Arthur and its economic development corporation can't seem to distinguish who's in charge. And now because the left hand hired a marketing consultant without the right hand's permission, the city's attorney has spent the last week in court.

The trial of the city of Port Arthur vs. Bill Diamond is slated to begin Tuesday, Feb. 5 in Judge Donald Floyd's 172nd Judicial Court and is expected to wrap up sometime in mid February.

The city sued Diamond in January 2005 after the Port Arthur Section 4A Economic Development Corporation paid him $30,000 for marketing services. The city claimed PAEDC had entered into a contract with Diamond that violated its bylaws.

On March 2, 2004, Port Arthur City Council had approved a resolution that allowed for the hiring of Diamond and agreed to pay him $30,000 for marketing service relating to the Business Park on Spur 93. The city said that was before it learned that Diamond had already entered into a contract with PAEDC on Feb. 25, 2004.

Deborah Echols, the city's assistant financial director, testified that Diamond had sent invoices to the PAEDC for his services before the resolution was approved in March 2004, and that Diamond had been paid $15,000 in unapproved funds.

"All of (PAEDC's) expenditures must be approved by council – otherwise, it's not a valid contract," Echols testified, adding that the PAEDC is only allowed to spend $5,000 without council's permission.

Shortly after passing the resolution, the city learned it had been paying Diamond for services "not authorized by city council," court documents stated.

According to the PAEDC Bylaws, all programs and projects of the EDC must be approved by the city council.

And five months later, on Aug. 10, 2004, City Attorney Mark Sokolow sent at letter to Diamond informing him that the PAEDC voted that he needed to return any monies paid to him for services rendered.

"On Dec. 11 you indicated … that you would cease doing work as to the marketing matters until you received proper authorization," Sokolow said in his letter to Diamond. "The City Council did not approve the marketing contract until March 2, 2004, and that was for services to be provided after March 15."

Diamond refused to give back the money and the city responded with a lawsuit.

On Aug. 3, 2005, Diamond fought back and filed a counter-suit against the city, claiming that he was still owed $70,242.31 for his marketing services.

"Diamond provided services to PAEDC … (and) PAEDC received a benefit," Diamond's counter-claim stated. "PAEDC accepted those services provided by Diamond and PAEDC became bound to pay Diamond his designated charges, which were reasonable and customary for such services."

The defense argues that there was a clause – which the city is simply ignoring – in Diamond's contract that permitted him to be paid for past services before the March 2004 resolution and fiscal year, so long as he billed the PAEDC and not the city.

According to testimony, PAEDC's former director, Ike Mills, had authorized Diamond to receive payment for his services.

However, the city argues all city expenses are paid through the same financial department, making PAEDC bills city bills.

Since both sides could not reach a settlement, the case will be decided before Jefferson County jurors.

Case No. E173-959

More News