A federal court has dismissed the bankruptcy case against Gerry Jetton and sent the case back to the state district court.
The ruling stipulates that while Jetton can re-file for bankruptcy, the case cannot further delay the original action regarding the University Gardens case.
New bankruptcy laws required the court to dismiss the case because Jetton had not filed an up-to-date tax return with the court.
“We think the court gave serious consideration to all sides. We agree with the ruling and look forward to having our case heard as soon as possible,” said SMU’s Vice President of Legal Affairs Leon Bennett.
The ruling came at the end of a long day in Judge Harlin D. Hale’s bankruptcy court. The Daily Campus was the only news organization to attend the hearing inside the Earle Cabell Federal Building.
The case was scheduled for 2 p.m., but the docket was reshuffled to be the final one of the day.
Before the hearing began, both sides met in the courtroom in an attempt to reach a pre-hearing agreement. The two differed on the terms of dismissal. SMU wanted a dismissal with bad faith whereas Jetton and his team wanted a standard dismissal. Neither side could agree to terms and the hearing finally got underway at 4:15 p.m.
While the case focused primarily on the bankruptcy hearing, there was also a running line of questioning regarding the ability of state district Judge Jay Patterson to fairly hear the case from the Jetton team.
John McElhaney, an attorney representing SMU, did most of the talking for the university. He opened the hearing by stating SMU was hoping to become the home of the George W. Bush Presidential Library, and the numerous delays in the case were beginning to become an issue.
“We are running short on time; we need to get this cleared up so we can be part of the race for the presidential library,” McElhaney said.
University controller John O’Connor spent 45 minutes on the witness stand being cross-examined by McElhaney, bankruptcy lawyer Joyce Lindauer representing Jetton and Vodicka.
O’Connor established that it is costing SMU between $200 and $250 thousand a month to keep University Gardens open. Vodicka later established that it is costing $13,000 for water, $12,000 for electricity, $10,000 for security, $3,500 for insurance and up to $3,000 for gas in total monthly costs. The remaining amount is split between property taxes and interest on the money SMU borrowed to purchase the complex.
SMU borrowed $7 million in 1999 and an additional $4.5 million in 2002 and is still paying interest on those amounts. The loans were taken out to replenish the cash on-hand operating funds that the university actually used for the purchase.
O’Connor was also asked about the intended use for the University Gardens land. He said the university plans to demolish the condos as soon as it can, but there are no specific plans as of yet.
He confirmed one of two plans has the presidential library on the site, but that other ideas include using it for sophomore housing or athletic fields.
Jetton spent an hour on the witness stand in an often contentious questioning with McElhaney.
The two went back and forth on the validity of statements given by Jetton on his monthly income. McElhaney produced documents and a graph with differing figures given by Jetton in various depositions and hearings. Jetton said he could not give a complete answer because an accountant was still working on his tax returns.
Jetton said he has no steady income and he is currently working “odd jobs,” and occasionally working as a hair stylist.
Under questioning from Lindauer, Jetton said he filed bankruptcy because he was afraid he was going to be kicked out of his condo.
He said he filed the notice of removal because he thought Judge Patterson had too many SMU connections to remain impartial. Judge Patterson operates a program where two SMU interns work in his office each semester and receive SMU credits.
Jetton moved into the condo in November 2005 and said he was unaware that the property was involved in litigation. He only became aware in January 2006 when a representative of SMU appeared outside his condo to serve him with a lawsuit. It was at that point Jetton began consulting with Vodicka.
Jetton also revealed SMU had offered to pay his creditors in order to remove him from the University Gardens litigation.
Jetton admitted to being behind in payments to Vodicka. He owes Vodicka $900 in past-due rent from June, July and August.
The most surreal moment of the day came when Vodicka took the stand and was questioned by McElhaney. It was during the questioning when Vodicka said the most recent payment from Jetton consisted of $200 and that was five weeks ago.
The hearing wrapped up shortly before 7 p.m. and Hale issued a ruling 15 minutes later. He remanded the case to the state court because of “clear evidence of forum shopping” and that the issues with Judge Patterson should be dealt with at the state court level — not in the bankruptcy court.
McElhaney said after the ruling he will try and have a hearing for summary judgment be scheduled as soon as he can.
Afterwards, Vodicka asked to clarify statements in a recent Daily Campus article. He said he couldn’t reveal the true amount he believes University Gardens is worth due to confidentiality agreements signed in mediation sessions. The $250 per square foot figure was not a sum he believed is the true worth, rather an example he used that one tenant received from SMU. Other tenants who were bought out only received $75 per square foot.
