With Friends Like Jim Bob...
Developer Gary Bradley Is Sued by Old Pal as Finances Fade
Although their names are nowhere to be found in the pleadings filed in a lawsuit filed in Travis County District Court -- known as Circle C Land Corp. v. Phoenix Holdings Ltd. -- the case indicates a rift between the two high-profile entrepreneurs. And while Moffett, the chairman of New Orleans-based Freeport-McMoRan Copper & Gold, is rolling in gold -- having won a 15% stake in the gargantuan Busang deposit on the island of Borneo -- Bradley continues struggling to make ends meet.
At issue in the lawsuit, which was filed early last month, is $3.8 million in water and wastewater fees that the plaintiff insists are being improperly withheld by Phoenix Holdings. Bradley is a partner and president of Phoenix. The plaintiff, Circle C Land Corp. (CCLC), is a subsidiary of New Orleans-based FM Properties (FMP), whose managing partner is Freeport-McMoRan.
The suit alleges that CCLC is entitled to "$3,803,069.00 in MUD reimbursements currently available for distribution by the municipal utility districts for improvements." The Circle C Ranch development, located in southwestern Travis County, is served by several MUDs, which collect water and wastewater fees from local residents. The dispute came about because Phoenix bought part of the development from FMP last year. FMP alleges that Phoenix is taking fees from properties that were not part of that deal. For his part, Bradley says there is "no bad blood" between him and Freeport. He says, "I don't think anybody's mad or anything. If you sat down and read the contract, you'd say `I don't understand that either.'"
Moffett and Bradley began cooperating in 1992, when Bradley was trying to stave off foreclosure on the 3,200-acre Circle C Ranch, which he has been working on since 1981. First Gibraltar Bank of Dallas, representing the Resolution Trust Corp., wanted to foreclose on the property because Bradley and his partners defaulted on $118 million in development loans. Freeport-McMoRan stepped in and guaranteed $42 million in loans that allowed Bradley to stay solvent and avoid foreclosure on his Circle C project. With the loan guarantee, FMP (which was spun off from Freeport in 1992) paid $10,000 for an option to buy the bulk of the Circle C development, including 1,000 acres of commercial property.
With that deal, Bradley and Moffett's interests became one and the same. Bradley was instrumental in helping Freeport advance its agenda at the Texas Legislature. During the last session, Freeport's lobbyists were able to pass legislation that exempted their properties from Austin's environmental controls.
But while Bradley was able to escape Austin, he hasn't been able to escape his debts. In 1990, he was sued by First Madison Bank, which was seeking to recover more than $100 million in development loans and $15 million in personal loans that Bradley and his partner, James Gressett, received from the failed Gibraltar Savings Association of Houston. First Madison began pursuing Bradley after it bought some of Gibraltar's assets.
In May of 1995, a few days before Austin Senator Gonzalo Barrientos began
filibustering against a bill that would exempt Bradley's Circle C Ranch from
Austin's water quality laws, a federal district court judge in Houston ruled
that Bradley and Gressett were liable for
$50.7 million in loans that the pair got from Gibraltar. Bradley appealed that ruling to the Fifth U.S. Circuit Court of Appeals in New Orleans. But last September, the appeals court upheld the district court's judgment.
Despite the judgment, Bradley continued to work to regain control over the Circle C project, which he had surrendered to FMP in 1992 in exchange for the loan guarantees. In late 1995 FMP sold Circle C's residential lots to Bradley's group for $15.8 million. Then last September, FMP agreed to sell the 1,000 acres of commercial property at Circle C to Phoenix for $34 million. Bradley was supposed to make a $2 million non-refundable deposit by January 8 to allow the deal to go forward. But he didn't make the payment, and by missing the deadline, Bradley and his partners in Phoenix -- whom he has refused to identify -- lost $1 million in earnest money.
Bradley told the Chronicle that the reason for missing the deadline was
simple. He didn't want to move forward until the lawsuit against the Southwest
Travis County Water District that was filed by the city of Austin late last
year was resolved. The city's lawsuit, which is still pending, sought to
overturn HB 3193 -- the state law exempting
Circle C from Austin's water quality regulations.
"The city had filed a lawsuit," said Bradley. "We didn't want to go forward until the lawsuit is resolved. Somebody that has my financial problems to begin with isn't going to be able to get a lender interested with a lawsuit filed. The partners were ready to go, loans were in place, but the lawsuit interrupted all of that."
Bradley was hoping to lure a shopping center to Circle C. He was also planning to attract other commercial ventures to the property, which he believes offers a lower-cost development option when compared to land located within the city.
In addition to the loss of the $1 million in earnest money, there are other indications that Bradley is having financial trouble. Last April, he sold his 5.7% ownership interest in the NBA's Houston Rockets for an undisclosed amount to Rockets' owner Les Alexander, who was quoted by the Associated Press at the time as saying, "Gary wanted to sell."
Bradley's sale of the Rockets share is intriguing. In 1992, he tried to raise $80 million in order to buy the team from Houston car dealer Charlie Thomas. Bradley tried to close the deal with two different groups. One included embattled Houston torts lawyer John O'Quinn; the other included heavyweight boxer Evander Holyfield. Both deals fell apart. In 1993, still hoping to gain control of the team, Bradley went to court to try to block the sale of the Rockets to Alexander, a former bond trader.
Since 1992, Bradley has been gradually selling off his interest in the Rockets. That year, the AP reported that he owned 25% of the team. A year later, they reported his ownership at 20%. Last year, it was 5.7%. Could it be that Bradley has been selling off his interest in the team to raise cash to pay off his debts?
Bradley admits to having financial trouble ever since Gibraltar failed in 1988. "Since when is that news?" he asked. "Isn't being broke and being in a lawsuit with Freeport enough for today?"
Bradley says the federal suit against him is still "plodding along." He said his attorneys have appealed the case to the U.S. Supreme Court, but he adds, "I'm not optimistic about how that is going to turn out."
Regarding his sale of the Rockets, he said, "I was fortunate to win two championships. After I won two rings, I was trying to make as much money as I could." He said the Rockets "aren't getting any younger and the [Los Angeles] Lakers are going to be tough in the west. I thought it was the right time to get out."
Mike McKetta, a lawyer with the law firm Graves Dougherty Hearon & Moody, has represented Bradley for several years. But McKetta withdrew as Bradley's attorney in the current lawsuit because two lawyers in his firm are likely to be called as witnesses in the case. Asked if Bradley was having financial problems, McKetta said, "I started hearing those rumors in the late Eighties. I think he's done a fine job with that residential development out there."
Roy Minton, who is representing FMP in the case against Phoenix, also refused to discuss Bradley's finances, and said that the case at hand hinges on the contract between the two entities. "I think the contract is clear," said Minton, who expects depositions to begin some time next month. If the case is not settled, he believes the case could go to trial some time in September.
Bradley wants to avoid the courtroom. "Lawyers on both sides said `We just don't know what that [the language in the contract] means.' That's where we are," Bradley said. "I just hope we get it settled out. I hope not to have a trial."
As for his relationship with Moffett, Bradley said the mining magnate doesn't call for advice on the Busang project. But, he said, "We still talk every once in a while."
The next hearing on the lawsuit is April 3.