Scripps NP Operating, LLC, a Wisconsin Limited Liability Company, Successor in Interest to Scripps Texas Newspapers, LP D/B/A Corpus Christi Caller-Times and the E.W. Scripps Company v. Terry Carter

• Court: Court of Appeals of Texas
• Decided: December 17, 2015
• Docket: 13-15-00506-CV
• Status: Published

Opinion

ACCEPTED 13-15-00506-CV THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS 12/17/2015 5:34:25 PM Dorian E. Ramirez CLERK

Oral Argument Requested

NO. 13-15-00506-CV FILED IN 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS 12/17/2015 5:34:25 PM IN THE COURT OF APPEALSDORIAN E. RAMIREZ FOR THE THIRTEENTH DISTRICT OF TEXAS Clerk

Scripps NP Operating, LLC, a Wisconsin Limited Liability Company, Successor in Interest to Scripps Texas Newspapers, LP d/b/a Corpus Christi Caller-Times, and The E.W. Scripps Company, Appellants, v. Terry Carter, Appellee

On Appeal from the 214th Judicial District Court, Nueces County, Texas (Hon. Jose Longoria, Presiding)

APPELLANTS’ BRIEF Jorge C. Rangel Paul C. Watler State Bar No. 16543500 State Bar No. 20931600 Jaime S. Rangel Andrew D. Graham State Bar No. 24033759 State Bar No. 24041002 Joseph M. Marcum JACKSON WALKER, LLP State Bar No. 12973000 2323 Ross Avenue, Suite 600 THE RANGEL LAW FIRM, P.C. Dallas, Texas 75201 615 N. Upper Broadway, Suite 2020 (214) 953-6000 / (214) 953-5822 fax Corpus Christi, Texas 78401 Email: pwatler@jw.com (361) 883-8500 / (361) 883-2611 fax Email: agraham@jw.com Email: jorge.c.rangel@rangellaw.com Email: jaime.rangel@rangellaw.com Email: joe.marcum@rangellaw.com

Attorneys for Appellants IDENTITY OF PARTIES AND COUNSEL

Appellants:

Scripps NP Operating, LLC, a Wisconsin Limited Liability Company, Successor in Interest to Scripps Texas Newspapers, LP d/b/a Corpus Christi Caller-Times, and The E.W. Scripps Company

Lead Appellate Counsel: Appellate Counsel: Jorge C. Rangel Paul C. Watler State Bar No. 16543500 State Bar No. 20931600 Jaime S. Rangel Andrew D. Graham State Bar No. 24033759 State Bar No. 24041002 Joseph M. Marcum JACKSON WALKER, LLP State Bar No. 12973000 2323 Ross Avenue, Suite 600 THE RANGEL LAW FIRM, P.C. Dallas, Texas 75201 615 N. Upper Broadway, Suite 2020 (214) 953-6000 / (214) 953-5822 fax Corpus Christi, Texas 78401 Email: pwatler@jw.com (361) 883-8500 / (361) 883-2611 fax Email: agraham@jw.com Email: jorge.c.rangel@rangellaw.com Email: jaime.rangel@rangellaw.com Email: joe.marcum@rangellaw.com

Appellee:

Terry Carter

Lead Appellate Counsel: Appellate Counsel: Rene Rodriguez Craig Smith State Bar No. 17148400 State Bar No. 18553570 LAW OFFICE OF RENE Law Offices of Craig S. Smith RODRIGUEZ 14493 S.P.I.D. Suite A; P.M.B. 240 433 S. Tancahua Street Corpus Christi, Texas 78418 Corpus Christi, Texas 78401 (361) 728-8037 (361) 882-1919 / (361) 882-2042 fax Email: csslaw@stx.rr.com

2 Email: rene.rodriguez@rdrlaw.com Appellate Counsel: Angelica E. Hernandez State Bar No. 24027279 AEH Law Firm 410 Peoples Street Corpus Christi, Texas 78401 (361) 726-0054 / (866) 759-9272 fax Email: aehlawfirm@yahoo.com

3 TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ......................................................... 2 INDEX OF AUTHORITIES .................................................................................... 6 STATEMENT OF THE CASE .............................................................................. 11 ISSUES PRESENTED ............................................................................................ 12 STATEMENT OF FACTS ..................................................................................... 16 A. Introduction............................................................................... 16 B. Chamber Treasurer Raises Questions about Carter ............ 17 C. Carter Takes Tape; Bentley Denied Access. ......................... 23 D. Issues presented to Chamber Board of Directors. ............... 24 E. Chamber Leaders and Members Publicly Petition for Special Meeting ......................................................................... 28 F. Lawsuits Filed; Carter Placed on Paid Leave ....................... 28 G. Chamber Adjustments to 2007 Financials ............................ 29 H. Carter Resigns from the Chamber ......................................... 29 I. Chamber Obtains Audit of 2007 Financials.......................... 30 J. Caller-Times Articles Report on the Chamber Events as They Unfold .............................................................................. 30 STANDARDS OF REVIEW ............................................................................. 35 A. Elements of Libel ...................................................................... 35 B. Traditional Summary Judgment Standard ........................... 36 C. No-Evidence Summary Judgment Standard ....................... 37 D. Standard of Review in Media Libel Cases ............................ 37 SUMMARY OF ARGUMENT ......................................................................... 38 ARGUMENT ...................................................................................................... 39 A. The Articles Are Not Defamatory of Carter ......................... 39 B. The Articles Are True or Substantially True ........................ 45 C. The Articles Are Non-Actionable Opinion........................... 56

4 D. The March 19, 20 and May 29, 31 Articles Are Privileged Fair Reports of Judicial Proceedings Under Common Law and Texas Statute. ..................................................................... 58 E. Article-by-Article Analysis Shows the Caller-Times Appellants Are Entitled to Summary Judgment. ................ 59 F. The Articles Were Published Without Negligence ............. 83 G. Carter Cannot Recover Exemplary Damages Because the Articles Were Published Without Actual Malice ................ 85 H. Tag-Along Tort Claims Also Fail ........................................... 90 I. Appellant E.W. Scripps Has No Publisher Liability ........... 91 PRAYER .................................................................................................................. 91 CERTIFICATE OF SERVICE ............................................................................... 93 CERTIFICATE OF COMPLIANCE .................................................................... 94 APPENDIX ............................................................................................................. 95

5 INDEX OF AUTHORITIES

Cases

Ackly v. Bartlesville Examiner-Enter., No. 06-CV-529-TCK-PJC, 2007 U.S. Dist. LEXIS 87897 (N.D. Okla. Nov. 29, 2007) ......................................................................................... 51

AMS Constr. Co. v. Warm Springs Rehab. Found., 94 S.W.3d 152 (Tex. App.—Corpus Christi 2002, no pet.) ...................54, 55

Assoc. Press v. Cook, 17 S.W.3d 447 (Tex. App—Houston [1st Dist.] 2004, no pet.) .............56, 58

Belo Corp. v. Publicaciones Paso del Norte, S.A. de C.V., 243 S.W.3d 152 (Tex. App.—El Paso 2007, pet. denied) ............................. 38

Bentley v. Bunton, 94 S.W.3d 561 (Tex. 2002) ....................................................................53, 57, 58

Bich Ngoc Nguyen v. Allstate Ins. Co., 404 S.W.3d 770 (Tex. App.—Dallas 2013, pet. denied)............................... 56

Burbage v. Burbage, 447 S.W.3d 249 (Tex. 2014) ........................................................................37, 86

Church of Scientology Int’l v. Time Warner, Inc., 903 F. Supp. 637 (S.D.N.Y. 1995), aff’d, 238 F.3d 168 (2d Cir. 2001) ................................................................................................................... 87

City of San Antonio v. Pollock, 284 S.W.3d 809 (Tex. 2009) .............................................................................. 55

Coastal Transp. Co. v. Crown Cent. Pet. Corp., 136 S.W.3d 227 (Tex. 2004) .............................................................................. 55

6 Coronado v. Freedom Commc’ns, Inc., No. 13-13-00525-CV, 2015 Tex. App. LEXIS 10128 (Tex. App.—Corpus Christi, Sept. 30, 2015, no pet.) (mem. op.)........................ 58

Danevang Farmers Coop. Soc’y v. Indeco Prods., Inc., No. 13–04–445–CV, 2006 WL 2885058 (Tex. App.—Corpus Christi Oct. 12, 2006, no pet.) (mem. op.) ..................................................... 55

Dolcefino v. Randolph, 19 S.W.3d 906 (Tex. App.—Hou. [14th Dist.] 2000, pet. denied) ...................................................................................................38, 49, 89

Farias v. Garza, 426 S.W.3d 808 (Tex. App.—San Antonio 2014, pet. filed) ........................ 61

Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809 (Tex. 1976) ..................................................................84, 85, 86

Freedom Commc’ns Corp. v. Salinas, No. 13-13-00702-CV, 2015 Tex. App. Lexis 10129 (Tex. App.—Corpus Christ, Sept. 30, 2015, no pet.) ............................................. 42

Freedom Newspapers v. Cantu, 168 S.W.3d 847 (Tex. 2005) ........................................................................89, 91

Global Relief Found. v. New York Times Co., 390 F.3d 973 (7th Cir. 2004) .................................................................51, 52, 57

Hancock v. Variyam, 400 S.W.3d 59 (Tex. 2013) ....................................................................40, 41, 45

Hearst Corp. v. Skeen, 159 S.W.3d 633 (Tex. 2005) ........................................................................53, 90

Hearst Newspaper P’ship, LP v. Macias, 283 S.W.3d 8 (Tex. App.—San Antonio 2009, no pet.) ............................... 48

7 Henry v. Nat’l Ass’n of Air Traffic Specialists, Inc., 836 F. Supp. 1204 (D. Md. 1993), aff’d, 34 F.3d 1066 (4th Cir. 1994) ................................................................................................................... 87

Holly v. Cannady, 669 S.W.2d 381 (Tex. App.—Dallas 1984, no pet.) ...................................... 85

Hotze v. Miller, 361 S.W.3d 707 (Tex. App.—Tyler 2012, pet. denied) ..........................38, 39

Huckabee v. Time Warner Entm’t Co. L.P., 19 S.W.3d 413 (Tex. 2000) .........................................................................passim

KTRK Television, Inc. v. Robinson, 409 S.W.3d 682 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) ......................................................................................................... 43, 45

Laidlaw Waste Systems (Dallas) v. City of Wilmer, 904 S.W.2d 656 (Tex. 1995) .............................................................................. 55

Liberty Lobby, Inc. v. Dow Jones & Co., 838 F.2d 1287 (D.C. Cir. 1988)......................................................................... 88

In re Lipsky, 460 S.W.3d 579 (Tex. 2015) ........................................................................45, 53

Lohrenz v. Donnelly, 350 F.3d 1272 (D.C. Cir. 2003)......................................................................... 90

Main v. Royall, 348 S.W.3d 381 (Tex. App.—Dallas 2011, no pet.) ....................38, 39, 41, 46

McIlvain v. Jacobs, 794 S.W.2d 14 (Tex. 1990) .......................................................................... 46, 49

Means v. ABCABCO, Inc., 315 S.W.3d 209 (Tex. App.—Austin 2010, no pet.) ..................................... 61

8 Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990)..........................................................................................57, 58

Musser v. Smith Protective Serv., Inc., 723 S.W.2d 653 (Tex. 1987) .............................................................................. 41

Neely v. Wilson, 418 S.W.3d 52 (Tex. 2013) .........................................................................passim

New Times, Inc. v. Isaacks, 146 S.W.3d 144 (Tex. 2004) ..................................................................40, 41, 45

NW Commc’n of Tex., Inc. v. Power, No. 05-99-01641-CV, 2000 WL 1036327 (Tex. App.—Dallas July 28, 2000, pet. denied) .........................................................................44, 47

Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640 (Tex. 1995) .............................................................................. 37

Rogers v. The Dallas Morning News, Inc., 889 S.W.2d 467 (Tex. App.—Dallas 1994, writ denied) .............................. 91

Ryland Group, Inc. v. Hood, 924 S.W.2d 120 (Tex. 1996) ..................................................................46, 54, 55

Scripps Tex. Newspaper, LP v. Carter, No. 13-09-00655-CV, 2012 WL 5948955 (Tex. App.—Corpus Christi Nov. 21, 2012, pet. denied) (mem. op.) ............................................ 37

Scripps Tex. Newspapers, L.P. v. Belalcazar, 99 S.W.3d 829 (Tex. App.—Corpus Christi 2003, pet. denied) ................. 85

Shipp v. Malouf, 439 S.W.3d 432 (Tex. App.—Dallas June 24, 2014, no pet.) ....................... 45

Shunta v. Westergren, No. 01-08-00715-CV, 2010 WL 2307083 (Tex. App.—Houston [1st Dist.] June 10, 2010, no pet.) .................................................................... 91

9 Stewart v. Sanmina Texas L.P., 156 S.W.3d 198 (Tex. App.—Dallas 2005, no pet.) ...................................... 55

Stone v. Midland Multifamily Equity REIT, 334 S.W.3d 371 (Tex. App.—Dallas 2011, no pet.) ...................................... 55

Tex. Monthly, Inc. v. Transamerican Nat. Gas Corp., 7 S.W.3d 801 (Tex. App.—Houston [1st Dist.] 1999, no pet.) .................... 37

Vice v. Kasprzak, 318 S.W.3d 1 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) ............................................................................................................... 44

Wal-Mart Stores, Inc., 313 S.W.3d 837 (Tex. 2010) (per curiam) ........................ 44

Statutes

Tex. Civ. Prac. & Rem. Code §§ 73.002(a) .......................................................... 59

Tex. Civ. Prac. & Rem. Code § 73.002(b)(1)(A) ................................................. 79

Tex. Civ. Prac. & Rem. Code § 73.002(b)(1)(D) ...........................................78, 81

Other Authorities

Restatement (Second) of Torts § 611 (1977) ....................................................... 59

Tex. R. Civ. P. 166a(c) ........................................................................................... 37

Tex. Const. art. I, § 8.............................................................................................. 75

Tex. R. App. P. 9.4(i)(2)(B).................................................................................... 95

U.S. Const. amend. I .................................................................................57, 75, 90

10 STATEMENT OF THE CASE

Nature of the Case Appellee Terry Carter, former president and CEO of the Corpus Christi Chamber of Commerce, filed suit against Appellants Scripps NP Operating, LLC, a Wisconsin Limited Liability Company, successor in interest to Scripps Texas Newspapers, LP d/b/a Corpus Christi Caller-Times, and the E.W. Scripps Company alleging libel and related non-libel claims based on 25 articles published in the newspaper in 2008.1

Trial Court Disposition Appellants filed their second motion for final summary judgment2 on all claims against them and Carter responded.3 The trial court denied the summary judgment motion.4 Appellants timely perfected this interlocutory appeal pursuant to Tex. Civ. Prac. & Rem. Code § 51.014(a)(6).5

1 CR801-16. 2 CR41–1225. 3 2CR1228–6CR12703. 4 6CR12748. 5 6CR12743–747. 11 ISSUES PRESENTED

Did the trial court err in denying Appellants’ second motion for final

summary judgment?

1. Did the trial court err because the Articles were not defamatory of Carter?

2. Did the trial court err because there is no evidence that the Articles were defamatory of Carter?

3. Did the trial court err because the Articles were substantially true?

4. Did the trial court err because there was no evidence that the Articles were not substantially true?

5. Did the trial court err because the Articles are non-actionable opinion?

6. Did the trial court err because there was no evidence that the Articles were not opinion?

7. Did the trial court err because certain Articles were privileged fair reports of judicial proceedings?

8. Did the trial court err because there was no evidence that certain Articles were not privileged fair reports of judicial proceedings?

9. Did the trial court err because the Articles were published without negligence?

10. Did the trial court err because there was no evidence that the Articles were published with negligence?

12 11. Did the trial court err in denying summary judgment on Carter’s exemplary damage claim because the Articles were published without actual malice?

12. Did the trial court err in denying summary judgment on Carter’s exemplary damage claim because there was no evidence that the Articles were published with actual malice?

13. Did the trial court err in denying summary judgment on Carter’s non-libel claims?

14. Did the trial court err in denying summary judgment because there was no evidence to support Carter’s non-libel claims?

15. Did the trial court err in denying summary judgment to Appellant E.W. Scripps Company because it did not publish the Articles?

16. Did the trial court err in denying summary judgment to Appellant E.W. Scripps Company because there was no evidence that it published the Articles?

13 REFERENCES TO THE RECORD

CR301 Volume 1, Clerk’s Record (filed October 28, 2015), page 301

2CR1268 Volume 2, Clerk’s Record (filed October 28, 2015), page 1268 (Volume number included only in citations to volumes 2-6).

14 STATEMENT REGARDING ORAL ARGUMENT

Appellants request oral argument because it will assist the Court in a

case which implicates freedom of speech and press. Although Appellants

believe the legal principles entitling them to summary judgment are well-

settled and readily applied here, oral argument is appropriate as this libel

suit impacts the role of the news media in reporting on leadership

controversies at institutions vital to the economic well-being of the

community.

15 STATEMENT OF FACTS

A. Introduction

In early 2008, the treasurer and two executive committee members of

the Corpus Christi Chamber of Commerce raised concerns over the

financial stewardship and management of the organization by Terry

Carter, president and CEO.6

The questions arose in the course of the executive committee

considering an annual raise and bonus for Carter. Because the controversy

about Carter and the Chamber was newsworthy and a matter of public

concern, the Caller-Times covered it in 24 news articles and an editorial

(collectively, the “Articles”), published February 15, 2008 through June 13,

2008.7 The Articles are the basis of Carter’s libel suit against the Caller-

Times Appellants.8

6 CR299–308. 7 See CR461-62, CR523, CR535-37, CR566-67 (copies of the Articles attached to the reporters’ affidavits). The Articles are also found at Appendix Tab 1. 8 In his petition and discovery responses, Carter identified certain statements from the

Articles as allegedly containing defamatory, false statements about him. CR669-96; CR807-09. Appellants moved for summary judgment on all such Articles and statements. 16 B. Chamber Treasurer Raises Questions about Carter

1. Chamber leadership conducts Carter’s annual review.

In January 2008, the Chamber asked its executive committee to

conduct Carter’s 2007 annual performance review.9 That month, Carter

presented financials to the Chamber showing a profitable year in 2007. 10

Chamber chairman Freddie Martinez11 requested treasurer Damon

Bentley, a local business owner, to review the 2007 financials in connection

with Carter’s request for a raise, performance bonus, and contract

extension.12

That review led Bentley and executive committee members Judy

Hawley and Sylvia Whitmore13 to demand an emergency executive

committee meeting to address issues related to the 2007 financials.14

9 Mtg. minutes, CR116; Hawley Deposition (hereafter “Dep.”), CR1006–07. 10 Martinez Dep., CR1047–48.

11 Martinez, a local business owner, had served on the Chamber board since 2005 and

as chairman since March 2007. Martinez Dep., CR1037–38. 12 Martinez Dep., CR1043, 1048–49; Bentley letter to Chamber board, CR301; Bentley

Dep., CR842–44; Trevino Dep., CR1125. Bentley’s letter to Chamber board is also found at Appendix Tab 2. 13 Hawley is a former state representative, port commissioner, Chamber board member,

and Chamber executive committee member. Hawley Dep., CR1004–06. Whitmore is a former chair of the Chamber. Whitmore Dep., CR1192–93. 14 Martinez Dep., CR1040, 1049–50, 1057.

17 2. Financials linked to Carter’s performance review are questioned.

On February 15, Bentley and others addressed serious financial and

management concerns about Carter to the executive committee.15 The

meeting was audio-recorded.16

Bentley stated that Carter’s performance measures were “directly

linked to the performance of the [2007] financials” but that a salary deferral

by Carter in 2007 altered the Chamber financials by “minus $19,992.”17

Bentley also revealed that Carter had asked a senior staff member “to

forego his pay in October because we were under a financial strain.”18

Bentley summarized that the “big picture is we were presented” financial

statements reflecting $40,000 in net income for 2007 but which was really

“zero or a minus, and maybe even a really big minus.”19

Bentley said he was concerned that Chamber expenses were charged

to the Chamber’s foundation, that money from the building fund was

15 Tape, CR324; Bentley Dep., CR 850-51, 854-55; Martinez Dep., CR1041, 1054. 16 Tape, CR324-25; transcript of tape, CR705-94; Martinez Dep., CR1041, 1052; Trevino Dep., CR1127-29. 17 Transcript, CR717-19; Trevino Dep., CR1121-22.

18 Transcript, CR 721-23; Trevino Dep., CR1124.

19 Transcript, CR721-23, 732-33, 744-46.

18 shifted to the foundation, and that the Chamber accrued 2008 membership

dues in year 2007.20 Bentley discussed that special events were accounted

for “off the books” and reported to the board only on a net basis.21 Bentley

stated that checks were not signed by the treasurer as required by the

Chamber’s bylaws.22

Carter’s responsibility for the Chamber’s financial performance and

the link to his bonus had been provisions of his employment since he was

hired in 2004.23 His employment contract vested him with responsibility

for the Chamber’s finances and called for a “performance” bonus “based

on the attainment of financial goals for the Chamber.”24 Although Carter’s

contract was later amended as to his bonus,25 his annual reviews

consistently reflected a link between the financial performance of the

Chamber and his compensation.26 Whitmore, Hawley, Martinez, and

20 Transcript, CR724-33; Trevino Dep., CR1123-24. 21 Transcript, CR734-36. See also Bentley’s PowerPoint, CR168, 171; Carter Dep., CR901;

FY2007 audit report, CR252; Martinez Dep., CR1039; Hawley Dep., CR1011-12, 1017. Bentley’s PowerPoint is also found at Appendix Tab 3. 22 Transcript, CR738; Chamber bylaws, CR292.

23 Carter’s contract, CR122; Carter Dep., CR879.

24 CR125, 130; see also CR133-36; Carter Dep., CR909.

25 CR134, 136.

26 Carter’s performance reviews, CR137-45.

19 Bentley understood that Carter’s bonus was based on the Chamber’s

financial performance,27 and Carter acknowledged the connection.28

Bentley attributed the 2007 financial issues to Carter, stating, “I’ve

lost trust in him, and I don’t think he should be the CEO of the Chamber of

Commerce.”29 Whitmore, Hawley and Martinez also recognized the matter

as an issue of trust between Carter and the Chamber leadership.30

Bentley recommended an audit for 2007 and other executive

committee members agreed.31 Chair-elect Gonzalez summarized: “I think

all of us in this room agree that we have to have the financials correct, and

they have to be reviewed.”32

Toward the end of the meeting, Darrell Thompson, the Chamber’s

outside CPA, was asked whether the concerns endangered the Chamber

27 Whitmore Dep., CR1194, 1204-05; Hawley Dep., CR1010; Martinez Dep., CR1044, 1048; Bentley Dep., CR847, 851; transcript, CR717-19; mtg. minutes, CR116. 28 Carter Dep., CR951-53; Carter and Waller emails, CR152; Carter and Martinez emails,

CR268. 29 Transcript, CR743-47, 749-51.

30 Id.; see also Whitmore letter, CR314; Whitmore Dep., CR1200; Hawley Dep., CR1009.

Whitmore’s letter is also found at Appendix Tab 6. 31 Transcript, CR747, 749, 758; Carter Dep., CR893; Bentley Dep., CR862-63; Whitmore

Dep., CR1194-96, 1202; Hawley Dep., CR1011. 32 Transcript, CR747.

20 foundation’s 501(c)(3) nonprofit status.33 Thompson explained the main

concern would be “individual inurement” where an individual “benefit[s]

personally from a donation” made to a nonprofit organization.34 Applied

to the Chamber, Thompson said: “Now, if I say, Terry, if you’ll keep us on

budget, I’ll give you a share of whatever the bottom line is. If your bonuses

are going to be based on how well you do, which it is for us, okay, you may

have a problem.”35

3. Carter takes part in effort to remove Hawley and Whitmore.

Before the February 15 meeting began, Carter took part in an effort to

remove Hawley and Whitmore from the executive committee. Carter

asked Bentley to wait outside the meeting in a hallway.36 Carter and

Martinez then met with Hawley and Whitmore to inform them that they

were no longer eligible to serve on the executive committee, and thus,

33 Transcript, CR791-92. 34 Transcript, CR792. 35 Transcript, CR792-93; see also Thompson Dep., CR1141, 1147, 1152-53. 36 Carter Dep., CR891-92; Bentley Dep., CR861. 21 could not take part in its recommendation to the board regarding Carter’s

contract and compensation.37

Despite this, Whitmore and Hawley decided to stay and assist

Bentley with his report.38

4. Carter participates in contentious meeting.

Carter’s participation in the meeting was contentious.39 As Chamber

employee Lucy Reta would tell Caller-Times’ reporter Elvia Aguilar, she

heard Carter and another man shouting from the meeting room.40

Whitmore testified that Carter got loud and was yelling at Bentley.41

Chairman Martinez stated “voices were raised and volume levels

increased.”42 Whitmore testified that Carter stood over her, pointed his

finger at her, and spoke loudly to her.43 Bentley testified that Carter “blew

37 Carter Dep., CR880-81, 891, 902, 913-14; Martinez Dep., CR1040-41; transcript, CR752; Whitmore Dep., CR1197, 1206; Hawley Dep., CR1007-08. 38 Transcript, CR709-17; Hawley Dep., CR1008.

39 Transcript, CR711-13, 751; Hawley Dep., CR1009; Trevino Dep., CR1129.

40 Reta Dep., CR1096-97, 1099-1100.

41 Whitmore Dep., CR1197-98, 1203-04, 1209.

42 Martinez Dep., CR1041.

43 Whitmore Dep., CR1209.

22 up on him” and had an aggressive attitude and body language.44 Carter

was eventually asked to leave so that Bentley, Hawley, and Whitmore

could present their concerns to Martinez and Gonzalez.45

C. Carter Takes Tape; Bentley Denied Access.

Carter admits he took a tape recording of the meeting from the

building.46 Bentley made several attempts to obtain the tape without

success.47 Indeed, the tape was not produced until ordered released by the

trial court after Bentley filed a lawsuit.48 Bentley was also told by Chamber

staff that he must go through Carter to request financial information. 49

44 Bentley Dep., CR849-50. Carter, a former U.S. Army colonel (CR703), called Bentley “lieutenant commander,” indicating he outranked Bentley in military hierarchy. See Lieutenant Commander, Wikipedia, https://en.wikipedia.org/wiki/Lieutenant_commander (last visited July 6, 2015). Carter was known for an “aggressive” leadership style. Martinez Dep., CR1047. 45 Transcript, CR714-15; Martinez Dep., CR1041.

46 Carter Dep., CR896; see also Bentley Dep., CR850; Martinez Dep., CR1042, 1045;

Whitmore Dep., CR1198, 1204; Bentley letter to board, CR301. 47 Id.; see also Carter Dep., CR897-98; Bentley letter to board, CR301-02, 314, 316-20;

Martinez Dep., CR1052-53. 48 CR360-61.

49 Bentley Dep., CR861-62; see also Waller Dep., CR1172.

23 D. Issues presented to Chamber Board of Directors.

Two days after the executive committee meeting, Carter sent a letter

to the Chamber board giving his account of the issues.50

On February 20, the Chamber board met to consider the matter.51

Carter himself described it as an “issue raised regarding misappropriation

of funds.”52 Carter advised the board that Chamber CPA Thompson no

longer wanted the engagement “due to high risk.”53 A board member

questioned Carter if a complete audit had been performed for the past year

and he acknowledged it had not—only a review.54

Bentley addressed the board on “irregularities in financials he found

in the month of December” and stated that the “issue was regarding the

performance of the CEO.”55 He made a PowerPoint presentation regarding

his concerns and findings.56 Among other things, Bentley explained that

50 CR240-43. Carter’s letter to the Chamber board is also found at Appendix Tab 5. See also Bentley Dep., CR859; Carter Dep., CR882; Trevino Dep., CR1131. 51 Mtg. minutes, CR117-20.

52 CR119 (emphasis added).

53 Id.

54 Id.; see also Thompson Dep., CR1138, 1141, 1147.

55 Id.; see also Martinez Dep., CR1042.

56 CR156-72. Bentley’s PowerPoint to Chamber board is also found at Appendix Tab 4.

Mtg. minutes, CR119; Bentley Dep., CR858-59. 24 the building fund had been used without board approval, which was

potentially a “serious problem” for 501(c)(3) status according to CPA

Thompson.57 Bentley’s presentation also included a “summary of 2007

adjustments in which the ‘original NOI [net operating income]’ of positive

$40,425 compared to ‘adjusted NOI’ of negative $61,782 produced a

‘$102,207 swing.’”58

Martinez presented the executive committee’s recommendation to

“postpone review of CEO until annual audit of finance is complete to

include 2006-07.”59 The board then voted to conduct the audit.60

Bentley believed Carter’s February 17 letter to the board61 had

“misrepresented both the intent and the facts presented in the treasurer’s

report” at the board meeting and he responded with his own letter to the

board on February 26, 2008.62 In his letter, Bentley described discovering a

57 Bentley’s PowerPoint, CR162-64; Thompson Dep., CR1155-56; Carter Dep., CR883-84. 58 Id.; see also Bentley letter to board, CR304-07; Bentley Dep., CR862. 59 Mtg. minutes, CR119. 60 Id.; Trevino Dep., CR1130. 61 Carter letter to board, CR240-43. 62 CR299-08; Bentley Dep., CR859. 25 “crucial problem with the use of building fund dollars to supplement the

Chamber’s operating expense account.”63 Bentley wrote:

It is undeniable the financials for 2007 as presented to the executive committee and board are inaccurate, inconsistent with the process used in previous years and a misrepresentation of the Chamber’s bottom line.64

Bentley stated that he “suspected irregularities in booking expenses

and revenues” had “created the ‘Net Operating Income’ for 2007” and that

“these irregularities had the effect of justifying a performance bonus under

[Carter’s] contract.”65

Bentley then identified three main areas of concern in the Chamber’s

2007 financials:

 Carter deferred his pay for November and December 2007 without booking it as an expense, resulting in $19,992.00 gain for 2007.66

 Carter used building fund dollars to pay for certain Chamber expenses, resulting in $18,312.00 gain for 2007. The “CEO should have never shifted the building fund

63 CR301; Bentley Dep., CR845. 64 CR302-03.

65 CR303.

66 CR303-04; see also email from Waller to Carter, CR154-55; Waller Dep., CR1168-69,

1172. 26 from the Chamber books to the foundation books for the use of supplementing the Chamber’s financials.”67

 The Chamber accrued January 2008 membership renewals in 2007, resulting in $63,903.00 gain for 2007.68

On February 28, former Chamber chair Sylvia Whitmore sent a letter

to the board stating that Bentley’s “concerns are very credible, and

appeared to be mostly ignored.”69 She also stated that Carter’s letter to the

board “gloss[ed] over financial irregularities and the declining membership

numbers.”70 Whitmore also expressed concerns with the “interpretation

that I am not officially a member of the executive committee,” “denying the

treasurer access to critical information and advise (sic) of financial

professionals,” and “refusal of Chamber staff to cooperate . . . and refusal

of Chamber CEO to release the tape of the Executive Committee

meeting[.]”71

67 CR304; see also FY2007 adjustments, CR179-83; FY2007 audit report, CR244-66; Whitmore Dep., CR1195; Carter Dep., CR895, 899; Thompson Dep., CR1145. 68 CR303-05.

69 CR314. Whitmore’s letter also appears at Appendix Tab 7.

70 Id.

71 Id.; Whitmore Dep., CR1202, 1205.

27 E. Chamber Leaders and Members Publicly Petition for Special Meeting

Carol Scott and other Chamber members eventually petitioned the

Chamber for a special meeting to provide more information to its

members.72 For example, Scott experienced difficulty obtaining accurate

membership lists to assess the declining membership and the number of

signatures needed for the petition.73

On March 3, 2008, a news conference was attended by 11 former

chairs of the Chamber and 60 Chamber members to obtain signatures and

support for the petition asking the Chamber to address financial and other

concerns.74

F. Lawsuits Filed; Carter Placed on Paid Leave

On March 18, Bentley filed a petition in the 214th District Court and

was granted a temporary restraining order preventing Carter and the

Chamber from destroying the tape recording of the February 15 meeting.75

72 Aguilar Aff., CR458; Scott Dep., CR1112. Aguilar’s Affidavit is also found at Appendix Tab 5. 73 Scott Dep., CR1107-09; Whitmore Dep., CR1199; Hawley Dep., CR1016, 1018. From

Dec. 31, 2006 to Mar. 31, 2008, the Chamber lost 257 members. Compare CR215-39 with CR184-214. 74 Aguilar Aff., CR457-58; CR 472-75, 515-17; Scott Dep., CR1112, 1114-15.

75 CR337-40.

28 The next day, Carter filed this lawsuit seeking damages against the

Chamber, Bentley, Hawley, Whitmore, the Caller-Times and others.76

On March 26, at a special meeting of the Chamber board, Carter was

placed on administrative leave with pay.77

G. Chamber Adjustments to 2007 Financials

On March 25, 2008, the Chamber adjusted its 2007 financials from

those presented in January.78 The adjustment changed the positive

$40,425.48 net operating income reported in January 2008 to a negative

$95,377.76 NOI, reflecting a total decrease in 2007 NOI of $135,803.24.79

Adjustments were made for special events, accrual of Carter’s salary from

2007 and shifting back money removed from the building fund.80

H. Carter Resigns from the Chamber

After reaching a severance agreement with the Chamber, Carter

resigned effective April 30, 2008.81

76 CR341-53. 77 Aguilar Aff., CR457; CR481; Chamber’s interrog. resp., CR799.

78 FY2007 adjustments, CR179-83; Thompson Dep., CR 1139, 1149-50.

79 Id.

80 Id.; see also CR180-83; Waller Dep., CR1171, 1173-74.

81 Martinez Dep., CR1046, 1053-54, 1061; Carter’s resignation CR641-45; Carter Dep.,

CR885-86, 969. 29 I. Chamber Obtains Audit of 2007 Financials

On August 27, 2008, the Chamber retained an independent CPA to

audit the financial statements for the year ended December 31, 2007.82

On November 12, 2008, the CPA issued his report, which included

the following findings:

 “The misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements as a whole.”83

 Various expenditures of the building fund totaling $95,982.00 were “a breach of the intended purpose of the funds.”84

 Various weaknesses on internal control over financial reporting, including a “very high possibility of management override.”85

J. Caller‐Times Articles Report on the Chamber Events as They Unfold

1. Community leader tips newspaper

On the morning of February 15, 2008, Caller-Times reporter Jaime

Powell received a news tip about the Chamber from Ruben Bonilla,

82 CR258. 83 CR260-65. 84 CR265. 85 CR264. 30 chairman of the Port of Corpus Christi.86 Bonilla was a well-known and

highly respected local attorney and community leader who had been a

reliable source of information during the years for Powell.87 Veteran

business editor Tom Whitehurst assigned business reporter Elvia Aguilar

to assist Powell with investigating the matter.88

2. Newsworthy developments reported

Whitehurst and other editors and reporters pursued the story

because it was “newsworthy in that it pertained to one of our community’s

most important local organizations, the Chamber of Commerce, and its

CEO and president, Carter.”89 “The fact that high-ranking Chamber

officials were raising questions regarding the CEO and president of the

Chamber made the matter newsworthy.”90 The news was “published in

86 Whitehurst Aff., CR617-18; Powell Aff., CR585; Powell Dep., CR1088. 87 Powell Aff., CR 585.

88 Whitehurst Aff., CR 617-18; Averyt Aff., CR621-22; Aguilar Dep., CR820.

89 Id.; see also Powell Aff., CR587; Aguilar Aff., CR459. Publisher Birmingham was not

involved in deciding news coverage about the controversy. Birmingham Dep., CR873- 74; Averyt Dep., CR836. 90 Whitehurst Aff., CR618-19.

31 good faith for the purpose of providing information to the public on a

matter of public interest and concern.”91

The Articles informed viewers of the controversy involving Carter

that erupted among leadership of the Chamber.92 The Caller-Times

reported allegations by Bentley and others; the newspaper itself did not

originate any allegations about Carter.93

3. Articles balanced with Carter’s explanations

The Articles included numerous items favorable to Carter. For

example, in the first Article published February 15 the newspaper

described the “financial questions” involving Carter “as business practice-

related, not improprieties.”

The Articles also provided readers with Carter’s version of events in

context. For example, the February 27 Article informed readers in detail

about Carter’s February 17 letter to the Chamber board that disputed

Bentley’s assertions and provided his own explanation, including that:

91 Carter concedes the Articles “involved a public matter.” CR415; CR805; see also Trevino Dep., CR1123; Whitehurst Aff., CR 618-19; Averyt Aff., CR622. 92 See Aguilar Aff., CR454-60; Averyt Aff., CR 620-23; Birmingham Aff., CR624-28;

Cavazos Aff., CR518-22; Chirinos Aff., CR 530-34; Contreras Aff., CR636-40; Jimenez Aff., CR 562-65; Malan Aff., CR 608-11; Powell Aff., CR 584-88; Reta Aff., CR451-53; Whitehurst Aff., CR 616-19; Wilson Aff., CR 612-15. 93 Id.

32  “Carter, in a Feb. 17 letter to board members, said he deferred part of his salary in 2006 and 2007 for tax purposes.”

 Carter said in his “letter that the failure to record his salary deferral as a 2007 expense was a bookkeeping error.”

 Carter’s “letter says including the January 2008 revenue was consistent with the chamber’s accounting method approved by the board in September 2004.”

 Carter’s letter “says he discussed the move with Thompson and Bentley before shifting the funds” between the Chamber and the foundation.

 “The foundation has operated with overhead provided by the chamber and chamber had never been reimbursed for these expenses, according to Carter’s letter.”94

The March 20 Article likewise presented Carter’s position at length in

reporting on the filing of this lawsuit by him, including that:

 Carter “was seeking damages against Bentley, the chamber, the Caller-Times and others.”

 Carter accused the Caller-Times Appellants of “false and defamatory” statements “without regard to the truth.”

 Carter “disputes Bentley’s assertions that Carter deferred a portion of his salary and transferred funds among accounts in manner that showed a surplus when according to Bentley the chamber should have shown a deficit.”

94 CR241-43. 33  “Carter also disputes Bentley’s statements that Carter’s bonus was linked to the chamber’s financial performance.”

 Carter disputed that his “shifting of funds among chamber accounts jeopardized the chamber foundation’s non-profit status.”

 Carter “offers justification for the Chamber accounting method questioned by Bentley.”

 Carter’s position was that “his bonus would not have been related to any Chamber condition or status.”95

At all times during the editing process, Whitehurst directed the

reporters to attempt to reach Carter and other Chamber officials for

comment.96 Carter, his attorney, or his lawsuit were quoted or cited 21

times in the Articles.97 Carter declined to comment or to return calls at least

10 times.98 Aguilar alone attempted without success to contact Carter on

eight separate occasions, and twice she spoke to his attorney, who declined

to comment.99 Moreover, Caller-Times’ sources included high-ranking

95 Compare March 20 Article, 2CR1519, with Carter’s Orig. Pet. CR341-53. 96 Whitehurst Aff., CR618.

97 Aguilar Aff., CR457-58, 481-82, 488-90, 498-500; Cavazos Aff., CR520, 525, 527; Chirinos Aff., CR 532-33, 536-38, 541. 98 Aguilar Aff., CR456; Chirinos Aff., CR532.

99 Aguilar Aff., CR457; see also Carter Dep., CR909 (agreeing he never returned calls

from reporters). The Caller-Times’ investigated, reported, edited and published the Articles with diligence, balance and in accordance with common journalistic practice. 34 Chamber officials who were in a position to be knowledgeable about the

matters at issue.100

The Caller-Times reviewed and relied on documentary evidence such

as the letters and email by Carter, Bentley and Whitmore to the Chamber

board.101 Editorial writer Nick Jimenez reviewed seven Articles for the

editorial.102

Carter never contacted the Caller-Times to point out that any

statement in the Articles was incorrect. 103

STANDARDS OF REVIEW

A. Elements of Libel

To maintain a libel cause of action against a media defendant, a

plaintiff must prove that the defendant (1) published a statement; (2) that

See Pederson Report, CR665; Pederson Dep., CR1068, 1070-79; Aguilar Aff., CR454-60, 462-96, 498-517; Cavazos Aff., CR518-22, 524-27, 529; Chirinos Aff., CR 530-34, 536-43, 545-61; Jimenez Aff., CR562-65, 567, 569-81, 583; Malan Aff., CR608-11; Powell Aff., CR584-88, 590-95, 597-607; Wilson Aff., CR612-15; Whitehurst Aff., CR616-19; Birmingham Aff., CR624-28, 630, 632, 634-35; Contreras Aff., CR637-40; Averyt Aff., CR621-23. 100 Whitehurst Aff., CR618; Aguilar Aff., CR459; Powell Aff., CR587.

101 Whitehurst Aff., CR617-19; Aguilar Aff., CR458; Powell Aff., CR586.

102 Jimenez Aff., CR562-64, 569-81.

103 Whitehurst Aff., CR619; Aguilar Aff., CR459; Powell Aff., CR587; Chirinos Aff.,

CR533; Cavazos Aff., CR521; Malan Aff., CR610; Wilson Aff., CR614; Birmingham Aff., CR627; Averyt Aff., CR622; see also Carter Dep., CR971. 35 defamed the plaintiff; (3) while acting with negligence regarding the truth

of the statement, if the plaintiff was a private individual.104 A private-

figure plaintiff must prove actual malice to recover punitive damages from

a media defendant.105

B. Traditional Summary Judgment Standard

A defendant is entitled to a traditional summary judgment upon

establishing that no material fact issue exists and that it is entitled to

judgment as a matter of law.106 To meet this burden, a defendant must

conclusively negate at least one essential element of the cause of action or

establish each element of an affirmative defense.107 The burden then shifts

104 Neely v. Wilson, 418 S.W.3d 52, 61 (Tex. 2013) (citing WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998)). This Court previously affirmed denial of summary judgment to Appellants on the issue of Carter’s status as a public figure. See Scripps Tex. Newspaper, LP v. Carter, No. 13-09-00655-CV, 2012 WL 5948955, at *5 (Tex. App.— Corpus Christi Nov. 21, 2012, pet. denied) (mem. op.). For this appeal, Appellants assume but do not concede that Carter is a private-figure not required to prove actual malice as an element of his prima facie case. 105 Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014) (private figure plaintiff who does

not prove actual malice may recover only damages for actual injury) (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974)). 106 Tex. R. Civ. P. 166a(c).

107 Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Tex. Monthly, Inc.

v. Transamerican Nat. Gas Corp., 7 S.W.3d 801, 805 (Tex. App.—Houston [1st Dist.] 1999, no pet.). 36 to the plaintiff to produce evidence creating a fact issue on an element or

defense in order to defeat the summary judgment.108

C. No‐Evidence Summary Judgment Standard

A no-evidence summary judgment is essentially a pretrial directed

verdict.109 The moving party must specifically state the elements as to

which there is no evidence.110 The burden then shifts to the non-movant to

produce evidence raising a genuine issue of material fact regarding each

element challenged.111

D. Standard of Review in Media Libel Cases

The denial of summary judgment to a media libel defendant is

reviewed on interlocutory appeal under the same standards applicable to

the granting of summary judgment.112 On appeal, the court conducts a de

108 Hotze v. Miller, 361 S.W.3d 707, 712 (Tex. App.—Tyler 2012, pet. denied); Dolcefino v. Randolph, 19 S.W.3d 906, 916 (Tex. App.—Hou. [14th Dist.] 2000, pet. denied) (non- movant bears shifted burden to raise material fact issue to defeat summary judgment). 109 Hotze, 361 S.W.3d at 712; Belo Corp. v. Publicaciones Paso del Norte, S.A. de C.V., 243

S.W.3d 152, 157 (Tex. App.—El Paso 2007, pet. denied). 110 Belo Corp., 243 S.W.3d at 158; Tex. R. Civ. P. 166a(i).

111 Hotze, 361 S.W.3d at 712; Main v. Royall, 348 S.W.3d 381, 389 (Tex. App.—Dallas

2011, no pet.). 112 Hotze, 361 S.W.3d at 712.

37 novo review of a trial court’s decision to deny the motion for summary

judgment by the media libel defendant.113

SUMMARY OF ARGUMENT

On July 22, 2015, the Caller-Times filed their Second Motion for Final

Summary Judgment (the “Motion”).114 Appellants were entitled to final

summary judgment on the grounds and defenses that the Articles are not

defamatory, are true or substantially true, are non-actionable opinion, are

statutorily privileged as fair reports of judicial proceedings and public

meetings, and were published without negligence or actual malice. There

is no evidence that the Articles are defamatory of Carter or that the Caller-

Times published any false statement of fact about Carter, and no evidence

of negligence or actual malice. In addition, Appellant E.W. Scripps—a

separate entity from the Caller-Times—did not publish the Articles or any

allegedly defamatory statements concerning Carter and there is no

evidence of such publication by that Appellant. Further, Carter’s non-libel

claims fail on one or more essential elements as they are based on the same

113 Id.; Main, 348 S.W.3d at 389. 114 CR41-96. 38 statements and actions underlying his libel claims, and there is no evidence

in support of the non-libel claims. 115

Carter filed a response to the Motion on August 28, 2015, which

offered three reasons for denial: (1) the Caller-Times allegedly published

the statements with actual malice; (2) Carter’s affidavit details alleged false

statements; and (3) an expert deposition for the plaintiff allegedly details

damage to Carter’s reputation.116 Carter failed, however, to offer

competent or legally sufficient evidence to raise any fact issue on the

grounds and defenses in the Motion. His arguments fail as a matter of law.

ARGUMENT

A. The Articles Are Not Defamatory of Carter

1. Standard for Determining Defamatory Meaning

An initial question for the court in a libel case is whether a statement

is reasonably capable of a defamatory meaning from the perspective of an

ordinary reader in light of the surrounding circumstances.117 If the

115 CR42-44 (setting out summary judgment grounds). 116 2CR1229. Because this case may be disposed of on grounds other than damages, that issue is not discussed herein. 117 Hancock v. Variyam, 400 S.W.3d 59, 66 (Tex. 2013) (citing Musser v. Smith Protective

Serv., Inc., 723 S.W.2d 653, 655 (Tex. 1987)). See also New Times, Inc. v. Isaacks, 146 S.W.3d 39 statement is not reasonably capable of a defamatory meaning, the

statement is not defamatory as a matter of law and the claim fails.118

Likewise, the determination of whether a statement is defamatory per se is

an initial inquiry for the court.119

Courts must give words their ordinary meaning as read by persons

of ordinary intelligence.120 The hypothetical ordinary reader is “no

dullard.”121 The focus must be on the “words used” in the publication, not

plaintiff’s characterization of them.122

2. The Articles are not reasonably capable of the defamatory meaning claimed by Carter.

a. The Articles do not charge Carter with crime or fraud.

Statements are defamatory per se if they expressly charge the plaintiff

with crime, dishonesty, or fraud.123 The Articles do not state that Carter

committed a crime or fraud, or that such conduct is suspected. There are

144, 154 (Tex. 2004) (citing Turner v. KTRK Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000); Musser, 723 S.W.2d at 655). 118 Hancock, 400 S.W.3d at 66.

119 Id.

120 See Musser, 723 S.W.2d at 655.

121 New Times, Inc., 146 S.W.3d at 157 (internal citation omitted).

122 See Musser, 723 S.W.2d at 655; see also New Times, Inc., 146 S.W.3d at 154.

123 Main, 348 S.W.3d at 390.

40 no references to police or prosecutors and no use of such words as “stolen,”

“theft,” “misappropriation,” “malfeasance,” “fraud,” “felony,”

“embezzlement,” “corrupt,” or the like.

b. The Articles may not reasonably be read to imply or impute a crime by Carter.

The first of the Articles—published February 15, 2008—states that the

“financial questions” at issue are “business practice-related, not

improprieties.”124 Similarly, other Articles, particularly those from

February 27 and March 20 as well as the editorial, extensively convey

Carter’s explanations. Such balanced reporting dispels any implication of

dishonest or criminal conduct and clarifies that the matter is a civil dispute

over accounting practices and executive compensation, not a criminal

matter. Thus, an ordinary reader may not reasonably interpret the Articles

to ascribe criminal acts to Carter.125

124 CR462 (emphasis added). 125 See, e.g., Freedom Commc’ns Corp. v. Salinas, No. 13-13-00702-CV, 2015 Tex. App. Lexis 10129 (Tex. App.—Corpus Christ, Sept. 30, 2015, no pet.) (news report not expressly stating plaintiff was arrested would not cause ordinary person to infer that plaintiff was involved in criminal wrongdoing). 41 A more direct accusation of financial malfeasance was recently held

not to falsely impute criminal behavior.126 A Houston television station

reported that a school’s charter was revoked by the State because “millions

of dollars in State funding … was not accounted for,” that the State didn’t

know “how [the school] spent $3 million of taxpayer money,” and that the

school “did not provide proper financial records.”127 The operator of the

school sued the station, contending the statements “insinuate that she

embezzled over $3 million and thereby falsely imputed criminal behavior

to her.”128 The First Court of Appeals rejected the argument:

There is nothing intrinsically defamatory about KTRK’s reports on the State’s investigation into [the school’s] mismanaged funds. The reports did not say or imply that the entire $3 million in state funds had been misappropriated or embezzled. Rather, the statements speak to the insufficiency of financial records to account for spent state funds.129

126 KTRK Television, Inc. v. Robinson, 409 S.W.3d 682, 690-91 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). 127 Id. at 690.

128 Id.

129 Id. at 691.

42 Likewise, there is nothing intrinsically defamatory in reporting concerns by

Chamber leaders over financial management and accounting practices

under Carter’s watch.

Carter’s own reading of the Articles—that they falsely “implied

financial malfeasance” and “implied or insinuated that I committed

violations of the Penal Code”—does not supply the requisite defamatory

meaning.130 A plaintiff’s characterization that statements make accusations

of criminal conduct is not reasonable when, as here, no such language

appears in the publication.131 Likewise, Carter’s resort in his affidavit to

comments posted on-line by third-party readers also fails to show the

Articles are defamatory because the proper inquiry is objective, not

130 Carter Aff., 6CR12165. 131 See Vice v. Kasprzak, 318 S.W.3d 1, 21 (Tex. App.—Houston [1st Dist.] 2009, pet.

denied) (characterization of statement as accusing plaintiff of “embezzlement” not reasonable when no such language appears in the publication); NW Commc’n of Tex., Inc. v. Power, No. 05-99-01641-CV, 2000 WL 1036327, at *34 (Tex. App.—Dallas July 28, 2000, pet. denied) (media defendant not liable for subjective impressions from statements not actually charging intentional or criminal conduct). 43 subjective.132 Further, since the comments are extrinsic to the Articles, they

do not demonstrate the alleged defamatory meaning on their face.133

c. The Articles do not injure Carter in his profession.

A publication is defamatory per se if it accuses a person of lacking a

peculiar or unique skill necessary for his profession or occupation.134 Here,

viewed in context, the Articles amount only to general criticism applicable

to a person in any profession or occupation and, therefore, are not

actionable per se.135

For example, accurately reporting that Carter allegedly “shifted

funds” is, at most, a disparagement equally discreditable to a person in any

business or occupation.136 Likewise, “seizing” a tape recording at a

meeting or “shouting” during a meeting does not disparage Carter

132 See New Times, Inc., 146 S.W.3d at 157 (“the question is not whether some actual readers were misled, as they inevitably will be, but whether the hypothetical reasonable reader could be”). 133 See Robinson, 409 S.W.3d at 691 (defamatory nature must be apparent on face of

publication without reference to extrinsic facts or innuendo). 134 Hancock, 400 S.W.3d at 66-67.

135 See Hancock, 400 S.W.3d at 67 (Statement charging physician with “lacking veracity”

was not defamatory per se because statement was equally discreditable to persons in any profession.). 136 See Shipp v. Malouf, 439 S.W.3d 432, 441 (Tex. App.—Dallas June 24, 2014, no pet.),

disapproved on other grounds, In re Lipsky, 460 S.W.3d 579, 587 (Tex. 2015) (false allegation of personal bankruptcy did not injure dentist in his profession). 44 regarding a particular quality or trait peculiar to his occupation. Carter’s

conclusory affidavit statements of injury to his reputation are legally

insufficient to establish that any statement in the Articles was

defamatory.137 Therefore, the trial court erred in denying summary

judgment to Appellants because the Articles are not defamatory.138

B. The Articles Are True or Substantially True

1. The Articles were not more damaging than a literally truthful account.

A media defendant is entitled to summary judgment upon a showing

of the substantial truth of an allegedly libelous publication.139 The Articles

are substantially true because they are not more damaging to Carter’s

reputation than a truthful statement would have been.140

If the Caller-Times had published the complete record of the

controversy instead of the Articles, it would not have had a more favorable

impact on Carter’s reputation. For example, publishing Bentley’s letter or

PowerPoint presentation in full would not have caused the ordinary reader

137 See Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (conclusory affidavit statements are not competent summary-judgment evidence). 138 If articles are not capable of a defamatory meaning, the court need not consider

whether they are false or not substantially true. See Main, 348 S.W.3d at 389. 139 Neely, 418 S.W.3d at 63; McIlvain v. Jacobs, 794 S.W.2d 14, 15-16 (Tex. 1990).

140 Neely, 418 S.W.3d at 63; McIlvain, 794 S.W.2d at 16.

45 to form a better impression of Carter than would the Articles. Likewise,

publishing the entire tape of the February 15 meeting, including

demeaning remarks by Carter to “Lt. Commander” Bentley, statements by

Hawley that she had “a big problem” with Carter’s leadership, and

Whitmore’s questions about “trust” of his leadership, certainly would not

have cast Carter in a more favorable light. Verbatim inclusion in the

Articles of Carter’s February 17 letter or his original petition in this suit

would have no better effect, as those accounts were fairly summarized in

the Articles and do not alter the gist of the reports.141

Carter contends that an audit issued in November 2008 establishes

that the “2007 financial statements had been ‘fairly presented in conformity

with U.S. generally accepted accounting principles.’”142 But the complete

record of the audit report included findings that “misstatements” corrected

in the financials were “material.”143 Likewise, accounting adjustments by

141 See NW Commc’n of Tex., Inc., 2000 WL 1036327, at *25 (publishing plaintiff’s verbatim account would not have been less damaging because the central facts remained undisputed). 142 2CR1240.

143 CR264.

46 the Chamber were greater even than those identified by Bentley.144

Publishing such adjustments and final audit would not have been less

damaging to Carter’s reputation than the Articles. Therefore, the Articles

were substantially true.145

2. The gist of the Articles is true.

The “gist” of an allegedly libelous publication is the meaning a

person of ordinary intelligence would give it when read as a whole in

context.146 A publication that correctly conveys the gist, even if it errs in

details, is substantially true.147 Here, the gist of the Articles in relation to

Carter’s libel claims is that serious questions had been raised by certain

Chamber officials concerning the financial performance and management

practices of the Chamber under Carter’s leadership. The Articles correctly

conveyed this gist and, therefore, are substantially true.

144 FY2007 adjustments, CR180 (showing positive $40,425.00 reported in January 2008 under Carter ending in negative $95,377.76 after adjustments of March 25, 2008). 145 The November 2008 audit was not available to the newspaper during the time it

published the Articles and, even if the audit is given the spin presented by Carter, it does not dispute substantial truth. See Hearst Newspaper P’ship, LP v. Macias, 283 S.W.3d 8, 14 (Tex. App.—San Antonio 2009, no pet.) (audit report allegedly exonerating plaintiff but not available to newspaper did not raise fact issue on substantial truth). 146 Neely, 418 S.W.3d at 63-64.

147 Id. at 64.

47 3. Items of secondary importance do not defeat substantial truth.

Carter claims that he was defamed because the Articles reported he

“seized” a tape, could be heard “shouting,” or that he excluded others from

a meeting.148 But these are items of secondary importance that do not

factor into the substantial-truth analysis.149 The gist of the Articles is not

that Carter “seized” a tape recording or “shouted” during a meeting.

Reporting such details, even if incorrect, does not undermine the gist of the

matter that serious questions had been raised by certain Chamber officials

concerning the financial performance and management practices of the

Chamber under Carter’s leadership. 150

4. There is no omission or juxtaposition.

A news report “can convey a false and defamatory meaning by

omitting or juxtaposing facts, even though all the story’s individual

statements considered in isolation were literally true or non-

148CR24-25. 149 See McIlvain, 794 S.W.2d at 16; Dolcefino, 19 S.W.3d at 919 (whether media defendant

“learned” of or “instigated” an investigation may be disregarded as of secondary importance). 150 Although the items are of secondary importance to the gist of the Articles, they are

in fact substantially true as demonstrated in the article-by-article discussion below. 48 defamatory.”151 Here, there is no material omission or suggestive

juxtaposition as readers were provided a lengthy account of Carter’s

version of events, which Caller-Times personnel consistently sought to

obtain.152

Carter’s case is easily contrasted to that of Neely v. Wilson. There, the

Supreme Court found a fact issue on whether the news report created a

more damaging impression by omitting the material fact that the plaintiff-

physician had not been disciplined by the medical board for use of

controlled substances during surgery.153 But here, the Articles did not omit

information that would place Carter in a more favorable light since the

Caller-Times included his explanations for the actions questioned by

Bentley.

5. The Articles are substantially true reports of allegations.

In Neely, the Supreme Court noted but did not resolve whether in

some cases involving allegation reporting, substantial truth may be

established by showing the defendant accurately relayed the allegations of

151 Neely, 418 S.W.3d at 64 (quoting Turner, 38 S.W.3d at 114). 152 See supra notes 93-102 and accompanying text. 153 Neely, 418 S.W.3d at 64-69. 49 a third party.154 Such a case is presented here, at least to the extent that

Carter claims the Articles are false because third-party allegations

accurately reported by Appellants were not true.

Where a media defendant accurately reports third-party allegations

against a plaintiff, while including the plaintiff’s denials and without

stating a conclusion of guilt, the reports are substantially true even if the

plaintiff disputes the third-party allegations.155 The defendant is not held

to proving the truth of the third-party allegations in order to be entitled to

the defense of substantial truth.156

Here, for instance, the February 15 and 27 Articles provided an

accurate account of allegations concerning Carter that were presented by

Bentley and others to the Chamber executive committee and board.

Indeed, Carter does not dispute that the Articles accurately reported these

154 418 S.W.3d at 65 (citing Global Relief Found. v. New York Times Co., 390 F.3d 973, 985- 87 (7th Cir. 2004). 155 See Global Relief Found., 390 F.3d at 985-87.

156 Id.; accord Ackly v. Bartlesville Examiner-Enter., No. 06-CV-529-TCK-PJC, 2007 U.S.

Dist. LEXIS 87897, at *8 (N.D. Okla. Nov. 29, 2007) (“when assessing the truth of a report concerning an investigation, a defendant is under no requirement to show that the allegations against the plaintiff are true, but must only show that the allegations were made and that the allegations themselves were accurately recited”). 50 third-party statements.157 Instead, Carter rests his case on conclusory

affidavit testimony that the allegations are false. However, because the

Caller-Times accurately reported the third-party allegations and did not

state or imply Carter’s guilt, Appellants not need additionally prove the

allegations were valid in order to obtain judgment as a matter of law on

substantial truth.158 In such instances, substantial truth is measured only

by whether the Caller-Times accurately relayed the allegations of a third

party, which is undisputed here.159

6. Carter failed to raise a fact issue on substantial truth.

Once the Caller-Times established that the Articles were substantially

true, as shown by the foregoing discussion, Carter had the burden as non-

movant to produce evidence creating a fact issue on that element in order

to defeat summary judgment.160

157 See, e.g., Carter Dep., CR900-01 (Carter admits that the statements reported in the 2/27/08 article came from Bentley’s letter), CR904-05 (Carter admits that statements reported in the 2/29/08 article came from Whitmore’s letter), CR908 (Carter stipulates that Whitmore made the statement at issue in the 3/4/08 article). 158 See Global Relief Found., 390 F.3d at 985-87.

159 See Neely, 418 S.W.3d at 65.

160 See Huckabee v. Time Warner Entm’t Co. L.P., 19 S.W.3d 413, 420 (Tex. 2000).

51 a. Alleged proof of actual malice does not prove falsity.

Carter’s response concentrated on the issue of actual malice due to

his mistaken position that it is dispositive.161 Substantial truth and actual

malice, however, are distinct aspects of a libel case.162 A finding of actual

malice does not imply that a statement was false.163 For a summary

judgment in a private-figure libel case, “whether [the plaintiff] raised a fact

issue regarding the truth or falsity of the underlying statements is the

primary issue in [the] appeal.”164

b. Carter’s affidavit raises no fact issue on substantial truth.

The only specific evidence that Carter pointed to in his response to

show alleged falsity is his affidavit of August 28, 2015.165 The affidavit,

however, fails as summary judgment proof because it is rife with

substantive defects that make it legally insufficient.

161 2CR1240. 162 In re Lipsky, 460 S.W.3d at 593 (referencing falsity and actual malice as separate

elements); Huckabee, 19 S.W.3d at 420 (same); Hearst Corp. v. Skeen, 159 S.W.3d 633, 636- 37 (Tex. 2005) (same). See also supra note 103 (cases listing defamatory statement and negligence as separate elements). 163 Bentley v. Bunton, 94 S.W.3d 561, 587 (Tex. 2002)

164 Neely, 418 S.W.3d at 63.

165 2CR1229.

52 Carter’s affidavit declares that certain statements in the Articles

“implied or insinuated” he committed felony violations of the penal code

or “financial malfeasance” but that he “never violated the penal code” or

“engaged in any financial malfeasance.” But such conclusory statements

and opinions “cannot support a judgment.”166 Conclusory statements in

affidavits are not competent summary judgment evidence because they are

not credible and are susceptible to being readily controverted.167 Thus, the

Carter affidavit does not meet the basic requirement to “set forth such facts

as would be admissible in evidence.”168

Appellants made substantive objections to a host of other statements

in Carter’s affidavit, including that specified statements were improper

attempts to offer expert testimony, prohibited by TRE 702, improper legal

conclusions, lacking personal knowledge, speculation, and improper

166 Wal-Mart Stores, Inc., 313 S.W.3d 837, 839 (Tex. 2010) (per curiam). See also AMS Constr. Co. v. Warm Springs Rehab. Found., 94 S.W.3d 152, 156 (Tex. App.—Corpus Christi 2002, no pet.) (Affidavit must set forth facts establishing witness competency, expertise, or personal knowledge to support opinions or conclusions in order to constitute competent summary judgment evidence.). 167 See Ryland Group, Inc., 924 S.W.2d at 122.

168 See AMS Constr. Co., 94 S.W.3d at 156.

53 opinion.169 Such substantive evidentiary defects are not waived by the trial

court’s failure to rule on the objections but, on appeal, are legally

insufficient to raise a fact issue.170

Further, this Court need not concern itself with the voluminous

document dump that Carter included with his response. Carter repeatedly

makes blanket references to the prior appellate record but fails to quote,

cite, or point the Court to any evidence raising a fact issue.171 As a matter

of law, that approach cannot raise a fact issue on substantial truth or any

other essential element of Carter’s libel claim because courts are “not

169 6CR12708-15. 170 See Laidlaw Waste Systems (Dallas) v. City of Wilmer, 904 S.W.2d 656, 661 (Tex. 1995)

(substantive objection to summary judgment evidence not waivable); Stone v. Midland Multifamily Equity REIT, 334 S.W.3d 371, 374 (Tex. App.—Dallas 2011, no pet.) (same). See, e.g., City of San Antonio v. Pollock, 284 S.W.3d 809, 816-17 (Tex. 2009) (testimony based on unsubstantiated speculation is legally insufficient to support summary judgment); Coastal Transp. Co. v. Crown Cent. Pet. Corp., 136 S.W.3d 227, 233 (Tex. 2004) (speculative or conclusory expert opinion may be challenged on appeal as legally insufficient to raise fact issue on summary judgment); Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (objection that affidavit includes opinions constitutes substantive defect and may be raised on appeal); Danevang Farmers Coop. Soc’y v. Indeco Prods., Inc., No. 13–04–445–CV, 2006 WL 2885058, at *3 (Tex. App.—Corpus Christi Oct. 12, 2006, no pet.) (mem. op.) (lack of personal knowledge and conclusory statements were substantive defects to summary judgment evidence); Stewart v. Sanmina Texas L.P., 156 S.W.3d 198, 207 (Tex. App.—Dallas 2005, no pet.) (unsubstantiated legal or factual conclusion was substantive defect to affidavit); AMS Constr. Co., 94 S.W.3d at 156 (“An objection that an affidavit is conclusory is an objection to the substance of the affidavit that can be raised for the first time on appeal.”). 171 See, e.g., 2CR1228, 1233, 1241, 1267-70.

54 required to sift through voluminous” records to identify evidence raising a

fact issue.172

In addition, Carter’s benign explanations in his affidavit of

accounting practices under his leadership at the Chamber173 do not render

the Articles untrue.174 A libel plaintiff’s self-serving account that his actions

were in good faith are irrelevant to whether a news organization misstated

the facts.175

Thus, resting merely on conclusions and legal insufficiencies, the

affidavit raises no fact issue on substantial truth.

c. Concealed truth does not controvert substantial truth.

Carter may not dispute substantial truth by suggesting that the

newspaper should have withheld publication since he does not have a

legally protected right to a reputation based on the concealment of the

172 Bich Ngoc Nguyen v. Allstate Ins. Co., 404 S.W.3d 770, 776–77 (Tex. App.—Dallas 2013, pet. denied) (quoting Aguilar v. Morales, 162 S.W.3d 825, 838 (Tex. App.—El Paso 2005, pet. denied). 173 6CR12168, 12170.

174 Again, Carter’s explanations were included in the Articles. See supra notes 93 - 102

and accompanying text. 175 See Assoc. Press v. Cook, 17 S.W.3d 447, 453-54 (Tex. App—Houston [1st Dist.] 2004,

no pet.) (Plaintiff’s explanation that court testimony was incorrect because he relied on misinformation from a colleague was irrelevant to whether newspaper misstated the facts of his testimony.). 55 facts.176 Indeed, the full record on the Chamber’s financials is worse than

reported by the Caller-Times (e.g., adjusted March 25 to negative $95,377.76,

as compared to February 27 Article reporting treasurer Bentley

presentation of negative $61,782).177 Truth—not just known truth—is a

complete defense.178

C. The Articles Are Non‐Actionable Opinion

1. Constitutional protection for statements not capable of objective proof as conveying actual facts.

There are “constitutional limits on the type of speech” that is subject

to a defamation action.179 The First Amendment and Texas law require that

a plaintiff prove that a media defendant published a false, defamatory

statement of fact rather than an unverifiable opinion.180 A statement that is

not capable of objective proof as true or false, or that cannot be read as

176 Global Relief Found., 390 F.3d at 989. 177 CR162-64; Bentley Dep., CR862; Bentley letter to board, CR304-07; FY2007 adjustments, CR179-183; Thompson Dep., CR1139, 1149-50. 178 Global Relief Found., 390 F.3d at 989.

179 Milkovich v. Lorain Journal Co., 497 U.S. 1, 16 (1990).

180 See id. at 19-20; Bentley, 94 S.W.3d at 580-82.

56 conveying actual facts about an individual, is protected opinion.181

Whether a statement is one of fact or opinion is a question of law.182

2. Statements of opinion in the Articles

Numerous expressions of non-actionable opinion appear throughout

the Articles. For instance, references in the March 2 editorial to Carter’s

“highly questionable stewardship of the financial affairs of the chamber,”

“intimidation, secrecy and duplicity,” attempts to bring “transparency and

accountability” to the Chamber and a “question mark” over Carter are

constitutionally protected opinions, not statement of facts.183

Protected statements of opinion in the Articles also include:

 February 15, 16, 27 and 29 Articles that Carter could be heard “shouting”;184

 February 27 and 29 Articles that Carter “seized the tape”;185

181 See Milkovich, 497 U.S. at 18-21; Bentley, 94 S.W.3d at 580-81. See also Coronado v. Freedom Commc’ns, Inc., No. 13-13-00525-CV, 2015 Tex. App. LEXIS 10128, at*7 (Tex. App.—Corpus Christi, Sept. 30, 2015, no pet.) (Statement must constitute an assertion of an “objectifiably verifiable” fact in order to constitute actionable defamation.) (mem. op.). 182 Bentley, 94 S.W.3d at 579-80.

183 See Assoc. Press, 17 S.W.3d at 454 (statement that Texas Ranger captain was a “blight

on law enforcement” was constitutionally protected opinion). 184 CR462-65, 468-71.

185 CR468-71.

57  February 27 Article reference to “off the books” accounting, and a “red flag”;186

 March 2 Editorial as a whole;187

 March 4 Article references to “lack of financial transparency” and not “transparent”;188 and

 May 31 Article references to a “heated exchange” and “contentious exchange” and “findings of fact.”189

D. The March 19, 20 and May 29, 31 Articles Are Privileged Fair Reports of Judicial Proceedings Under Common Law and Texas Statute.

The March 19, 20 and May 29, 31 Articles consisted of fair, true and

impartial accounts of judicial proceedings; namely, judicial proceedings

involving a petition by Bentley and this lawsuit by Carter. Such “fair

reports” of judicial proceedings are privileged against a libel claim by

common law and Texas statute.190

186 CR468-69. 187 CR567.

188 CR474-75.

189 CR526. See also infra Part I. (article-by-article analysis regarding non-actionable

opinion). 190 Restatement (Second) of Torts § 611 (1977); Tex. Civ. Prac. & Rem. Code §§ 73.002(a),

73.002(b)(1)(A). 58 E. Article‐by‐Article Analysis Shows the Caller‐Times Appellants Are Entitled to Summary Judgment.

Examining each Article and allegedly defamatory statement shows

they are non-defamatory, substantially true, non-actionable opinion and

privileged as fair reports. Carter’s response failed to raise a fact issue on

these grounds and defenses.191

1. February 15, 2008 Article: Financial, Management Questions Raised at CC Chamber.

a. The Article is not reasonably capable of the defamatory meaning claimed by Carter.

The February 15 Article does not impute commission of a crime by

Carter and is not reasonably capable of that defamatory meaning claimed

by Carter. Indeed, the Article expressly disclaims that any “financial

questions” involved “improprieties.”

b. The Article is substantially true.

The gist of the February 15 article is that three high-ranking Chamber

officials raised serious financial and management issues at a meeting of the

Chamber’s executive committee. This statement is indisputably true.192

191 See supra notes 158-172 and accompanying text. 192 See supra notes 15-35 and accompanying text. See also mtg. minutes, CR118; FY2007

audit report, CR244-66; LRGlobal contract, CR279-86; Chamber bylaws, CR287-94; FY2006 financials, CR295-98; Bentley email to Carter, CR309-12; Bentley Dep., CR859-60, 59 c. Statement 2/15-1:

“However, they were asked to present their information in a meeting that lasted most of Friday morning and from which Chamber President could be heard shouting.”

i. Not Defamatory

The statement is not defamatory as a matter of law. It does not state

or imply that Carter committed a crime. Shouting in a business meeting is

certainly legal. 193 It may be unflattering to Carter to report that he shouted,

but that does not make it actionable in defamation.194

ii. Substantial Truth

It is undisputed that Chamber employee Lucy Reta told reporter

Aguilar that she heard Carter shouting from the meeting room, an account

corroborated by Whitmore, Bentley, and Martinez, all of whom were

present.195

863-64; Carter Dep., CR888-90; Hawley Dep., CR1010-14, 1017, 1019-20; Martinez Dep., CR1049-50, 1053; Powell Dep., CR1088-90; Thompson Dep., CR1141, 1143, 1144-48, 1151- 52, 1154, 1156; Whitmore Dep., CR1201-02, 1205-08; Thompson letter, CR438-39. 193 See Means v. ABCABCO, Inc., 315 S.W.3d 209, 214 (Tex. App.—Austin 2010, no pet.)

(citing Musser, 723 S.W.2d at 655) (statement that a person has done what he has a legal right to do is not defamatory). 194 See Farias v. Garza, 426 S.W.3d 808, 816 (Tex. App.—San Antonio 2014, pet. filed) (a

statement that is merely unflattering is not actionable). 195 See supra notes 39-45 above and accompanying text.

60 iii. Opinion

As Carter testified in his deposition, whether a person is shouting is a

matter of opinion.196

d. Statement 2/15- 2:

“We agreed from a statement standpoint to say we are continuing the process of our evaluation and that there are both serious financial and management issues that we need to address, according to Bentley.”

Bentley and others testified to the accuracy of the statement

attributed to him.197

2. February 16 Article: Corpus Christi Chamber of Commerce Pulls Two Off Panel.

The February 16 Article as a whole is not defamatory of Carter and is

substantially true.

i. Statement 2/16-1:

“Before their grievances could be voiced, two of the three, Judy Hawley and Sylvia Whitmore, were told they no longer are eligible to serve on the committee, meaning they can’t participate in the committee’s recommendation to the full board on matters involving Carter’s contract.”

The statement is non-defamatory and substantially true.198

196 Carter Dep., CR903. 197 See Bentley Dep., CR863; Hawley Dep., CR1010-11, 1013-14, 1017; Martinez Dep.,

CR1042, 1053; Whitmore Dep., CR1201-02, 1205-08. 61 ii. Statement 2/16-2:

“Carter could be heard shouting during portions of the meeting.”

The statement is substantially true and non-defamatory as discussed

above and herein.199

iii. Statement 2/16-3:

“Bentley was outside in a hallway when Hawley and Whitmore were dismissed because Carter had denied him entrance to the meeting.”

The statement is substantially true and non-defamatory.200

iv. Statement 2/16-4

“We agreed from a statement standpoint to say we are continuing the process of our evaluation and that there are both serious financial and management issues that we need to address, according to Bentley.”

The statement is substantially true and non-defamatory.201

198 See supra notes 36-38 and accompanying text. See also Carter Dep., CR890-91, 902-03; Whitmore Dep., CR1197; Hawley Dep., CR1021; Martinez Dep., CR1040-41; CR326-36; CR341-53. 199 See Carter Dep., CR891; Whitmore Dep., CR1208. See also Part I.1.c.iii.c. discussing

Statement 2/15-1. 200 See Carter Dep., CR891-92; Whitmore Dep., CR1208; Hawley Dep., CR1021; Bentley

Dep., CR861. 201 See Carter Dep., CR892. See also Part I.1.c.iii.d. discussing Statement 2/15-2.

62 3. February 20 Article: CC Chamber Meeting to Discuss Financial Irregularities.

“The Corpus Christi Chamber of Commerce executive committee is meeting to discuss financial irregularities discovered during a performance review of President Terry Carter after a raise and bonus for Carter had been proposed. The financial questions led to a decision to conduct a full audit.”

The brief February 20 Article—set out in its entirety above—is non-

defamatory and substantially true.202 It is undisputed that Carter used the

term “misappropriation” in discussions of the Chamber’s financials with

executive committee members at the February 20 meeting while Bentley

referred to financial “irregularities” in the same meeting, as shown by the

minutes.203 Carter’s affidavit testimony that “there were no financial

irregularities”204 is a mere conclusion and legally insufficient to raise a fact

issue.205

202 Mtg. minutes, CR118-20; Bentley Dep., CR862-63; Carter Dep., CR892-93. 203 CR117-20. 204 6CR12166. 205 See Wal-Mart Stores, Inc., 313 S.W.3d at 840. 63 4. February 21 Article: Chamber of Commerce: Financial Questions Lead to Call for Audit.

i. Statement 2/21-1:

“The audit decision occurred at a special called meeting of the executive committee.”

The statement is non-defamatory and substantially true.206

Carter’s affidavit assertion that the Article’s statement is false that

“Carter and Huseman informed two of three [executive committee

members] that they were no longer eligible to serve”207 raises no fact issue

because he does not dispute that he met with the two when they were

informed of their alleged ineligibility.208 Reporting that Carter

“participated” in informing the two of their alleged ineligibility rather than

that Carter “informed” them himself would have no lesser effect on his

reputation.

206 Carter Dep., CR893. 207 6CR12167. 208 See supra notes 36-38 and accompanying text. 64 5. February 27 Article: Chamber CEO Shifted Funds, Letter Says.

The February 27 Article is non-defamatory and substantially true.209

The February 27 article presents an accurate account of dueling letters to

the Chamber board by Bentley and Carter regarding the Chamber’s

financial status, accounting practices and Carter’s role.

i. Statement 2/27-1:

“The Corpus Christi Chamber of Commerce chief executive, whose bonus is based on financial performance, shifted funds to make a loss look like a profit, according to a letter by the Chamber’s treasurer.”

The statement is non-defamatory and substantially true.210 Bentley’s

letter, obtained by reporter Aguilar, states, “CEO [Carter] … shifted the

Building Fund from the Chamber’s books for the use of supplementing the

Chamber’s financials.”211 Carter admits he transferred funds from one

account to another.212 This “shift[ing]” of funds made a “loss look like a

209 Aguilar Aff., CR458; Aguilar Dep., CR822-24; Bentley letter to board, CR303-04; Bentley PowerPoint, CR156-72; Bentley Dep., CR852-53; Thompson Dep., CR1145. 210 Carter Dep., CR894-95, 899, 939, 951-953; Martinez Dep., CR1044, 1048; Thompson

Dep., CR1145; Thompson letter, CR432-36; Bentley letter to board, CR303-04; Bentley Dep., CR 851-52, 854-55, 862; Whitmore Dep., CR1194, 1204-05; Hawley Dep., CR1010; Carter’s review, CR137-40, 143-45, 148-50; Carter’s contract, CR121-36; transcript, CR717-18. 211 Aguilar Aff., CR458; Bentley letter to board, CR303-04 (emphasis added).

212 Carter Dep., CR894-95, 899.

65 profit” because the effect of the transactions was a swing of more than

$100,000; that is, a stated $40,000 profit versus a loss of more than

$60,000.213 Carter also admits a connection between his bonus and

Chamber finances.214

Carter’s affidavit asserts the statement is false because his amended

employment contract did not link his bonus to the Chamber’s financial

performance.215 However, the Article does not base the statement on his

contract and the affidavit does not dispute that executive members

understood Carter’s bonus was based on financial performance.216

ii. Statement 2/27-2:

“Bentley disclosed his concern about the Chamber’s books at a Feb. 15 meeting of the Chamber executive committee that included a shouting match with Carter.”

The statement is non-defamatory and substantially true.217

iii. Statement No. 2/27-3:

“During the meeting, which was tape-recorded, Carter seized the tape and left the building.”

213 Bentley Dep., CR862. 214 Carter Dep., CR951-53; Carter and Waller emails, CR152; Carter and Martinez emails, CR268. 215 6CR12167-68.

216 See CR468-69; CR12165-172. See also supra notes 16-30 above and accompanying text.

217 See Carter Dep., CR896; see also Part. I.1.c.iii.c. discussing Statement 2/15-1.

66 The statement is non-defamatory and substantially true.218 Bentley’s

letter to the Chamber board states the “CEO [Carter] took the tape and

immediately left the premises” and describes unsuccessful efforts over a

number of days by him to obtain the tape. 219 Carter’s affidavit testimony

that the statement is “blatantly false”220 is a mere conclusion and legally

insufficient to raise a fact issue.221

iv. Statement No. 2/27-4:

“The link between Carter’s bonus and the Chamber’s financial performance was a red flag for the Chamber’s accountant, Darrell Thompson, according to Bentley’s letter.”

The statement is non-defamatory and substantially true.222 Although

Bentley’s letter did not use the term “red flag,” Thompson testified that he

agreed with that characterization.223 Bentley’s letter relates that the

Chamber’s CPA confirmed that the treasurer’s questions about financial

adjustments were valid concerns and that the link between the bonus and

218 See supra notes 46-49 above and accompanying text. 219 CR301.

220 6CR12168.

221 Wal-Mart Stores, Inc., 313 S.W.3d at 840.

222 Thompson letter, 434-35; Thompson Dep., CR1152-53; Bentley letter to board, CR300-08; tape, CR325; transcript, CR791-93; Carter Dep., CR896, 922-31. 223 Thompson Dep., CR1152-53.

67 Chamber’s financial performance could possibly forfeit the Foundation’s

501(c)(3) status.224 Stating the link was a “red flag” rather than a “concern”

has no greater impact on Carter’s reputation and thus is substantially

true.225

v. Statement No. 2/27-5:

The accountant told the Chamber executive committee that “use of Building Fund dollars to supplement the Chamber operating expenses could possibly forfeit the (Chamber) foundation’s (nonprofit) status because of the link between the CEO’s bonus to the financial performance of the Chamber.”

The statement is non-defamatory, substantially true and protected

opinion.226

vi. Statement No. 2/27-6:

“Bentley also sought but never received a copy of the tape seized by Carter.”

The statement is non-defamatory and substantially true. Carter

admits that as of the date of the article, Bentley had called him to request a

copy of the tape, Carter never returned the call, and Bentley had not

224 Tape, CR325; transcript, CR791-93; Thompson letter, CR434-35. 225 See supra notes 23-28 above and accompanying text regarding the link between

Carter’s bonus and the Chamber’s financial performance. 226 Thompson letter, CR435; Thompson Dep., CR324-25; transcript, CR791-93; Bentley

Dep., CR847-48; Carter Dep., CR896-97. 68 received a copy of the tape.227 Bentley’s letter recounts his unsuccessful

efforts over several days to obtain the tape.228

vii. Statement No. 2/27-7:

“Bentley’s letter states the Chamber showed a $40,425 profit when it should have shown a $61,782 loss. The numbers provided in Bentley’s letter show that the Chamber showed the surplus by booking $63,903 in January 2008 revenue for 2007 and by deferring part of Carter’s salary. Carter’s February 17th letter says including January 2008 revenue was consistent with the Chamber’s accounting method, approved by the Board in September 2004. He also said in his letter that the failure to record his salary deferral as a 2007 expense was a bookkeeping error.”

The statement is non-defamatory and substantially true.229

viii. Statement No. 2/27-8:

“Carter also used $18,312 from the Chamber’s building fund to pay operating expenses, according to the letter. He shifted the money to the Chamber’s foundation, then billed the foundation for expenses in that amount. Carter’s February 17th letter says he discussed the move with Thompson and Bentley before shifting the funds. The foundation has operated with overhead provided by the Chamber and the Chamber had never been reimbursed for those expenses, according to Carter’s letter.”

227 Carter Dep., CR897-98. 228 CR112-13.

229 See supra notes 58, 64-67 and accompanying text. Bentley letter to Freddie, CR112-

13; Bentley letter to board, CR303-05; Carter’s letter, CR240-43; Carter Dep., CR898-99; FY2007 adjustments, CR180-82; FY2007 audit report, CR260-65; Martinez Dep., CR1051. 69 The statement is non-defamatory and substantially true.230 Carter’s

affidavit contends the statement that he “shifted money to the Chamber’s

foundation” implies a felony on his part,231 which again is an incompetent

conclusion or opinion. Importantly, Carter does not deny that the funds

were shifted; in fact, he admitted he transferred funds from one account to

another.232

ix. Statement No. 2/27-9:

“Among other concerns Bentley listed was the Chamber’s lack of accounting for special events. His letter described them as “off the books”, with only net income presented to the executive committee. Examples of special events in 2007 were the Mayor’s State of the City address, Salute to the Military and the Conquer the Coast bicycle ride. Bentley also stated in his letter that he was concerned that Carter authorizes “significant contracts” without seeking bids or consulting the executive committee or board.”

230 Carter letter, CR499; Carter Dep., CR899; Bentley Dep., CR845-46, 852-53; Martinez Dep., CR1045, 1051-52; Thompson Dep., CR1145; FY2007 audit report, CR245-66; FY2007 adjustments, CR180-83. 231 6CR12168.

232 Carter Dep., CR895, 899.

70 The statement is substantially true and non-defamatory.233 Once

again, the Article accurately recounted the content of Bentley’s letter,234

which Carter does not dispute.235 Further, Carter admits that he may not

have provided a full accounting of all special events to the board and that

he typically presented special events on a net basis to the board.236

Moreover, the Article makes clear that the phrase “off the books” is

Bentley’s characterization of the disclosed fact that only net income was

presented to the Executive Committee.

Carter agreed that the examples of special events in 2007 cited in the

letter and Article are not false or defamatory.237 Carter also acknowledged

he authorized certain contracts, including some around $50,000, without

bids or executive committee or board approval.238

233 Bentley letter to Freddie, CR112-13; Carter Dep., CR900-02; Martinez Dep., CR1039, 1062; Hawley Dep., CR1011-12, 1017; Bentley Dep., CR860-61; LRGlobal contract CR279- 86; CR252. 234 CR112-13.

235 CR900.

236 CR900-02.

237 Id.

238 Id.

71 6. February 29 Article: Ex‐Chair Airs Her Chamber Concerns.

The February 29th Article is non-defamatory and substantially true as

a whole.239

i. Statement No. 2/29-1:

“On the morning of Feb. 15, Carter and Huseman took Whitmore and Hawley behind closed doors and told them they were no longer eligible to serve on the committee. As Bentley waited outside, according to witness accounts, the two women endured shouting from Carter. They stayed to hear Bentley’s report. Before leaving the room, Carter seized a tape recording of the meeting and left the building.”

The statement is non-defamatory and substantially true.240 Although

Carter’s affidavit makes the conclusory assertion that it “is not true” that

the two women endured shouting from him, the affidavit does not dispute

the extensive record that Carter spoke “loudly” to Whitmore and “yelled”

and “blew up” at Bentley in the meeting.241

ii. Statement No. 2/29-2:

“Bentley had been asked to review the Chamber’s finances in anticipation of a raise, bonus and contract

239 Whitmore Dep., CR1208-09; Whitmore’s letter, CR313-15; Aguilar Dep., CR824-27. 240 See supra notes 190-93 and accompanying text. See also Carter Dep., CR902-03, 962;

Martinez Dep., CR1040-41; Whitmore Dep., CR1203. See also supra note 195 and accompanying text. 241 See supra notes 39-45 and accompanying text.

72 extension for Carter. Bentley found that Carter shifted funds among accounts and deferred $19,992 of his 2007 salary. Without those moves, the Chamber’s cash flow would have been negative, according to Bentley, adding that Carter’s bonus is based on the Chamber’s financial performance. According to Bentley, the Chamber accountant told him that the Chamber Foundation’s nonprofit status could be in jeopardy because Carter shifted Chamber Foundation funds to pay operating expenses and Carter’s bonus is linked to the Chamber’s financial performance.”

The statement is non-defamatory and substantially true.242

iii. Statement No. 2/29-3:

“…denying the treasurer access to critical information and advice of financial professionals employed by the Chamber of Commerce.”

*****

“There was refusal of Chamber staff to cooperate with the treasurer on a task he was given by the board and the executive committee.”

The statement is non-defamatory and substantially true.243 Carter

admits the February 29th Article accurately reports that Whitmore’s letter

stated that the treasurer was denied access to critical financial

242 See Carter Dep., CR903-04; Thompson Dep., CR1152; see also Part I.2.i. discussing Statement 2/16-1. 243 Bentley letter, CR299-308; Bentley Dep., CR861-62; Whitmore’s letter CR313-15; Carter Dep., CR904-05. 73 information.244 Carter admits he does not know for a fact whether Bentley

was ever denied access to information.245 Bentley’s emails of February 15th

and 18th confirm that he requested information from the Chamber, but was

refused and told he must go through Carter.246 Carter’s affidavit testimony

of alleged instructions to a staff member to fully cooperate offers no actual

proof that Bentley received the information he was seeking.247 Further,

Bentley requested information from Chamber CPA Thompson, but was

refused.248

7. March 2 Editorial: Chamber’s CEO’s Actions Raise Serious Questions.249

For the reasons set out above and below, the editorial in its entirety is

protected under the First Amendment of the U.S. Constitution, Article 1,

244 Whitmore letter, CR313-15; Carter Dep., CR904. 245 Carter Dep., CR904-05. 246 Bentley Dep., CR861-62.

247 6CR12169.

248 Bentley Dep., CR852-54 (Chamber officials refused to sign a letter of indemnification,

effectively silencing Thompson.); Thompson’s indemnity letter to board, CR437-39. 249 Appellants’ motion inadvertently referred to the editorial as published March 3,

which is corrected herein to the March 2 publication date. 74 Section 8 of the Texas Constitution and the common law as non-actionable

opinion, and is non-defamatory and substantially true.250

i. Statement No. 3/2 (Editorial)-1:

“…highly questionable stewardship of the financial affairs of the chamber by Carter.”

This statement is non-defamatory, substantially true, and non-

actionable opinion.251

ii. Statement No. 3/2 (Editorial)-2:

“Two executive committee members, former state Rep. Judy Hawley and bank executive Sylvia Whitmore, were removed from the committee by Carter after they attempted to bring transparency and accountability to the finances of the Chamber at a Feb. 15 meeting.”

The statement is non-defamatory and substantially true.252

iii. Statement 3/2 (Editorial)-3:

“…intimidation, secrecy and duplicity discredit a vital organization”

This statement is non-defamatory, substantially true and non-

actionable opinion.253

250 Jimenez Aff., CR563-64; Jimenez Dep., CR1029-32. 251 See supra notes 180, 184 and accompanying text. See also Jimenez Dep., CR1029; see

also Carter Dep., CR910. 252 See supra notes 36-37 and accompanying text. See also Jimenez Dep., CR1029-30.

253 See supra notes 180, 184 and accompanying text. See also Jimenez Dep., CR1031-32.

75 iv. Statement No. 3/2(Editorial)-4:

“The fund-shifting, including the deferring of Carter’s salary, allowed the Chamber to show a profit, thus qualifying Carter for a bonus.”

The statement is non-defamatory and substantially true as discussed

above.

v. Statement No. 3/2 (Editorial)-5:

“The question mark remains over Carter until he fully explains his actions or until the Chamber chooses to move on without him.”

This statement is non-defamatory, substantially true and non-

actionable opinion for the reasons set out above.

8. March 3 Article: Petition Seeks Chamber Changes.

The article is substantially true and non-defamatory.254

i. Statement No. 3/3 (Article)-1:

“Treasurer Damon Bentley reported that Carter had deferred a portion of his salary and shifted other funds among Chamber accounts in a manner that turned what should have been a deficit into a surplus of operating funds. Carter’s bonus is linked to the Chamber’s financial performance.”

The statement is non-defamatory and substantially true as set out

above.255

254 Whitmore letter with petition, CR513-17; Scott Dep., CR1106, 1108-09. 76 9. March 4 Article: About 80 Sign Petition on Chamber Operation.

The March 4th Article as a whole is non-defamatory, substantially

true and a fair report of a public meeting.256

i. Statement No. 3/4-1:

“Never has the lack of financial transparency been an issue like it is now, Whitmore said.”

ii. Statement No. 3/4-2:

“…I don’t think the current leadership is transparent in its financial decisions.”

The statements are non-defamatory, non-actionable opinion,

substantially true and a fair report of a public meeting.257

10. March 8 Article: Chamber Board, CEO to Enter Talks.

i. Statement No. 3/8-1:

“Bentley was asked to look into the organization’s finances as part of a review of a proposed raise, bonus and contract extension for Carter, whose bonus is linked to the Chamber’s financial performance.”

The March 8th Article is non-defamatory and substantially true.258

255 See also Carter Dep., CR907. 256 See Aguilar Aff., CR457; Aguilar Dep., CR828; Scott Dep., CR1106, 1108-09; see also Tex. Civ. Prac. & Rem. Code § 73.002(b)(1)(D). 257 See Whitmore letter, CR313-15; Whitmore Dep., CR1209; Carter Dep., CR907-08;

Hawley Dep., CR1021; see also Tex. Civ. Prac. & Rem. Code § 73.002(b)(1)(D). 258 See Carter Dep., CR908; Aguilar Dep., CR829; Scott Dep., CR1114.

77 11. March 19 Article: Chamber Treasurer Granted Temporary Restraining Order

The March 19th Article is substantially true. It is also a fair, true and

impartial account of a judicial proceeding.259 As such, it is privileged

against Carter’s libel claim pursuant to Tex. Civ. Prac. & Rem. Code §

73.002(b)(1)(A) (the “fair report privilege” hereafter).

i. Statement No. 3/19-1:

“Corpus Christi Chamber of Commerce treasurer Damon Bentley has been granted a temporary restraining order against the chamber and CEO Terry Carter to prevent a tape recording from being destroyed.”

ii. Statement No. 3/19-2:

“Bentley’s petition for the temporary restraining order says he has sought a copy of the tape but it has not been provided, and that Carter took the tape from the meeting.”

The statements are non-defamatory, protected by the fair report

privilege and substantially true.260

12. March 20 Article: Chamber Unrest Ends Up In Court.

The March 20th Article is a fair, true and impartial account of judicial

proceedings by Bentley and Carter. 261

259 CR326-36. 260 See CR326-36; Carter Dep., CR963-64. 78 i. Statement No. 3/20-1:

“The restraining order, obtained Tuesday, prohibits Carter and the chamber from destroying a tape of a Feb. 15 chamber executive committee meeting at which Bentley and two others. . .”

ii. Statement No. 3/20-2:

“One of the members’ concerns, Scott and others have said, is that the chamber is losing membership but they couldn’t verify it because the full member list was withheld.”

The statements are protected by the fair report privilege, non-

defamatory and substantially true.262

13. March 26 Article: Chamber Puts CEO on Paid Leave and March 27 Article: Chamber CEO on Paid Leave.

i. Statement No. 3/26-1 and 3/27-1:

“Chamber CEO on Paid Leave”

The statement is substantially true and non-defamatory.263

14. March 27 Article: Judge Unifies Filings On Chamber Events

The March 27th Article is a fair report of judicial proceedings.264

261 See CR326-36; CR342-53; Scott Dep., CR1114-15. 262 See Carter Dep., CR964-65; CR504-517. 263 See Carter Dep., CR908, 965-66. 264 Order of Consolidation, CR359-62. 79 i. Statement No. 3/27(2)-1:

“Bentley sought the consolidation, asserting that his and Carter’s legal actions arose from the same set of events.”

ii. Statement No. 3/27(2)-2:

“That tape was removed by Terry Carter from the meeting and taken from the Corpus Christi Chamber of Commerce immediately after the meeting ended.”

The statements are protected by the fair report privilege, non-

defamatory and substantially true.265

15. April 1 Article: Chamber Had Deficit, Board Tells Members.

The Article is a privileged as a fair report of a public meeting, non-

defamatory and substantially true.266 Reporter Aguilar attended the

Chamber’s public general membership meeting on March 31, 2008 and

accurately reported on it.267

i. Statement No. 4/1-1:

“Further review of the books by the Chamber executive committee showed that a deferral of a part of the chief executive officer’s salary and shifts of more than $142,000 in membership dues resulted in the surplus, according to treasurer Damon Bentley.”

265 Carter Dep., CR966; see also CR354-58. 266 See Aguilar Aff., CR457; Carter Dep., CR966-67; FY2007 adjustments, CR180-83; see also Tex. Civ. Prac. & Rem. Code § 73.002(b)(1)(D). 267 Aguilar Aff., CR457.

80 The statement is privileged as a fair report of a public meeting,

substantially true and non-defamatory.268

ii. Statement No. 4/1-2:

“The membership meeting was a result of a petition drive started in late February to address concerns of members who said they had been denied financial information and membership rosters and who were concerned about the Chamber’s accounting methods.”

The statement is privileged as a fair report of a public meeting,

substantially true and non-defamatory.269

16. April 29 Article: Chamber, In Need Of Audit, Renews Accountant Search.

Carter complains about the following statement:

“He said negotiations between Chamber attorney Van Huseman and Chamber President and CEO Terry Carter are ongoing.”

The statement is non-defamatory and substantially true.270

268 See Carter Dep., CR967; Thompson Dep., CR1145; FY2007 adjustments, CR179-83. 269 See Carter Dep., CR967-68; Scott Dep., CR1106, 1108. 270 See also Carter Dep., CR968. 81 17. May 2 Article: Chamber Offers Contract Settlement to Carter, His Attorney Says; May 3 Article: Chamber Makes Offer, Carter’s Attorney Says; May 23 Article: Chamber, Carter’s Attorney Confirm Severance Agreement and May 24 Article: Carter’s salary to be paid in full.

These Articles are non-defamatory and substantially true.271

18. May 28 Article: Release of Chamber Audio Recording Sought; and May 30 Article: Judge orders that chamber tape recording be released today.

Carter complains of the following statement in each article:

“Carter has been on paid leave since March 26.”

The statement is substantially true and non-defamatory.272

19. May 31 Article: Chamber Tape Tells of Heated Exchange.

The May 31st Article as a whole is privileged as a fair report of a

judicial proceeding, non-defamatory and is substantially true.273

i. Statement No. 5/31-1:

“Chamber tape tells of heated exchange.”

ii. Statement No. 5/31-2:

“A recording of a Corpus Christi Chamber of Commerce meeting obtained Friday by the Caller Times contains a

271 See also Carter Dep., CR968-69. 272 See also Carter Dep., CR908; Carter’s interrog. resp., CR795-800. 273 See also CR324-25; transcript, CR707-94. 82 contentious exchange between CEO Terry Carter and other chamber officials.”

iii. Statement No. 5/31-3:

“Early in the segment a contentious exchange between Carter and Bentley can be heard, as the chamber officials discuss whether to proceed with Bentley’s financial report.”

iv. Statement No. 5/31-4:

“Bentley: It’s not a question for me to answer right now. I’m going to give the findings of fact.”

The statements are a privileged as a fair report, non-defamatory and

substantially true.274

20. June 13, 2008 Article: Ex‐Chamber CEO’s Mediation to Continue.

The Article is non-defamatory and substantially true.275

F. The Articles Were Published Without Negligence276

A private figure plaintiff must prove negligence in a libel action

against a media defendant.277 Here, the record disproves negligence as the

Caller-Times acted reasonably in checking the truth of the Articles before

274 See CR711; Bentley Dep., CR849-50; Carter Dep., CR969-70. 275 See also Carter Dep., CR970. 276 The Court need not reach the issues of negligence or exemplary damages if it

determines the Articles were non-defamatory or substantially true. See Neely, 418 S.W.3d at 61 (citing McLemore, 978 S.W.2d at 571). 277 See Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809, 820 (Tex. 1976).

83 publication.278 It is undisputed that the Articles were published with

diligence, balance and in accord with standard journalistic practices and

customs.279 The Caller-Times submitted the expert opinion of Tony

Pederson—former editor of the Houston Chronicle and journalism chair at

SMU—that the Articles were prepared in accordance with usual

journalistic standards and practices. 280

Carter’s response offers no evidence or expert opinion to raise a fact

issue that the Caller-Times did not act reasonably in preparing and

publishing the Articles or that they contained any misstatement whose

content would warn a reasonably prudent editor of its defamatory

potential.281

278 See Scripps Tex. Newspapers, L.P. v. Belalcazar, 99 S.W.3d 829, 837 (Tex. App.—Corpus Christi 2003, pet. denied) (“Negligent conduct is determined by asking ‘whether the defendant acted reasonably in checking the truth or falsity or defamatory character of the communication before publishing it.’”) (internal quotation omitted). 279 See Pederson Report, CR665; Pederson Dep., CR1068, 1070-79; Aguilar Aff., CR454-

60; Cavazos Aff., CR518-22; Chirinos Aff., CR 530-34; Jimenez Aff., CR562-65; Malan Aff., CR608-11; Powell Aff., CR584-88; Wilson Aff., CR613-15; Whitehurst Aff., CR616- 19; Birmingham Aff., CR624-28; Contreras Aff., CR636-40; Averyt Aff., CR620-23. 280 CR664-65.

281 See Foster, 541 S.W.2d at 819. See also Holly v. Cannady, 669 S.W.2d 381, 384-385 (Tex.

App.—Dallas 1984, no pet.) (There was “simply no evidence indicating the existence of circumstances which would have prompted a reasonable person to question the statements made and conclusions drawn.”). 84 Carter’s response mistakenly asserted alleged evidence of actual

malice was dispositive of negligence.282 However, actual malice is not the

same as negligence.283 The two concepts are different fault standards in

libel cases. A private figure plaintiff must prove negligence, not actual

malice, on his case in chief.284

G. Carter Cannot Recover Exemplary Damages Because the Articles Were Published Without Actual Malice

A private figure plaintiff must prove actual malice in order to recover

punitive or exemplary damages in a libel case arising out of reports of a

matter of public concern.285

Here, the evidence establishes that the Caller-Times Appellants acted

without actual malice.286 Actual malice is “not ill will, spite or evil motive”;

it is the making of a statement with either knowledge it is false or reckless

282 2CR1241. 283 See Foster, 541 S.W.2d at 820 (refusing to assess negligence when only actual malice

argued). 284 See Neely, 418 S.W.3d at 61 (citing McLemore, 978 S.W.2d at 571) (public figure libel

plaintiff must prove actual malice while private figure plaintiff must prove negligence). 285 See Burbage, 447 S.W.3d at 259 (private figure plaintiff who does not prove actual

malice may recover only damages for actual injury) (citing Gertz, 418 U.S. at 350). 286 See Aguilar Aff., CR454-60; Cavazos Aff., CR518-22; Chirinos Aff., CR530-34; Jimenez Aff., CR562-65; Powell Aff., CR584-88; Malan Aff., CR608-11; Wilson Aff., CR612-15; Whitehurst Aff., CR616-19; Averyt Aff., CR620-23; Birmingham Aff., CR624- 28; Contreras Aff., CR636-40; Pederson Aff., CR646-48; Pederson Dep., passim; Reta Aff., CR451-53. 85 disregard—meaning it was made while entertaining serious doubts as to

the truth of the statement.287 The Articles were published without

knowledge of any falsity and without doubts as to the truth of any

allegedly defamatory statement.288 Although Appellants negated actual

malice, Carter’s various arguments that malice is shown also fail as a

matter of law.

1. Carter failed to show specific allegedly false statements were published with actual malice.

Carter must demonstrate actual malice separately as to each allegedly

false statement he claims libeled him.289 Yet, Carter's discussion of actual

malice in his response references specific statements in only a handful of

the Articles.290 Thus, the Court may disregard Carter's abstract discussion

287 Huckabee, 19 S.W.3d at 420. 288 See Aguilar Aff., CR459; Cavazos Aff., CR521; Chirinos Aff., CR533; Jimenez Aff.,

CR564-65; Powell Aff., CR587; Malan Aff., CR610; Wilson Aff., CR614; Whitehurst Aff., CR619; Averyt Aff., CR622-23; Birmingham Aff., CR627; Contreras Aff., CR639; Pederson Report, CR664-65. 289 See, e.g., Church of Scientology Int’l v. Time Warner, Inc., 903 F. Supp. 637, 641 (S.D.N.Y.

1995) (on summary judgment, “the Court considers each allegedly libelous statement individually to determine whether a rational finder of fact could find actual malice”), aff’d, 238 F.3d 168 (2d Cir. 2001); Henry v. Nat’l Ass’n of Air Traffic Specialists, Inc., 836 F. Supp. 1204, 1212 (D. Md. 1993) (“The plaintiffs must produce [] evidence that the defendants uttered [each] challenged statement [] with actual malice”), aff’d, 34 F.3d 1066 (4th Cir. 1994). 290 See Response, 2CR1244 (March 2 editorial); 2CR1252 (May 31 Article); 2CR1254

(February 27, 29, March 8 Articles); 2CR1259 (March 3 Article). 86 of malice regarding unspecified Articles. As to the few Articles he actually

specifies, Carter failed to establish actual malice as shown below.

2. There is no evidence of “reckless” preparation of the editorial.

Carter makes no attempt to examine whether the author of the

editorial, Nick Jimenez, actually entertained serious doubts as to its truth.

Carter’s response and affidavit do not refer to Jimenez or attempt to rebut

his uncontroverted affidavit that he believed that all facts stated in the

editorial were true based on previously published articles in the Caller-

Times.291 Reliance on previously published reports in reputable news

sources precludes a finding of actual malice.292 Carter also claims the Caller-

Times should have asked Thompson about Bentley’s letter.293 Yet it is

undisputed that Aguilar, the author of the article which quoted the Bentley

letter, attempted to do just that.294

Carter contends actual malice may be found because the editorial

stated that Carter’s actions “would” threaten the chamber’s financial status

291 CR565. 292 Liberty Lobby, Inc. v. Dow Jones & Co., 838 F.2d 1287, 1297 (D.C. Cir. 1988). 293 2CR1247. 294 CR458. 87 when the accountant had only said it “could” threaten it.295 However, the

statement is substantially true296 and therefore cannot support a finding of

actual malice.297

3. Alleged ill‐will is no evidence of actual malice.

Carter alleges publisher Patrick Birmingham demonstrated “dislike,”

“distain (sic),” “animosity,” “outrage,” and “personal animus” towards

him.298 But Birmingham did not write, assign, direct, edit or contribute to

any of the articles,299 and his alleged ill-will does not prove knowing or

reckless falsity.300 Statements that a defendant “didn’t like” or “had it out”

for the plaintiff are not proof of actual malice.301

295 2CR1247. 296 See Dolcefino, 19 S.W.3d at 921 (use of phrase “could not” when “would not” was

actually correct was of secondary importance and statement was substantially true). 297 See also Freedom Newspapers v. Cantu, 168 S.W.3d 847, 855 (Tex. 2005) (mistaken but

rational interpretation of statement is no evidence of actual malice). 298 2CR1248-50.

299 CR624-28.

300 Huckabee, 19 S.W.3d at 424–25.

301 Cantu, 168 S.W.3d at 857-58.

88 4. There is no omission or juxtaposition establishing actual malice.

As explained above, there was no omission or juxtaposition, as

Carter’s explanations and version of events were included in the Articles.302

In any event, Carter offered no evidence of an omission or juxtaposition

made with the intent of creating a false impression, which is required for

actual malice.303

5. There was no avoidance of the truth or obviously unreliable sources.

Where a journalist seeks the truth from multiple sources, on both

sides of an issue, there is no purposeful avoidance of truth evidencing

actual malice.304 It is undisputed that information was sought from

numerous, knowledgeable sources—including Carter and his counsel. In

addition, Carter’s claims that the Caller-Times should not have believed

Bentley and other persons with relevant knowledge is no evidence of

actual malice.305

302 See supra notes 150-51 and accompanying text. 303 Huckabee, 19 S.W.3d at 436 (“in the absence of evidence that the defendant selected the material to portray the judge’s record falsely, the First Amendment protects the organization’s choice of which material to include in its broadcast”). 304 Skeen, 159 S.W.3d at 637-39.

305 See Lohrenz v. Donnelly, 350 F.3d 1272, 1284 (D.C. Cir. 2003).

89 H. Tag‐Along Tort Claims Also Fail

Carter testified that his non-defamation claims are based on the

newsgathering for and publication of the Articles that he alleges defamed

him.306 His response—which mentions only tortious interference and

conspiracy among his non-libel actions—takes the same approach.307 But

publication-based claims fail along with defamation claims arising from the

same events.308

Carter argued in support of his conspiracy claim (without reference

to the record) that the Caller-Times acted in concert with the people it

interviewed for the Articles.309 But Carter offered no evidence to rebut

testimony from Bentley and Caller-Times personnel negating any such

conduct.310 Therefore, the trial court erred in denying summary judgment

to Appellants on the non-libel claims.

306 CR912. 307 2CR1268-70. Carter’s response does not mention or attempt to identify any evidence

in support of his fiduciary duty or inducement claims. 308 See, e.g., Freedom Newspapers, 168 S.W.3d at 852 n.3; Rogers v. The Dallas Morning

News, Inc., 889 S.W.2d 467, 474 (Tex. App.—Dallas 1994, writ denied). 309 2CR1269-70.

310 Bentley Dep., CR857; Cavazos Aff., CR521; Malan Aff., CR610; Averyt Aff., CR623;

Birmingham Aff., CR628. See Shunta v. Westergren, No. 01-08-00715-CV, 2010 WL 2307083, at *7-8 (Tex. App.—Houston [1st Dist.] June 10, 2010, no pet.) (affirming no- 90 I. Appellant E.W. Scripps Has No Publisher Liability

The threshold element for a libel action is whether a false, defamatory

statement was published. The record is undisputed that Appellant E.W.

Scripps had no involvement in publishing (or researching, preparing,

writing, reviewing, or editing) any of the Articles or content on the website

Caller.com.311 Accordingly, it was error to deny E.W. Scripps Co. summary

judgment because it did not publish any allegedly defamatory statements

concerning Carter.

PRAYER

Appellants pray that the Court reverse the trial court order denying

their second motion for final summary judgment and render judgment that

Appellee Terry Carter take nothing. Appellants further pray for any other

relief to which they may justly be entitled.

evidence summary judgment on conspiracy because plaintiff failed to present evidence of requisite intent). 311 See Contreras Aff., CR636-40; Contreras Dep., CR988-98; Whitehurst Dep., CR1180-

81; Carter Dep., CR979-80. 91 Respectfully submitted,

/s/ Paul C. Watler Jorge C. Rangel State Bar No. 16543500 Jaime S. Rangel State Bar No. 24033759 Joseph M. Marcum State Bar No. 12973000 THE RANGEL LAW FIRM, P.C. 615 N. Upper Broadway, Suite 2020 Corpus Christi, Texas 78401 Telephone: (361) 883-8500 Facsimile: (361) 883-2611 Email: jorge.c.rangel@rangellaw.com Email: jaime.rangel@rangellaw.com Email: joe.marcum@rangellaw.com

- and -

Paul C. Watler State Bar No. 20931600 Andrew D. Graham State Bar No. 24041002 JACKSON WALKER, LLP 2323 Ross Avenue, Suite 600 Dallas, Texas 75201 Telephone: (214) 953-6000 Facsimile: (214) 953-5822 Email: pwatler@jw.com Email: agraham@jw.com

Attorneys for Appellants Scripps NP Operating, LLC, a Wisconsin Limited Liability Company, Successor in Interest to Scripps Texas Newspapers, LP d/b/a Corpus Christi Caller-Times, and The E.W. Scripps Company

92 CERTIFICATE OF SERVICE

On December 17, 2015, I electronically filed Appellants’ Brief with the Clerk of Court using the File & eFileTexas electronic filing system, which will send notification of the filing to the following:

Rene Rodriguez LAW OFFICE OF RENE RODRIGUEZ 433 S. Tancahua St. Corpus Christi, Texas 78404 361-882-1919 / 361-882-2042 fax Email: rene.rodriguez@rdrlaw.com Attorney for Plaintiff Terry Carter

Craig Smith Law Offices of Craig S. Smith 14493 S.P.I.D. Suite A; P.M.B. 240 Corpus Christi, Texas 78418 361-728-8037 Email: csslaw@stx.rr.com Attorney for Plaintiff Terry Carter

Angelica E. Hernandez AEH Law Firm 410 Peoples Street Corpus Christi, Texas 78401 361-400-2966 / 866-759-9272 fax Email: aehlawfirm@yahoo.com Attorney for Plaintiff Terry Carter

/s/ Paul C. Watler Paul C. Watler

93 CERTIFICATE OF COMPLIANCE

Pursuant to Texas Rule of Appellate Procedure 9.4(i)(2)(B), I hereby

certify that the above styled document contains 14,431 words, excluding

the caption, identity of parties and counsel, table of contents, index of

authorities, statement of the case, issues presented, and statement of oral

argument, signature, certificate of service, certificate of compliance and

appendix. In making this certification, counsel is relying on a word-count

computer program used to prepare the document.

94 APPENDIX

TAB DESCRIPTION

1. Order denying Second Motion for Final Summary Judgment, 6CR12748

2. The Articles, CR462-78, 481-82, 485-92, 524-27, 538, 541, 567

3. Bentley’s February 26 letter to Chamber board, CR299-08

4. Bentley’s PowerPoint presentation to the Chamber board, CR156- 72

5. Carter’s February 17 letter to Chamber board, CR240-43

6. Affidavit of reporter Elvia Aguilar, CR454-60

7. Whitmore’s February 28 letter to Chamber board, CR313-15

95 TABl

96 CAUSE NO. 08-1360-F

TERRY CARTER § IN THE DISTRICT COURT Plaintiff, § I ~ § § 2141h JUDICIAL DISTRICT CORPUS CHRISTI CHAMBER OF § COMMERCE, SCRIPPS NP § r'IID"Il'D , T1'~.t" I I .t" '"'~· {,

.IJUYU I ""JJ li I '-'VlYIIC "' I ~ .. > 8 SUCCESSOR IN INTEREST TO SCRIPPS § TEXAS NEWSPAPERS, L.P., d/b/a § CORPUS CHRISTI CALLER TIMES, § and THE E.W. SCRIPPS COMPANY 6 1-- - - - - - -.._.Ditefenda.n.ts i NI !ECES-CO.ll!SI:V:, IEXA~ ""-----;

ORDER DENYING CALLER-TIMES DEFENDANTS' SECOND MOTION FOR FINAL SUMMARY JUDGMENT _j' I

vn the-

Motion for Final Summary Judgment filed by Scripps NP Operating, LLC, A Wisconsin

Limited Liability Company, Successor In Interest To Scripps Texas Newspapers, LP d/b/a

Scripps")(collectivcly, "Caller-Times Defendants"). After considering the Caller-Times

Defendants' Second Motion for Final Summary Judgment ("Motion"), the pleadings the

response, the reply, affidavits and other competent summary judgment evidence on file, the

Court finds that the Motion should be and it is hereby DENIED. k 1N \ \ :siDNEDlfiis );+-day of C> q <=:):>e.IC , 2

A~AA ,_)

97 TAB2

98 February 15, 2008 Financial, management questions raised at CC Chamber Jaime Powell CR462- 463 Exhibit M-1 to Aguilar Affidavit Exhibit Q-1 to Powell Affidavit

99 Financial, management questic - aised at CC Chamber : Corpus Chrisf.ler Times, C... Page 1 of 2

call.etcom COR?US CHRISTl TEXA~ Primcr- tri~ndly srory React more at caflcr.ccm

Financial, management questions raised at CC Chamber Two members of chamber of commerce's executive committee, who asked for meeting to discuss the issues, told they are no longer eligible to serve EXHIBIT By Jaime Powell

Originally published 05:00p.m ., February 15, 2008 I ""~-I'' Updated 05:00 p.m., February 15 , 2008

CORPUS CHRISTl - Three high-ranking Corpus Christi Chamber of Commerce officials raised what they describe as serious financial and management issues Friday.

After demanding an emergency meeting Friday of the chamber's executive committee to air their concerns, two of the three officials, Judy Hawley and Sylvia Whitmore, were told they are no longer eligible to serve on the executive committee, Hawley said. However, they were asked to present their information, in a meeting that lasted most of 1 Friday morning and from which chamber President Terry Carter could be heard shouting.

No chamber officials would discuss the nature of the financial issues. The concerns arose after chamber chairman-elect Robert Gonzalez recommended a raise, bonus and contract extension for Carter in January and executive committee treasurer Damon Bentley was asked to review the chamber's financial standing, Hawley said.

At the meeting, chamber chairman Freddie Martinez Jr., legal counsel Van Huseman and Carter told Hawley she was no longer on the board because she was an appointee of the Port of Corpus Christi and the port did not contribute money to the chamber this year. They told Whitmore, a banker and a past chamber chairman, that she was no longer eligible because she is no longer immediate past chairman.

Carter declined to comment. Attempts to reach Martinez and Whitmore were unsuccessful. Huseman said he reviewed Hawley's and Whitmore's status at Martinez's request. Huseman said Carter's contract runs through the end of the year, and described the financial questions as business practice-related, not improprieties.

Bentley said Carter's review was continuing.

"We agreed from a statement standpoint to say we are continuing the process of our

l C.R. 462

100 February 16, 2008 Chamber pulls two offpanel Jaime Powell CR464-465 Exhibit M-1 to Aguilar Affidavit Exhibit Q-1 to Powell Affidavit

101 FROM THE COVER CHAMBERJnm< lA The financial concern• a.rose after chamber dJ.air- ma.n·clect Robert Gon:r.&· lez recommended a raise, bonu1 a.nd contract tnen· • 'I* are gcnng to conduct our yearly audit ofthe chamber and that will give us the re.rults of2007. Frankly I am go- ing to rely on the audit to a718weT any further questions.' • lion for Carter In J&nuary and executive committee trcuurtr Damon Bentley wu &Jked to review the bets of the executive com- Freddie saya you can't vote chamber's ttnancial staru:i- mittee Based on the dwn· on anythln& but Jet'a so lnC. Hawley taid Friday. ben bylaws, the executive ahead. and hear what you Bentley, Gooule%. Ha.w- oommfttet 1s made up of the have to~.. tey and Wbitmore would c!Wrman,chalr-dcct,lmme- Gonzalez. wouldn't com- not describe the ft.nanclal c!Wepastch&lr,vlcechalntt ment on Friday's eventl and manacement c:ooc:erns. any, and tbe:trt.asurer, Hule- becauae, he l&id, they hap- Attemptl to reach chamber manAJd.Uodc:rthote~. pened In clooed ....son. ehalmw>- Martine. Bentley, Manlnez and Gon- Bentley wu outlide In 1. Jr. wueUlliUCteSStul. zalc:z are the ol'l1y member~, ha1lway when Hawley and Cb&mbtr lcca.I counsel Hwern.a.Dsa.ld. Whitmore were dbmlsse:d Van Hustman. who attend- lb.wlcylw been the Port because Carter had denied ed the meetiRJ Friday, de- of Corpua Cbrbtl'l repre· him entrance to the meet- acrtbed the ftna.Ddal ques- aentative on the cb&mber IQ&. tiow u business prutice-re- boanl. but thls ......the port •1 wu oot privy to the lated. DOt improprieties. He didn't reocw its tund.Jn.r of mect1n&: because I wu ukt:d aaid Ca.rtt:r'l contra.et runs the cbambu, which lutyear DOt to come in,• Benne,. said. throush the end of the ...... wu $45,000. For that ru- •He went iMide aod closed The....:ut!Yeboud, with aon, Huseman &aid Hawley, the door. They (Hawley and all five mtJTi)ers pruent, met a porteommissklne:r, no lon· Whitmore) uplalned to me twowedts aco m~ cer ahould be on the c:ha.m- what happened.. It wu a otftc:e LDd. weed to put off berboanl. strance tce.D&rlo. 1 was sad· m&klnJ a decision and to PortCh&lrmanRuben Bo- - a n d I'm still """"J)'- eall Freddie, he ca11ed me a1the port's Solomon P. Ortiz lawaweare:supposedtohave and called Sylvia_ He said. International Center. The an auc:!it every year; Hawley 'thtreartSOmtfrtecularities chamber bad begun UliDI said. "l.&&tyearwehadaspot I am concerned about. We the center less. 10 neither of audit. We felt very Jtron&IY

--- oeed a tun executiVe com· the - f o r the ori&iual that we oocht to have a tun mtttee meettns as soon as servk:e q:reemeot with the audit.. chamber lj)plie...,..udlyand in January not to renew, meat standpoint to say we sot no response, Hawiefa.od Hawley Pid abe asked Mar- are contlnulnc the process Bentley said. tine& if he wanted huto rt· of our eva.lnatton and that •At that point, Damon alp and he indicated that there are both ICriow: ftnan- h a d ahared those things she should Jtay on the eom- dal and manqement lsaues and e a ch meuase we left mittoe bccanse the chamber that we need to address... wu more atrklent than the rtillwutrylnctonqodat.ea After Bentley ddivertd last,• Hawley uJd.. "Ft.naJJy d..twithport. blutpOrt,lhwlcyandWbk- we aent hand-delivered let- Whitmore is put ch&lr, ""'"'lelt the m«tiQ&. ten to Bobby and Freddie but not lmmed1ate put "J am atill very commit~ ,.questlnr tlw they uncel ch&1r. ted and willinc to serve u other meetlnp to bold an ""The bylaws are: clearand Immediate put chair, u executive aeuion u an ex· theywante4todoth!luthe 1 thoucht I wu aervtnc: eeutiYe board to discuss the bylaws 1peclty,• Huaeman Wb.ltmore said. "But J udy l=(ularltia.. said. aDd l clld lea.. the c:lwnbcr Martinez sent a.o e-maO Whitmore wu chainnan omct after we told Freddie camnc for an emergency twotennaqo. but remained a.nd Bobby that we recom- meetin& at 8 Lm. Friday. on the committee In place meoded a full audit btc.ause When Hawley arrived 10 of reflne17 maaater Dave I no lon~ had a vote.• minutes early, wlth Whit· Allen, who resl&ntd u chair· Gonules u.kl a tun audit more and Bentley tollowinl man early af\e:r Koch IodUJ· ofclwnberftnances Is In the a abort time later, Martinez tries, wbk:h owna F1lnt HUll work&. He would not elabo- wu behind closed doors in n!tlnery In Corpua Chrlni. ...._ Carter's otnce with Huse· transferred him from the "We are COinI to ccnduct man. city. Whmuore remained on our yearly &udk otthe cham· "'1ben Terry and Freddie the committee at Mattlne%'1 ber and that wltl ctYe us the come ln and ta.lk to Sylvia reqaut, abe, Hawley aod re.sults of 2007," Gon:a:ale1 and me,• Hawtey aa.kl. "We Bentley &ald. Wd."'Fraolllylamcoins:to are the only ones in the room. lb.wlcy- their abrupt rely on the audit t o amwer They td1 us. Ttny says, "in anticipation that there mar be action t.Uen today, we. ... dismissal Friday, att.u hav- in& been asl

Sl4/f--- want you to know we have J uid 'You have cot bf!rAJ2007year.• been lookio& at the bylaws to be kiddinc.' Aad Sylvia aDd It lj)pcan"'" aDd Syt. Ald. 'Wb.l1 are you t&Jkinc ria are not YOtinc members about1' Our lt&.tUI was dne andFonR.v s. CWrinol beea.use after oar attorney Ulltiltoc!oy.• amtr(but.ld 10 " " rrport. JttUtiDhed the bylaws y"all Haw)eyaJd.ltwuslcnJ~ OmlactPoto«J.ctl!J86..$714 are DOt dicible to sit on the cant that: abe and Whitmore or~com e:xeeutiveboud.- were the ftrst order of busl· Huseman u1d Martinet ness Friday, instead of their asked for lega.l advice be- concernt about tln&oclal cause the question had been practices. raiaed whether Whitmore •t sa.ld, 'OK, I guesa we and Hawley were legal mem- will kiss """ soodbye.' Then

1 C.R 465

102 February 20, 2008 CC Chamber meeting to discuss financial irregularities Elvia Aguilar CR466 Exhibit M-1 to Aguilar Affidavit

103 CC Chamber meeting to discus .ancial irregularities : Corpus Christi ~er Times, Cal... Page 1 of 1

callet:com COIU'US CHRIST~ TEXA~ Printc r· friendly s\orr Read more at caller.com

CC Chamber meeting to discuss financial irregularities By Elvia Aguilar

Originally published 01:24p.m., February 20, 2008 Updated 01 :24 p.m .. February 20, 2008

CORPUS CHRISTl - The Corpus Christi Chamber of Commerce executive committee is meeting to discuss financial irregularities discovered during a performance review of president Terry Carter after a raise and bonus for Carter had been proposed. The financial questions led to a decision to conduct a full audit. Today's meeting is a special-called meeting, to be followed by a meeting of the chamber's full board.

@ 2009 Scripps Newspaper Group- Online

1 C.R. 466

104 February 21, 2008 Financial questions lead to call for audit Elvia Aguilar CR467 Exhibit M-1 to Aguilar Affidavit

105 • • · "ae~ItiRtiftfri~''''W~*~,; THURSDAY, FEBRUARY Zl. 2008 CITY EOlTION 50 CENTS

CHAMBER OF COMMERCE Financial questions lead to call for audit 1Y RVIA AIWilAR Q:I~TI'- The Corpus Chria:tl Cham· ber of Commerce decided Wednesday to conduct a full audit. after what have been described a.s finaociaJ ir- ~arlties were unccwered while remwmg a proposed rabe and bonus for chamber * CAl l EA•TIMES • February2l2008• n anday • 7 A p[c:sident.ICEOTcnyCartcr. Three top ch.amber ofl!- .W.,chalnnanF'reloo,_,occumd: to answer questiona abOut what was meeting of the execudve l)Threeotthecommtttee'J!Wemembers discussed. The meeting wu not tape committee, followed by a broughtthe1\nand.alconcrrnstothefu11 recorded, a departure from the usual full board meeting. Marti· commfttee'satt.ention,and2)Carterand pnctice. nez, who also cll&irs the er- Hu.scmaninfonnedtwoo!thethreethat Laurie Cook, a recently appointed ecutive committee, said no they were no longer eltgiblt to serve on board member and former chamber auditor has been chosen and the committee. chairwoman, offered perspective on Those two, Jucly Hawley and Sylvia why there may not be a set schedule Whitmote,dJd not attend Wedne.sd.ay's for the audlt. Cook, a cert.lfted pubUc meetinc. The third, bo&rd treasurer accountant, pointed out that this is Damon Bentley, declined to answer income tu: sca.son. the busiest time for questlonsallerWednesday's~ practking CPA& A CPA hired to audit People famlllar with Wcdoe.day's the chamber on a rtrlct schedule during proceedinp: saw Bentley dei!Yer a. Pow· tu season would be likdy tp charge a erPoint presentation on the ftDandal premium rate. she said. The ataodard lssues, with paper copies distributed practice for &n orpnizatlon eon.duct- to boord members. Aftetwvd, Trmlio lnl an audit would be to advertise !Of was observed eollectinc thoae paper requests for proposals from potential copies from boord mcmbcn. aod Bent- auditors, she said. ....... cbo

106 February 27, 2008 Chamber CEO shifted funds, letter says Elvia Aguilar Exhibit M-1 to Aguilar Affidavit Exhibit Q-1 to Powell Affidavit

107 SO CENTS WEDNESDAY, FEBRUARY Z7, ZOOS CITY EDITION

Chamber CEO shifted funds, letter says Move makes loss his salatyIn2008 and 2{)(fffortax purposes.AI:telnpUtoreacheart. Feb. 15 meetln& of the chamber executive committee that in- appear to b e profit, er'l\lesday were unsuccessful. cluded a shouting match with tng to a Jetter by the chamber's Bentley was asked to review Carter and the d ismissal of two treasurer writes treasurer. the chamber's tl.nao.c:es in antici· committee members, Judy Haw- Chamber CEO Terry Carter pation of a. raise, bonu.s and eon· ley and Sylvia Whitmore. Bentley, l'f n VIA AGUILAR also d eterred part of h is and his tract extension for Carter. The Hawley and Wbitmore had de- C4Uflr'>n:mu second-in-commaDd's 2007 sal- Calkr-Timudid not acquire the mandedthemeettngvfacertifted The Corpus Chr isti Chamber of ary to 2008, chamber treasurer letter from Bentley, but h as veri- letter after committee members .flllaryWQ.S Commercechtefexearttve. whose Damon BeDtley said In a let- fied It as what be sent &nd board Freddie Martinez Jr., the chair- 1137,000 plus bonus Is based on 1\nanctal per- ter 1\lesday to board members. members received. man, and Robert Gonzalez, the benefits and formance. shifted tuncb to make Carter, In a Feb. I7letter to board Bentley disclosed his concern cpmse.s. a loss look like a pront. accord- members, said he deferred part of about the chamber's bookl at a

1 C.R. 468

108 • CAllU•TUtU ·Febn.ary27.2(X)8· ~·· 7A

FROM THE COVER/ NATION CHAUBERJrcm< lA c.halrman-elect, did not numben prorided in Bent· respond to phone ea.ll.s for ley's letter show that the more than a week. chamber showed the aur· Ourtn1 the mectins:. plus by bookin1 $63.90.5 tn which was tape-rtadoY.acknowtcdcedthat expenses, accordin& to the beddcmdparto!hlssalary ktter. He lhitted the mooey !orth.atreuon. totbedwnbenfouodadoo, The amou.nt Carter de· then bOled the foundation fernd lutyearwu$19..992. for apen.ses Ln that amount. accordiDI to Bentley's Itt· Carter's Feb.l71etta'a,ys be IU. dbcuned the move with Carter's 2006 salary, Thompson and Bentley be- the molt recent available Con: shlftin& the funds. The throqh a ftn&ndal report foundation hu operated required by &overnment with ..W.ea4 provided by rulea for nonprofit orza· the chamber and the cham· niutlona, wu $137,000 ber had never bet.n reim- plua $8,000 In bend\ls and bursed for those expenses, $6,000 In upenses. &ca)l"diag to Carter'llctter. Thellnkbetweencan.r'S Amonr other concern• bonus and. the clwnber's fi. Bentley lilted wu t he nancW perfonn.nce wa.s a chamber'l Jack of aecou.o t· red flag for the chamber's ln& tor special event1. Hi.l accountant,OarTtllThornp- lettcrdescrlbed them as •ott aon, aecordins: to Bentley's the book&; with only net ln· letter. The a.ccountant told comepresentedtotheencu· the eh&mber executive com· ttve eonunlttet. Examples of mlttee that •use of Building special events In 2007 were Fund dolla.n to supp&ement thema)'Or'I.SweottheCity the dwnber operatins: ex· address, Salute to the MOI- penses could possibly forfeit tary and the Cooquer the the (chamber) foundation~ Coo>t blcyde ride. (nonprofiQswus bc:causeot Bentley also ltaUd In his the Unk between the CEO's letter that hewas conc:erned bonus to the ftnancial per- that carter autborizes ~ir· tonnance of the chamber." nlftcant con~ w1t.bout Tbebulldlnatundwasset 1eddDI bld.a or con.aultins up to pay for the chamber's the execut1V'e coaunlttee or CYentual moYe frOm lb cur· boud. rentbuikiin&. DOW owned by He also uJd a compari- the r~cnJ aovernment as son oCyu.r-cnd lllelllbenhip pa.rtotthedealtha.tallowed lisu •reflects a .li.(niflcaot the federal c:ourthouse to be decline in member orpnl- builtoextdoor.Thedwnber zations in 2()(11.· wlllh.avt:tomoYeby201L Anaudltoftbedwnbeds The letter also said the peodlno.Theorp.ahatioo~ accountant •no kmsez- wiU bylaws can for an annual discuss this matter and that a.udit but Bentley and otl...-

.....,.,t the eha.mber has become a 'hl$11 risk' .. that b e - DO Joo&u want ID be top cbamber oftldala have &&fd they"~ DOt sure when the last audit was done. o.aoc:!ated with." Tbompaon

1 C.R. 469

109 February 29, 2008 Ex-chair airs her chamber concerns Elvia Aguilar CR470-471 Exhibit M-1 to Aguilar Affidavit

110 50 CENTS FRIDAY, FEBRUARY 29, 2008 CITY EDITION

Ex-chair airs her chamber concerns Leaders say they are pushing for audit soon ftiLVIA AAIIUAI Co/,.,.71. . . The Corpua Chrl•tl Chamber of Com- merce bun't taken t utnclent mps to ad· dress • very credible" ft.na.nclal concerns raised by Ill treuurer, who hu been de- nied accetl to c:ritieallnfonnatloo. a for- merchaJrwoman aa.ld to a letterTh.unday to boud members. Former c!Wrwom&D Sylvia Whitmore aloo clispulalbe ..udltyofboCUDS. The other two eucutlve committee members, Chairman Freddie Martinet J r. and Chairman-elect Robert Gont.a- IC'l, said Thursday they are mov1nc u quickly u they ea.n to hire a.n auditor to conduct a tun audit. They uJd they deter to chamber attorney Van Huscm&n'• lepl Interpretation of chamber bylaws In the r emoval of both Whitmore and Hawley from the executfvoe committee. Phonemes- sqale!tonHul

111 fROM THE COVER CHAMBER.{nnn lA Chamber CEO Terry Carter, whose handling of chamber ft.nanclal matters I • Martinez said the com- mtttee already had been ICheduled to mett that day. • CALt.U-TIMES •Ftbruary29.2008•Frklzy• 7A

raised the concerns, could , Gonzalez said he talked not be reached Thursday t to Hawley tn person a.nd afternoon at his office or t returned a call from Whit- ~ cell phone. j more before the meeting. ' Is,°Ca~~!rm:~~i~~~!!~b~ ! n/:~=~~·~:rt~~~ ~~~~~; took Whitmore a.nd Haw- ! of the upe would be de< : i ley behind closed doors ! with as a staff personnel 1 and told them they were DO ' matter. Until that matter ' longer eligible to serve on is resolved. Martinez said. : the committee. As Bentley the tape should remain in waited outside, according Huseman's custody. to w1tncss accounts, the two Bentley, in thee-maO to · women endured 1hout1n g boardmemben,saidhesent

: from Ca.rter. They stayed a.certifiedletter to Huseman to hear Bentley's report. ~=~::.~~::J~~ta~er!=~~ :~P~~7::~~~~;::~1:~ ~~m the exeeutive commit- ;~~ft5r:r~~a{;,~~t~eer:~l::! ~:~~::!:~c~~~~tiei:~:~: bo&rd authorization, mov- ing funds to other accounts , ing of th~ meeting and left i said Huseman refused to "'The interpretation that yea.r or untn their succea- or suuesttons of any rots- running special evenu ott the bulldmr;. surrender the tape without 1am not officially a. member sors assume otnce. appropriation or mi.Juse of the books, arbitrarily fill- Bentley ha.d been asked Martinez's consent, and of the executive committee ..Since no one has as- funds . ... The Chamber of ing board seats. all of these to review the chamber's Martlnezdeclinedtorelease espectallylnUghtofthefact _.umed the duties of imme- Commerce is In exce llent issues are about trust, con- finances in antit:lpatton 1 !ton Huseman's advice. that the chairman (Freddie dlate past chair, that person ftnanclal condition a.nd will fidence in the leadership, of a. raise, bonus and con- Martine:z. u id Thursday Martinez Jr.) had requested would be me,~ Whit more continue to be good stew- procedures in place which tract extension for Carter. he sought legal a.dvice of that 1 stay on when the 2007 sa.id. ards of our funds.• ens ure tra.nsparency and Bentley found that Carter Husema.n.lntheseinstances chairman (Dave Allen} leh Whitmore also said she Whitmore offered some accountability of the cham- had shifted funds among and those were Huseman's the city is a concern to me; is conce rned with cone· wordsofadvicetothecham- ber CEO to the board and accounts and de fe rred ler;al interpretations of Whitmoresaidlntheletter. spondence by Carter to berboardmembers. the membership." $19,992 of his 2007 salary. : what needed to be done ac· Martinez said he may the board and ch amber "The chamber needs Whitmore, contacted Without those moves, the cordinc to the chamber's have asked Whitmore to members ~glossing over ft- to strengthen and follow Thursday, deelined t o co chamber's cash flow would bylaws. rematn on the board with n&nclal trre&ularities and Its accounting procedures into specific details about have been nqative, accord- •t also want to make it Allen's departure but has the decllnin&membership &nd Its accounubility to its her concerns on arbitran1y lng to Bentley, a.ddlnz that cie.ar that I have no person- no clear recollection of a numbers." members. M stated prevl- fU1inz board kats, but aatd Carter's bantu is b ased on alproblemwhatsoeverwith eonver:u~tion with h er on She wa.s referrinc to an ously, the action taken by :;he ha:;heardeoneenufrom the chamber's tinancial : Sylvia,• Martinez said. •tn the matter. e-mail Monday by Ca.rter the· chamber board to es- former board members who pe rformance. According fact, In rny business here at "I think I may have had to chamber members, In tablish a.n audit committee have left the ehamber about to Bentley, the chamber FreddteRecordswedobusi· a conve rsation with her which he wrote: "'The ar· lsagreatstep,butisnotsuf- bow they were replaced. ac:countant told htm that ness with Frost Bank." when I was first appointed tides which recently ran In ftclent to reusure me and

I the chamber foundation's Whitmore is employed at as chair," he said. "but what our local newspaper art an others that the chamber's Business writer PaftftJI S. nonprofit status could be Frost Bank. wa.ssaid,l'mnotsure." over dramath.ed account operations are trans par- Chirino&omtrlbut.edto lnjeopardybecauseCarter Wbltmoresa ldtnthelet- Whitmore eitesehamber of nothing more than our ent and open," she wrote. thi.s t"eport. ConlaclEivia shifted chamberfoundation ter she stfll Is bothered by bylaws which state that all board's routine and normal "Executinr; eontracU with- Aguilar ol 886-3678 Ot" ~~~~!,~:;~::::.!ib~::; .t~~~~-g-•1-it-y_of_h_•'_'_'_ "'_ov_•_I_om_•_•_"_'_h•_u_•_•_ k•_o_m_•_•_on_ r_•_vi_ew_or_t_h_ e _ch_•_m_b_•r_n_-_o_"_'.. _ •.,_u_ve_•o_m_m_I_tte_•_o_,_ ... _..,_..-... __-_"""___ ts linked to the chamber's I' ftnanci&l perlonnance. In an e-m&il Tuesday, Bentley informed board members that he sought a written account of what I tr&nspired at the Feb. 15 meeting from the accoun- tant, Darren Thompson, but Thompson decUned be· cause Martinez didn'tgrUlt him a letter releasing him to do 50. In her letter Thursday, Whitmore sa.id she was con- cerned about "denying the treuurer aceess to critical Information and advice of ftnandal professionals em- ploye d by the chamber of 1 commerce." --rhe treaaurer's con- ~ cems are very credible Uld appeared to be mostly Ig- nored,'" Whitmore wrote. "There was eonttnued re· tusal of the chair and cha.ir- elect to respond to attempts to schedule an executive meeting immediately to work to1ether to address irregulutttes. There was refusal of e.hamber SU.ff to cooperate with the trea- surer on a task he was given by the board and executive committee. FlnaJly. refusal of the chamber CEO to re· lease the tape of the e.r.ecu- tive committee meetlnc which was held Feb. 15." Martinez sa.id Thursday he had not been able to re- spond to Bentley's requens to meet becauGe of work commitments and Ulness. "The 6rst 1 heard about the concerns was during a Jan.3lmeetlnglnmyotfi.ces with the ftve executive com- mittee members,'" Martine2; said. • ouring that meeting we decided It would be dis- cussed agaln. I was out of town Feb. 7 and 8 on busi· ness and was Ill Feb. 11 and 12. When l returned to work on Feb.131 had a letter from 1 C.R 471 Damon, Sylvia and Judy re- 9U~tins the Feb. 15 meet-

112 March 2, 2008 Chamber CEO's actions raise serious questions CR567 Exhibit P-1 to Jimenez Affidavit

113 OPINION • • Chamber CEO's actions raise serious questions Funds were shifted that made a loss look like a profit, entitling CEO to a bonus he Co.iler-TlMu Publi.shinc

T Company resi.p.ed from the Co.-pus Christl Chamber of Commerce last year. That wa.s a. decision prompted by the divisive possibly rUkin&the chamber's nonprofit status. These hleh- h&nded t actic& havre done severe damq:e to a very Important civic orpnizatton. Jelderahlp of Terry Corter, chief The CO.-pus Christi Chamber executive of the dwnber. AJ ot Com.merc:e 11 supposed to Publisher aod Prutdent Patrick speak for the business eommunlty Birmin&ham .Wed at the Ume, of the dty, notjust oo bu.aine.s• the company could no longer be matters, but oo all l.uutt that a part of an orpuiu.tioo "with a a.ffect Ita: econom tc wdl-beln~o prcstdent who enp.ges in na.me The ch.a.mber can be, and bas calli~ a.Dd shows fawrtUsm been In its history, a truneodous toward one business over a.noth- force for the prosreu of the dty. er." The company had been a But when the conduct of its chief member of the Chamber ot Com- executive 11 under question, u It merce for 75 years. is now, then that transfen t o the The b111inesl side of the news- orpnlzatioo u well. That 1.1 the paper and the oplniom expressed damage that hu tnntcted on the to thlJ edltortal pqe space are dwnber by Carter's actions. aeparate. That point mll4t be It wa.s a cou.n.geov.s ltep taken emphasized followlnc rt;ports by Bentley, Hawley and Whitmore about bt&hJy questionable stew- lD fon::lnc tbe issue ofaocoo.nt- ardship of the dna.ncW atfa.ln ablllty. The removal of H&wtey and of the chamber by Carter. The Whltmote, by a. conventerrt. Cor rnd·shltltl!f wu &llowo

EXHIBIT I'' P- \,, ] C.R. 567

114 March 3, 2008 Petition seeks chamber Changes Elvia Aguilar CR472- 473 Exhibit M-1 to Aguilar Affidavit

115 50 CENTS MONDAY, II ARCH 3, 2008 CITY EDITION

Petition seeks chamber changes Members call for to ~erse hi!: changes io the cham· ber's accounting procedures. a surplus of operating funds. Cart· er's bonus is linked t o thechamber's increased clarity, The petition is a reacUon to ft. na.nclal moves cited bythe cba~r ftnancial performance. Attempts to reach Carter and accounting switch treasurer, who wu uk.ed to look into the Oflanlz.atlon'a ttoances u chamber eha.trman Freddie Marti· Del Jr. Sunday afternoon were un- IY U.YIA AGUILAa part of a review ofa proposed raise, IUCCU$ful. c.u.,.,_ bonus and contract utenston for Organizers of the petition are Some Corpus Cbrl.stt Chamber of Carter. Treasurer Damon Bentley scheduled to meet at 11 a.m. today Commerce members, tnelud lng reported that Carter had deferred at Brewtter Street lee House to dis- thrt1: former chairmen. are circu· a portion of his salary and shlfted t ribute the petition and explaln Ita: latlnr a petittoP to address eon· other funds •monc chamber a.c· purpo>e. cerns about recent ft.nanclal moves eounU in a manner that tu rned by t op executive Teny Carter, and wbat should bavebecoadeftdtinto

1C.R.472

116 • • CAllU· TIMts •Marchl2008•Mon~· S A

NATION/ FROM THE COVER CHAMBERJ;= IA llrm that Includes Jobn Bell, who for years was the cham~ The petition asks for: froml Oper«ntofthemem· ber'$1tt()maid he signed the got Involved In the process because he wu upset about Ha.wley and Under the modltied system Steve Woerner, CEO a.t Whitmore's removal as wen used by the ehamber, reve- I>rUcoU Cluldren's Hospital as eoocernedabout Bentley's nue Is booked lmmecllately. and chamber chairman lo 11.nandal qtaUons. For e.z:ample, 2008 chamber 2004, sa.1d. he stped the pe· •tthinkltwuquite rude dues collected ln 2007 were tition becaUJe he is worried how two of the most re- booked In 200 7 thoush about the chamber's future. spected women ln the com· they were paid for a 2008 "Onceyouareachairman munity were treated and 1 expense. you are part of the iofonnal think we as members need l~adership of the chamber to have more transparent AUDIT COMMITTE£ and because of that I have and frequent ftnanclal re- The board should appoint a vested interest In IU suc- port s," he said. "We also a n audit committee of a.t cess,• Woerner sa.l.d.. "'I want need toha.veclear goals and leastfwtch.ambermemben; to see ftsucceedand frankly a mission forthechamber." including the sitting cham· I ha.ve heard enou,b con- Chamber member Tom ber treasurer, two" past cerns where we were going Dobson, c:hairmaD and CEO chairs and two other mem- to see an exodus ofthe metno ~loc.,b­ ben selected by a mtJority berahip and 1 don't want to thepetitlon~si&ners- vote ofthe board, accordJng oeethal." "As &l onrtime member to the petition. Notable depa.rture.s in a nd past director of the Tbe petition also uka the pan year included Ful-- Corput Chrlatf Chamber of that the c:hamber publishfts ton..coastcon construction, Commerce,• Dobson 1aid, aonua1aud.itanddtstrlbtrte whole partaers lllclude for- "'I'm very concerned about ittoallmembenwlth.1Dl20 mer chamber cbainnan Jim the accounting questions daysofthe close oftbefiscal Barnette; Bank af America; raised recently. I strong1y year. UtF Distrilruton , the Bud- encour&&e t he chamber Former chai rwoman w.lserb=distrlbuu>r,San l

1 C.R. 473

117 March 4, 2008 About 80 sign petition on chamber operation Elvia Aguilar CR474-475 Exhibit M-1 to Aguilar Affidavit

118 • CORP'US CHRISTl '

•~allt~imtjili' 50 CENTS TUESDAY, MAICH 4, ZOOB CITYEO!TION

About 80 sign petition on chamber operation Concerns heard, Freddie Martinez Jr. at- tended the conference to chairman says uy the petitioners' coo- cern• are belns ~YJ',..!GRLAil ~ ~=~~~r::!:d b;~~: Some of Corpus ~ chamberboard. Chriatl'a1arae.~t em- - The petition orp- ploycra have sisned otun are ukin& the a petition of Corpus Chris- eht.mber'aleadership for a t1 C:hA.mhn of Commerce lin ot the tun mamborohip members nektng to ad- 10 they know how ma ny dre&J concerns about top slp1atures they need to col- uecuttve Terry Carter's !eeL Carol Scott, a petitiOn recent fioa.nclal moves and orpnber a.nd fotmcrthair- lhe dcparturea: ofloJlltime woma.n, uld she also needs members. the Jist to eoofirm which About 60 members, In- buslne.uu that have li~ed dud los 11 former cha.lnne.n. actually arc members. Ten attended a news conference percent of the membenhfp

. Monday at Brewster Street is needed to force the meet· fceHouseto&howtheirsup· Ins, but Scott said one of 1 po~!~~~e ~t~n ~~;ebe the luues thf'5lf2rates 1 C.R. 474 re ach ed, but chairman Ptsa.s••a CHAMB£171. ~

119 FROM THE COVER CHAMBERft..,. l A ,J~WHO SIGNED ,, :.:. LEFT: Jvdy HaWley ·COOipaniesthat~ · :~.·:_, ~~~t&~t~~~e~:· !~~~~~: wlthAdvancedA

~!i!E G pe"LitioK cdd.Te.U· ing rmmtj&Joncial mo-uu within lA.e Cor- P1U Chrl.tri Cl&cmber Q/ Com7Jl4f'CC Wore o tUWS cxniferenu on Jfonda.Jf 4boul th4 Ls- ""'cslBr-ew~IM"Strut lc.Houu.

BElOW: Chomboc ol Commerce chafnnan Fnddie Martin u Jr.

:=:=~-~ ~ i::~~~~e~~t~~ (l([l)tcLt.svrllAKen 1 :; : Grfffm ofAEP Tnus ' il C.C.FilePro ' -~- erhaddeferredaportionof ajkr Mo-n.tiay'a news

_:~t=':Fe <. f • ~~~;~~:~::~~~":~ cmt{ennct. Marti11a uys m4tmbn-s' con- •--~-.- ~:~~S.I~--:~t·~- - ;:;~~~- counts in a manner that uniJ"11Jef'eM4rd.

{: • Cobb,Luodqulst&Atnlp .. _,, turned what should have - ·-~~r-; ~fi · been a deficit into a sur· ~-:· PaeuettersteeiRultors plus of operating funds. f.: • .~et!Street .: -1·~ ~0a~=r~:~~r\i~~!~~ea~ =~~ - ~~-{: performance. r~- • Corpusarhti'Assoo,_tioo . ag~~~{!u~i~i~h:. • o(Rta.lton ·,.;- - ~~-~ --: sponsetotheconcenu.The ~' W C«pus aristiBUidf:rs•··:..:.- - chamber is &upposcd to un- - ~- ~~aristl-~~:···. - ~ . dergoanauditannuaUy,ac-

_·l-~.l_-1._?.·~_;:_.~~~; ~~~~ ; .. ........." narrow the list or outside

r~i= ~~:= =~~~~~=~~ ~~::,.~r~~ se~a~TI!~~~~S:di~oard t•: ~~~; ;~-~~..:-~ . ~:::U~~C:n~:= : ~~~-~r.1i}:~;, ~:nc:=::t'!e~oC:~iso:

; ~:~;~;0, =~~~~~~~ •- kleotitylheftSolutlonS. •JOeAdame&~lnc..'~ ·_r-~1 ate & fmanclal committee In charse of reporting the an iuue like It Is now," Sconsaki chamber members f ;. ~~=~~J~-: :· ~~ra~~~~~~a::~~~e: Whitmore uid. Port commissioner and who wanted to sign the petition could do so a.t Brewster Street =·~~== ,~~-, 0 charged with upde.tin&the former st ate Rep . Judy Ice House, FastSigns or Kailo ~.~rO:~~~~~- ~~:~~q~:;:_hedescribed Hawley, the other execu- tive committee member Cor:tmunlcations.

' =i~i~~:Jtat·~~:_ ~-~ ph;!eh~~~~~!~~ dismissed Feb. 15, said the newa conference Mon· Contoct Elvia Aguilar at88

1 C.R. 475

120 March 8, 2008 Chamber board, CEO to enter talks Elvia Aguilar CR476 Exhibit M-1 to Aguilar Affidavit

121 50 CENTS SATURDAY, MARCH 8, ZOOS CITY EDITION

Chamber board, CEO to enter talks Concerns about chamber's president a.nd CE.OafterehambermemberS Cuter did not retu rn cans to his work and cell phone future.• The board on ·Friday When contacted after Friday's board meeting, leadership lead r&.is ed concerns this w eek about his leadership. Friday. •u wouldn't be approprf· scheduled Its annual gen- eral membership meetlns several board members deferred comment to Mar- to discussion Chairman Freddie ate for me to say what MartinezJr.wouldnot ~ w e will b e t&lki ng in response to a request this week by members, but Mar- tinez. Martinez would not say IY rLVIA AGUILAR say what issues would ~l)n about because they tinez said the board may whether the planned discus· CaUe7'-1imu ~~e~\s~~!~!:~c~g :~~=:~ !~:~e;; meet $00ner if needed. The sions with Carter were In re- The Corpus Christi Cham- ber of Commerce board of Terry Carter and the - expect whatever is de- full membership meeting is scheduled for March 31 but sponse to concerns raJ$ed by chamber treasurer Damon directors decided Friday to 27-member board or when clded will lead to a decision a location and time have not enter dl..scusstoru with the those meetings will occur. from the board in the near been set. Pf«Ue see CHAM8ER7A

CAllU•fiMES • Marth8.2008• Satunlay• 7 A

FROM THE COVIR CHAMBERfrom lA petition drive. a11y, according to chamber bylaws, policies and pro· Scott said she was bylaws, but chamber otn- ceclure.s review committee Bentley in a Feb. 26letter pleased a date bad been dals have said they don't char~ with updating the that stated Carter deferred set for a full membership know when the last audit ch&mber's bylaws. a portion of his salary and meeting, somethi n g the wa.sdone. Btntley will lead the shifted other funds among petition requested, and Board members Leon ftr,ance committee, which chamber accounts In a hoped the remaining re - Loeb, a developer, and Lau- aho Include$ board mem· manner that turned what quests would be addressed rie Cook, a certified public bers Gary Malone of Wells should have been a dencJt i n the annual meeting's accountAnt and a former Fargo Bank, Butch Esc- into a surplus of operat- agtDdL chairwoman, said Friday obedo of Butch Escobedo ing funds. Ca.rter stat ed "1 would Uke to chal- they hope to hear back Insurance, Trent Hill of In a Feb. 17letter to board lenge the chamber leader- from auditors by the end Texas A&:M University· me mbers that those ac- ship to a ddress the level of Ma.rch. Former cha ir · Corpus Christi and Robert counting methods were of detail we u ked for in man Bud Harria, Del Mar Blair of Bay Ltd. a.cceptable under account· our petition," Scott said. College'a dean of Work- Hll1 also was appoint ed ing methods approved by "'If not, we may ask for a force &:. Economic Develop· to the bylaws, policies and the board. second f ull membership ment, also is on the audit procedures committee Bentley waa as ked to meeting." committee. alone with board members look into the orp.niutlon'a At F r iday's meetlng, "At that point we will Jcn na Davidson of Ana- finances aspartofareview the cha.mber board heard make a r ecommendation lylical Testing, the cham- of a proposed rain, bonus from an audit committee to the board and then ha.ve ber's attorney Van Huse· and contract ext ension formed Feb. 20 and also them select a firm to do tbe man and Pat Townsend for Cuter, whoae bonus Ls appointed board members audit for u a," Cook said. of Del Mar College. John linked to the chamber's ft. t o two other committees ~vera! I, It wu a very pos- Michael of Nabmlth En- nucial performance. formed i n response to itive meeting that I think ctneertng will lead that Carter came t o Corpus Bentley's concerns. is putting us in the right comml~tee. Christl In 20M from Pas- The aud it committee direction." cagoula, Miu ., where he seta.Mareh 28deadUneto The chamber 's board SIIJ,[fvn-!Uo-IH4A Wo'Uon was president and CEO of receive proposals from au- on Friday also established CClnlrihtted to llt.U fYPOrl., the Jack!: on County Cham- dltingftrmsforafullaud.ll a financial committee In C~tact Etfric. AguUor ot ber of Commerce. In 2006, The chamber Is supposed charge of r eporting t h e 886...!fJ78or the most recent year for to undergo an audit a.nnu- chamber's ftnances and a a.pil4rriitcaller.com. ~~~ct~!~~~C:h~~~~::~: , - -- - - - - -- - - - - - -- - - - - -- -- --' tlon's tu forms required of nonproftt JfOUps, Carter made $137,000 plus $8,220 in benetl.ts and $6,000 in expenses. Martinet said he called Friday's bo ard meeting: in response to questions raised by Bentley and other cb amber members, who have been circulating a petition seeklns detailed financial and membership information. Mora thao 60 chamber members had a news COD· terence Monday a.nnounc· ing: the petition drive a.nd stating concerns about de- partures of several tons· time members. By Friday evening, more than 85 signatures from some of Corp us Christi's larsest employers had be en col · lected, said former cham- ber chairwoman and cu r- rent member Carol Scott, 1 C.R 476 who helped organize the

122 March 19, 2008 Chamber treasurer granted temporary restraining order protecting tape of meeting Elvia Aguilar CR477 Exhibit M-1 to Aguilar Affidavit

123 Chamber treasurer granted ten:~ restraining order protecting tape c rting : Corpu... Page 1 of 1

callet:com CORPU~ CHRJST( lEX.AS Primer-friendly SlO{')' Read more at caller.com

Chamber treasurer granted temporary restraining order protecting tape of meeting By Elvia Aguilar

Originally published 11 :49. a.m., March 19, 2008 Updated 03:00 p.m .• March 19, 2008

CORPUS CHRISTl- Corpus Christi Chamber of Commerce treasurer Damon Bentley has been granted a temporary restraining order against the chamber and CEO Terry Carter to prevent a tape recording from being destroyed. The recording is of a meeting at which Bentley and two other chamber officers reported their concerns about the chamber's financial practices.

In a petition filed in Judge Jose Longoria's 214th District Court, Bentley also requests Carter to be called in for a deposition in anticipation of a lawsuit against him and the chamber.

The tape recording Bentley is seeking to preserve comes from a Feb. 15 meeting of the chamber's executive committee, where three of the committee's five members brought the financial conterns to the full committee's attention, and Carter and chamber legal counsel Van Huseman informed two of the three, Sylvia Whitmore and Judy Hawley, that they were no longer eligible to serve on the committee.

Bentley's petition for the temporary restraining order says he has sought a copy of the tape but it has not been provided, and that Garter took the tape from the meeting. Bentley's petition includes an affidavit from Whitmore, who said she also has sought a copy of the tape.

Bentley's concerns about the chamber's financial practices arose after the chamber board asked him to review the chamber's financial standing in anticipation of a raise , bonus and contract extension for Carter.

© 2009 Scripps Newspaper Group- Online

1 C.R. 477

124 March 20, 2008 Chamber unrest ends • up zn court Elvia Aguilar CR478 Exhibit M-1 to Aguilar Affidavit

125 • _, --(" ' .. ~ >:t\. • • ....... '~; ...."!f'l · : ~~ -~ "'"' ,-.,.~ , _ - ~~- "'~ .,.. ....... • ~:,·:,.:-.~-~atff~imt 50 CENTS THURSDAY, MARCH 20, 2008 CITY EDITION

Chamber unrest ends up in court Treasurer, CEO each make filings 6 A •Ttwnday• Man:h20,2008• CAllER·TI MU * IY RVJA AIWJLAI

FROM THE COVER """-"- Dboa!1sfaction within the CorJ>us Christ!CiwnberofCommen:olw moved to the court S)'StmL CHAMBER/,..... lA condition or mtus.lo addition, Chamber treasurer Damon since the bonus was not linked Bentley has obtained a tempo- the aecwed. "pla.intJfrs em- to the 1'\nanclal performance rary restrainiog order against the ployment wtth the chamber is ofthe chamber, use ofBuilding chamber and its chief executive. in jeopardy and any ch&.nee of Fnnd dollars t o supplement the Terry Carter. Carter bas filed a continued employment with the chamber operatina: expenses separate lawsuit seddn.g damag· chamber through Dec. 31, 2010, would not have forfeited the es against Bentley, the chamber, is essentially oonerlstent." foundation's 50l(c)3 status as the C'4.Un--Timu and others. Chamber attorney Van stated by defebda nt Damon The restralnlng order, ob~ Hustmt.n destribtd Bentley':J Bentley and reported by defen· tained. 1\.tesday, prohibits Carter petition a.s frivolous. He said da.nt C

126 March 26, 2008 Chamber puts CEO on paid leave Elvia Aguilar CR481 Exhibit M-1 to Aguilar Affidavit

127 Chamber puts CEO on paid lea- Corpus Christi Caller Times, Caller.<- Page 1 ofl

callet:com COR?U.S OiRISTI. lEXAS Prlnwr.frion,j lj" s loty Read more at callcr.oom

Chamber puts CEO on paid leave By Elvia Aguilar

Originally published 05:25p.m., March 26, 2008 Updated 05:"25 p.m., March 26, 2008

CORPUS CHRISTl- Terry Carter, president and CEO of the Corpus Christi Chamber of Commerce, has been put on administrative leave with pay effective immediately and the chamber is "working on a process of disengagement," the chamber's attorney said Wednesday.

The chamber board members decided Wednesday in a special meeting to put Carter on administrative leave with pay and make Ken Trevino, the chamber's executive vice president, the acting president and CEO, said chamber attorney Van Huseman.

"The board did this to get all this discord and dissension behind us," Huseman said." We are trying to put an end to all of this."

Carter's attorney Rene Rodriguez said he had informed his client of the decision late Wednesday afternoon and his client did not have any comment on the matter. Rodriguez said he did not know the reason tor Carter's suspension and had no further details.

Carter has been with the chamber since 2004.

The chamber board last month agreed to a full audit of the chamber's finances in response to concerns raised by chamber treasurer Damon Bentley, who looked into the chamber's financial matters in conjunction with a proposed raise and contract extension for Carter.

Carter filed a lawsuit March 19 against Bentley, the chamber, executive committee members Judy Hawley and Sylvia Whitmore, the Caller-Times and others, alleging actions that he said jeopardized his continued employment w ith the chamber.

''We're still working on tt)e process of disengagement," Huseman said Wednesday afternoon. ''We want something that's fair with everyone involved in it."

e 2009 Scripps Newspaper Group- Online

1 C.R. 481

128 March 27, 2008 Chamber puts CEO on paid leave Elvia Aguilar CR482 Exhibit M-1 to Aguilar Affidavit

129 • • 50 CENTS THURSDAY, MARCH 27, 2008 CITY EDITION

Chamber CEO on paid leave INSIDE:Judgtcon.solidAtnfil~gsonCorpusChristiChambl!foftammme..6A Moves aim to end Chamber chairman Freddie Martinez Jr. said that because dissension, group's torney said Wednesday. The chamber board decided hind us," Huseman said. -we are trying to put an end to all of this." of pendinr lltta:atlon he didn't wanttocommt.nt anyturtheron attorney explains Wednesday in a special Carter's attorney, Rene Carter's employmentstatus with meeting to pat Carter on ~ Jtodriguel:, said h e in · the chamber. BY RVIA AGUlLAI admlninrati..e leave with =rtedon formed b ts elient of t he •1 don't know what can and Calk7-T'i:mu Terry Carter, president and CEO ~a:e ~~~~~::: ~:~c~~~~~ - ~~~!~i~~~~te4;:'~d~:~~:~ can'tbesaidrightoowsoiwould rather not elaborate," Martinez

""' bun with lhe oftheCorpusChrlsttChambcrof Commerce, i.s on admitlistrative cAGmbeT f i nct leave with pay and th~ chamber lfio the aeting president and CEO, chamber attorney Van Husema.n saiC.. w ould decline to com- ment. Rodriguez said he d id not know the rea..son for the board's said. Carter has been with the chamber .sinc:e 20

CARTERfrom lA Carter filed a lawsuit The chamber has sched- March 19 &&ainst chamber uled an anooal membership treasu rer Damon Bentley, meeting at 4 p.m. Monday at the ch.a.mbet, executive com- the Del Mar CoUea:e Center mittee members Judy Haw- for l!.eonomk Development ley and Sylvia. Whitmore, at Staples Street and Kos- the Co.JUr..Timu and ot.bers, tomRoad. seeking daJna&es for ution.s At the meetln( chamber he claims jeapardiu:d his omclals will discuss lu:ues emp)oyment with the cliam- raised tn a petition sisned ber. by about 95 chamber mem· Asked about Carter's ben, who soucht the meet · employment status, Huse- lngto discuss the chamber's man responded: "We're still Ao.anees and other matte11. work ing on t he process of disena:arement. We want Conklet Elvie~ A guiJ11r ell some tbln1 that's fair w ith 886-3678 or aguuaree everyone Involved i n it.• """"""""

1 C.R. 482

130 March 27, 2008 Judge unifies filings on chamber events Mary Ann Cavazos CR524 Exhibit N-1 to Cavazos Affidavit

131 6A • Tbursday·Man:h 27. 2008· C.t.llfR •1'1Mf S

_FR_O_M_TH_E_CO_VE_R_______tt•~----------------~~.-------------- Judge unifies filings on chamber events Court's action l.ng and. taken from the Cor· pusCiu1atiC'b&mberofCom· also preserves mercebnmedLately after the meetin,ended."' tape of meeting Carter disputes this In his lawso.lt ftled March 19 aY MARY AJCN CAVAZOS asainst Bentley, the cham- Ca.!Jero.7liMI ber, the Calt.r-Timn and A judte Wednesday &ll'eed othen. Carter saya chamber to consolidate lepl action& chairman Freddie Martinez filed by CorpUI Christl Jr. took the tape "and left Chamber of Com- · the meeting to give it merce treasurer ~ to" Carter, who wa.s Damon Bentley and Arstrtedon In anolherofttcewith chief executive Terry ~ two other people, a.c- Cart er, and to pre- - - cord.ingto t he lawsuit, serve a tape recordin&" which seeks damages sought by Bentley. tor action~ Cuter says jeop- Bentley sought the co n· ardtze d his employment solldatlon, asserting that wlth the chamber. his a.nd carter's legal actions Bentley's March 18 peti· a ro.se from the same set of tionseekstoquestionCartu events. Judge Jose Longoria in adeposft!on Bentley could ot the 21~th District Court use tnalawsuitagafnstCart- a:igned. the order eoruolida.t- er, if Bentley chooses to ft.le ingtbecases. one. "'A s a result of the til· In moUons ft.led on Bent· iDJS of the claims of Terry ley's behalf, attorney Robert Carter, Damon Bentley will Anderson says Bentley wm be allowed to take the depo- be able to take a depo$itlon sition of Terry Carter and, ftom carter bec:a.Me Carter therefore, there is no neces- ha.s sued him and others in sttyfor a.n order authort:rtng a separate utton. and that a the deposition without suit,• t.a.pc reconilna: of a chamber a.ccordlms:to themoUonAled meeting sought by Bentley Thesday. will be protectm.. Bentley on Anderson a1Jo sent a let- Mareh 18 obtained a. tempo· ter'I\lesd.ay to the chamber's rary restraining order pro· attorney, Van Huseman, to tecttnrthetape. conftrm that Huseman bad The tape is a reeordlns the tape and that •tt would of a Feb. 15 chamber exeeu- not be altered or erased.· tive committee meetina: at Huaeman acknowledged whk:h Bentley rave a report posseu{on of the tape and •concerningthe financial ac- &&reed to safquard it. tivtties of Terry Carter a.nd Thejudge'sorderconsolt- the Corpus Christi Chamber datingthetwoac:tionsstates of Commerce; aeeording to that •each of the pa.rttu In Bentley'~ Marth 18 petition. this eau.se: of action shall be -rhere wu a tape of an of pTovided wJth a copy af the the activities while Damon tape.• Bentley wu In the room."' - - - - - - - - accordtn, to that petition. ComCicl Mary Ann Cavo..us "lhat tape wu removed by al 886-36!3 Terry Carter from the meet- or c:G11CUDSmCitcall.lr.com

EXHIBIT

l ,, N-- l '~ 1 C.R. 524

132 April 1, 2008 Chamber had deficit, hoard tells members Elvia Aguilar Fanny Chirinos CR485-487 Exhibit M-1 to Aguilar Affidavit

133 Chamber had deficit, board tel'.embers: Corpus Christi Caller Timef .ller.com Page 1 of3

callet:com COR~\JS CHRISTl. TEXA~ ?rii:tcr-fricn

Chamber had deficit, board tells members $95,377 deficit cited at meeting contrasts with earlier surplus report

By Elvia Aguilar. Fanny S. Chirinos

Originally published 03:25 a.m .• April 1, 2008 Updated 03:25 a.m., April 1, 2008

The Corpus Christi Chamber of Commerce finished last year with a $95,377 deficit, not a $40,425 surplus, the board told members Monday in a meeting that had been sought by petition.

An end-of-the-year report given to the board earlier this year by chamber staff showed a profit. Further review of the books by the chamber executive committee showed that a deferral of part of the chief executive officer's salary and shifts of more than $142,000 in membership dues resulted in the surplus, according to treasurer Damon Bentley. Bentley in February reported that the deficit was $61 ,782 but adjustments by chamber staff raised the number.

Despite the deficit, Bentley said, the chamber is doing fine.

"We are financially sound, and we're ready to move on," he said.

About 120 people attended the meeting, held at Del Mar College's Center for Economic Development, including 96 voting chamber members, said C. Michelle Peters, a chamber spokeswoman. Fifteen of those 96 also represented 15 members by proxy.

The membership meeting was a result of a petition drive started in late February to address concerns of members who said they had been denied financial information and membership rosters, and who were concerned about the chamber's accounting methods.

The chamber's recently appointed audit committee reported that on March 26, the board voted to return to the accrual method of accounting instead of the modified method of accounting instituted in 2004. The modified accrual method is one under which revenues are recognized in the period they become available and measurable and expenditures are recognized in the period the associated liabilities a re incurred. The accrual method is one under which revenue is recognized or recorded when earned and expenses are recognized when incurred.

1 C.R. 485

134 Chamber had deficit, board tel4Jembers : Corpus Christi Caller Time~.aller.com Page 2 of3

The last annual audit the chamber had conducted was in 2003, according to audit committee member Laurie Cook, a certified public accountant and former chamber chairwoman.

The audit committee set a March 28 deadline to receive proposals from auditing firms for a full audit. Other audit committee members are Leon Loeb, a developer, and former chairman Bud Harris, Del Mar College's dean of Workforce & Economic Development.

Cook said the committee has heard from three auditors. Two said they were not interested and one said it could perform the audit at a later time. The request for proposals had been sent to 10 local firms, Cook said, but because of the tax season she suggested sending additional requests after April 15, which could push back the process.

·we may have to go to another market,' she said, •but we were trying to be conservative with our money because we estimate an audit will cost anywhere from $10,000 to $15,000.•

The chamber members voted to approve the proposed amendments to the bylaws asked for in the petition.

The approved amendments include:

n The finances of the chamber shall be reported utilizing the accrual method of accounting. The accounts of the chamber shall be audited annually as of the close of business on Dec. 31 by a certified public accountant. The board shall appoint an audit committee of at least five chamber members, three current board members, two past chairs and two other members selected by a majority vote of the chamber.

n A printed annual report will be published and distributed to all members of the chamber within 120 days of the close of the fiscal year. The annual report will include a balance sheet, profit and loss statement and a reporting of the number of members in good standing.

San Jacinto Title Company recently rejoined the chamber, said company president Mark Scott, a former city councilman. He asked the board to reinstate Sylvia Whitmoreto the executive committee. Scott's wife, Carol, is a former chamber chairwoman who helped organize the petition.

On Feb. 15, Whitmore and Judy Hawley, members of the executive committee, were told they no longer were eligible to serve on the executive committee.

Chamber attorney Van Huseman said Monday that the board would consider reappointing Whitmore, but the matter could not be brought to a vote Monday because it was not on the agenda.

- -1 C.R. 486

135 Chamber had deficit, board tell~embers : Corpus Christi Caller Timer j l ler.com Page 3 of3

Carol Scott said Monday's meeting was a positive step by the board, but she hoped another membership meeting would be called soon for updates without the membership having to sign a petition to request it.

Acting chamber president and CEO Ken Trevino and board member Harris welcomed the idea and said a dialogue must continue.

Contact Elvia Aguilar at 886-3678 or aguilare @caller.com. Contact Fanny S. Chirinos at 886-3759 or chirinosf@caller.com.

C 2009 Scripps Newspaper Grqup- Online

1 C.R. 487

136 April 29, 2008 Chamber, in need of audit, renews accountant search Elvia Aguilar CR488 Exhibit M-1 to Aguilar Affidavit

137 Chamber, in need ofaudit, - r renews accountant search F"" ......,_ .... ll_VJA AOfQI.M

"""""""'"- Wlaltolno:mtt: tuflli.flcdw!.1lr.e fU'ed. hel~t.fCIIJII!Qii:lrUI~ -~·M~ The: ~' prn1olls as~ w )1ft ao ucl1lor .. ~ r&fltd ud ... ..._..I;W: c:burt!eJallldtls......,. .I P ' _ ~_.._ - M M~. thin ..olb., 1'-ltou'll ---~-~.,.. .rut"~ . . . -~. - . . . , . ha nu...ra Dtata .... ..._..,oe-..... Oa,..,...trla..~ --..n.. ........ duulkl t..n. ~ CIO , .. &eii~Ald the.,.~ ""'""~~ ,~ .. .. ... fr:rc-a&ll-.ht. t~ aJd • Md:t:n. ~lhM.t~- ......- . b-tllb pii:IOI'$Sbe DCtbecflat. .,.,..~ 1 C.R . 488 • 138 May 2, 2008 Chamber offers contract settlement to Carter, his attorney says Elvia Aguilar Dan Kelley CR489 Exhibit M-1 to Aguilar Affidavit

139 Chamber offers contract settle- to Carter, his attorney says : Corpus ~sti Caller Ti... Page 1 of 1

call.erecom CORP'U'S CHRISTl, TEXAS. Printer, friendly story Read ITI1)(C at caner.com

Chamber offers contract settlement to Carter, his attorney says By Elvia Aguilar, Dan Kelley

Originally published 05:09p.m.. May 2, 2008 Updated 05:09p.m .. May 2. 2008

CORPUS CHRISTl -The Corpus Christi Chamber of Commerce has made an offer to president and CEO Terry Carter to settle a contract dispute, accdrding to his attorney.

Carter has been on paid leave since late March, and he had bee in talks with the chamber over what insiders termed the process of disengageme t.

Carter's attorney, Rene Rodriguez, said the chamber has offered a sum of money and he is waiting to speak with his client, who is traveling in Tenness e. Rodriguez would not disclose the offer.

Chamber attorney Van Huseman would neither confirm nor deny existence of a settlement offer.

"A deal is not done,' Huseman said. "This is a work in progress over till it's over." J this point and it ain't

Ken Trevino, acting chamber president and CEO, said Carter's c ntract extended through Dec. 31 and Carter was seeking severance that amount d to what he would have been paid under the contract, or some middle ground.

its executive committee, the Caller-Times and others, seeking da ages for actions he claims jeopardized his employment with the chamber. The Caller Times and the other defendants deny Carter's claims.

© 2009 Scripps Newspaper Group - Online

1 C.R. 489

140 May 3, 2008 Chamber makes offer, Carter's attorney says Elvia Aguilar Dan Kelley CR490 Exhibit M-1 to Aguilar Affidavit

141 • BUSINESS&OPINION ~ I Saturday, May 3, 2008

Chamber makes offer, Carter's attorney says Chamber won't Commerce has made an offerto president and CEO Terry carter is waiting: to speak with hJs eli- ent, whoLstravelinglnTennes· Ken Trevino, acting cham· b er president and CEO, said executive committee, the C4ll· tr-Ti'mt .s a nd others, seeking confirm, deny to settle a eontratt dispute, ac- cording to his attorney. see. Rodriguez would not disclose the offer. Carter's contract extend- ~ ed through Dec. 31 and damages fot a.ctions he claims jeopardized his employ ment proposed deal Carter has been on paid leaW: since late March, and he had Chamber attorney Van Flrst tad on Carter wu seeking sev- Huseman would neither ~ erancethat amountedto w lth the chamber. The CllUtr· Tinu'.s and the other defendants t o end dispute been In talks with the chamber over what Insiders termed '"the conftrmoordeny theexis-- - - whathewouldhave been tenceofasettlementoffer. paid under the contract, deny Carter's clainu. IY lLVlA AGUJLAA process of disengagement." "A deal is not done,'" Huse- or some middle ground. Co1t~t Don KdJ4y o.t telleydr.t cart£r U AND DAN K E.LUY Carter's attorney, Rene Ro- man said. "This is a work in On March 19, Carter ftled a calUr.com. tn"886~115. Conl4ct trawling in Co1Ur-1'1tnu drilUc:z. saJd the chamber has progress at t his point and it lawsuitagainstthe c.hamber,its EhriG Apilar Ol aguilGrt@ TQ nU.SU.. The Corpus Christi Chamber of of!ered a sum ot money and he ain't over till it's over.'" treasurer, two members of Its caller.rom or 886-3B78.

l C.R. 490

142 May 23,2008 Chamber, Carter attorney confirm severance agreement Fanny Cbirinos CR491-492 Exhibit M-1 to Aguilar Affidavit

143 Chamber, Carter's attorney con~ severance agreement : Corpus Chrif .aller Times, C... Page 1 of2

caller.coni COitPUS CHIIISTI, "Tl:XA~ Printer-friendly story Read more at caller.com

Chamber, Carter's attorney confirm severance agreement By Fanny S. Chirinos

Originally published 07:1 0 p.m .• May 23, 2008 Updated 07:10p.m .• May 23.2008

CORPUS CHRISTl -The Corpus Christi Chamber of Commerce and CEO Terry Carter's attorney gave conflicting reports Friday about a severance agreement, but confirmed that it included paying his full 2008 salary and benefits and accepting his resignation. The proposal does not Include an agreement by Carter to end his lawsuit against the chamber and others, including the Caller-Times.

Chamber attorney Van Huseman and Carter's attorney, Rene Rodriguez, also confirmed that the resignation would be effective April 30. Carter has been on paid leave since March 26 after disagreements over chamber financial practices.

Huseman and Rodriguez differed Friday on whether the agreement to settle Carter's 2008 contract was concluded. Huseman said it was and Rodriguez said some details remained to be resolved. Those details involved the final compensation amount, federal payroll taxes and Social Security.

Huseman said the chamber has issued a check and it has been cashed. Rodriguez said the check is deposited in an escrow account. Neither would identify the amount, but interim CEO Ken Trevino said It was in the $132,000 range. A copy of the contract, provided by Huseman, calls for a $136,500 salary and various benefits. Trevino said the $132,000 represented salary and benefits not already paid this year.

Attempts to reach Carter were unsuccessful Friday.

Huseman said Carter's contract was so favorable to him that the chamber was not in a position to obtain an agreement not to sue in exchange for the severance.

According to a copy of the employment contract Carter signed in 2004 when he was hired, he could be terminated without cause only after a 90-day written notice and a vote of at least 75 percent of the voting members of the board of directors. In such an event, Carter would be compensated for 100 percent of the remaining salary and benefits.

If there was cause for termination, Carter would be released from his contract only if a

1 C.R. 49 1

144 Chamber, Carter's attorney co11P4J severance agreement: Corpus Christ-aiJer Times, C... Page 2 of2

90-day written notice was given along with vote of at least 75 percent of the board and only if Carter flagrantly violated policy adopted by the chamber. In such a case, Carter still would receive full compensation for salary and benefits.

Huseman said the chamber had no choice but to pay the remainder of Carter's contract.

' He had an employee contract that was entirely one-sided in his favor,' Huseman said. 'It did not help our bargaining position any.'

Huseman declined to name who drew up the contract on behalf of the chamber. Steve Woerner, the chamber's board chairman at the time Carter was hired, said he didn't remember the details of the contract or who wrote the contract.

John Bell, a former, longtime chamber attorney, said he was the chamber's attorney in 2004 but wasn't involved in the contract.

' I asked for a copy of that contract several times and never got one,' said Bell, who is representing two defendants in Carter's lawsuit, chamber executive committee members Judy Hawley and Sylvia Whitmore.

Carter filed a lawsuit March 19 against the chamber, its treasurer Damon Bentley, Hawley, Whitmore, the Caller-Times and others, seeking damages for actions he claims jeopardized his employment with the chamber. All defendants deny Carter's allegations.

Huseman said the chamber tried to persuade Carter to drop the lawsuit as part of the contract settlement, but he wouldn't agree to it.

'Had the chamber not settled the remainder of the contract, it would have had to wait until the laWsuit ran its course,' the attorney added.

' The chamber got rid of what it could and what he was willing to settle,' Huseman said.

- - - - · - ·- ---------

C 2009 Scripps Newspaper Group- Online

1 C.R. 492

http://www.caller.com/news/2008/may/23/chamber-carters-attorney-confirm-severance-ag... 9/ 14/2009

145 May 24,2008 Carter's salary to be paid in full Fanny S. Chirinos CR538 Exhibit 0-1 to Chirinos Affidavit

146 • • SO CENTS SATURDAY, IIAY 24, 2008 CITY ED!TlON

Carter's salary to be paid in full Ch amber will that it included paying his full 2008 salary a nd benefits and on pald Jeayesince March a6 after dlsacreements ~ f;~don payroll taxes and Social Security. accept resignation accepting his relignation. The proposal docs not inclu de an ~;:~ti~~:.mber financial - ch!!::~=~~~s s1~!~e~h! effectiveApril 30 agreement by Carter to end his Huseman and Ro- lawsuit against the chamber driguez differed Frida.y on check and tt has been cubed. Rodrigu e% said the I Y FANNY S. CIIIIINOS and others, Including the Calt- whether the agreement to Jet· check ts deposited in an escrow Ozl/.n>.7'ima n--Timts. tie Carter's 2008 contract was account. Neither would identify The Corpus Christi Chamber of Chamber attorney Van Huse- concluded. Hu.seman said it the amount, but interim CEO Commerce and CRO Terry Cart- man and Carter's attorney, Rene was and Rodriguez said some Ken Treviri.o said It was in the c.ter is er's attorney gave confUcting Rodrig uez, also confirmed that details rema.ined to be resolved. $132,000 range. A copy of the former CEO q{ reports Friday abou.t a sever- t he resignation would be eff~­ Those deuils Involved the 1\nal tMChmnbft" ance agreement, but confirmed iive April 30. Carter has been compensation amount, federal Pfeo.se Uti CKAMIWt UA q{Commnu.

CAlLER· TIMES •May24, 2008•5atvd.y•lJA

FROM THE COVER CHAMBERfrom lA contract, provided by Huse· name who drew up the man, calls for a $136,500 contract on behalf of the salary and various benefi.ts. chamber. Steve Woerner, Treviti.o said the $132,000 the chamber's board chair- repre.sented. salary and ben-- man at the time Carter was efits not already paid this hired, sa.ld he didn't re- year. member the deu.tb of the Attempta to reach Cuter contract or who wrote the were unsucct!sful Friday. contract. Huseman said Carter's John Bell, a former long- contract was so favorable to time chamber attorney, him that the chamber was said he was the chamber's not In a position to obtain a,ttorney in 2004 but wasn't a n agreement not to sue involved in the contract. In exchange for the s ever· "I asked for a copy of ance. that contract several times According to a copy ofthe and never cot one," said employment contract Carter Bell, who is representtnc signed in 2001. when he was two deferidant& In Carter's hired. he could be terminat- lawsuit, chamber executive ed without cause only after committee members Judy a 90-day written notice and Hawley and Sylvia Whit- a vote of at least 75 percent more. otthevotin&membertofthe Carter filed a l awsuit board of directors. In such Much 19&&1!nst the cham- an event, Carter would be ber, its treasurer Damon compensated for 100 per· Bentley, Hawley, Whitmore, cent ofthe remalnlng salary the Coll~r--Ttm•s and pth- andbeneftts. ers,seeking damages for ac- If there was cause for tions be claims jeopardized termination, Caner would his employment with the be releued from his con· chamber. AU defendants trtct only if a 90·day wrlt· deny Carter's alleptions. ten noUee wu liven along Huseman said the cham- with vote of at least 75 bertrled to persuade Ca.rter per cent of the board a.nd to drop the lawsuit as part only if Carter •n agra.ntly of the cont ract settlement, violated" policy a dopted but he wouldn't agree to lt. by the chamber. In such a Had t h e ch amber not ease, Carter rtill would re- settled the remainder of the ceive full C

1 C.R. 538

147 May 28,2008 Release of chamber audio recording sought Fanny Cbirinos CR541 Exhibit 0-1 to Chirinos Affidavit

148 LOCAL .--·· • Release ofchamber audio recording sought .,..,.,.._ IY fAIINY L CHWMOI the pendi.Jle bWiult. At the tape-recorded The Co:Ucr-f'im• has ulc.ed mutln &Feb. 15, ehamber a judce to compel uleue treasurer Damon Bentley of an audio recordlns of a aired COI\cerns about the Corpw: Christi Chamber of chamber's tlnauelal prac· Commerce mee\J.ns"at which tices. Abo at that meetin&. the chambertreuurer alred two membefl of the eu-c.u· concerns about the cham· Uve committee_ Judy Haw· bu'8 ftnanclal practices. ley and Sylvia Wbitmore, The tape, Ia tbe custody were told. they were beJn& of chamber attorney Van r emoved from t he t JCCCU· Huseman, b evidence in a tlve committee. AU ttuee lawsuit by chamber presi- are defendants in C&.rte r's dent and CEO Terry C&rttr lawsuit . q:alnst the chamber, some Rancel, who tiled the 1110-- ch amber officlalt and the t\on to compel releue of the C4lUr-1'imu. tape Thcsd~. said a n other A hearing on the C4J.l.e-r.. a.ttorneys Involved In the ri""'s' modon is R t for 8:30 case ha.ve reoeivoed notke of a.m. Friday In Judse Jose the bearing. HllStman said Longorla's·2Hth Dis trict Tuesday afternoon t hat he Court. LonJorla on March had not rece l~d notice of U ordered release of theu.pe thehearlns. t o all parties to the lawsuit. Huseman said Bentley'• Since then, Call•r-TiM•• a.Ltorney, Robert Anderson. attorney Jorge Rancel hu lnformeci h im that lawyers requested.aeopyfromHu.se- involved.in the lawsuit would m.an ln'eral titnel by man. bear the tape toa:ether. Carter's lawsui t, filed "I tbourht he had (Ran· Maub 19, alleces aetlona cel'l) b leuin& on It, but that jeopardlu:d hb em- m aybe 1 mlsundeutood," ployment with the ch a m- Huseman said. "I told Ran· bu. The defendant• deny eel thata.t~600n u wecotthis the allesaUons. Ca.tter(settlemenl) wrapped Carter hu been on paid up, we would make It ava.O· l eave since Marth 215 and able. We cUdn\ want tojeop· last week hls and the cham- ardlz.e tile oegotta.tlotu.• ber'l a.ttorney~p.veconllict· Hutemao s aid he didn't lng ~porta as to whether a kDOW If he woukl appear at . settlement lnvolvfn& hi1 res· Friday's hearing as he had lcn&don was eooclud!d. The Juat beta tnfonnedoftt. settlement l.l.epuate from the lawsuit and dou not In· CtmlActFarm~S. Clliri"AM elude an a&reement not to Cll 886-3"l.S9 sue the chamber, or to drop or c;h(riM.tl'iJoalUT

1 C.R. 541

149 May 30,2008 Judge orders that chamber tape recording be released today Mary Ann Cavazos CR525 Exhibit N-1 to Cavazos Affidavit

150 • Judge orders that chamber tape riording be released today : Corpus Cb· · ·ti Caller Times,... Page 1 of 1 •

calleracom CORP!JS CHRISTl. TEXAS Primer-friendly swr1 Read more at callcr.com

Judge orders that chamber tape recording be released today By Mary Ann Cavazos

Originally published 10:51 a.m., May 30, 2008 Updated 10:51 a.m.. May 30, 2008

CORPUS CHRISTl -District Judge Jose Longoria signed an order this morning ordering release Friday of a tape recording of a Corpus Christi Chamber of Commerce meeting at which the chamber treasurer voiced concerns about the chamber's financial practices.

The tape is to be released today to all parties in a lawsuit by chamber president and CEO Terry Carter against the chamber, some chamber officials and the Caller-Times. Longoria first ordered release of the tape to all parties on March 26. Today's order precluded the need for a hearing scheduled at 10:30 a.m. today to consider a motion by Caller-Times attorney Jorge Rangel to compel release of the tape.

Since March 26, Rangel ~as made several requests for the tape, which has been in the custody of chamber attorney Van Huseman since shortly after the Feb. 15 chamber meeting. It is evidence in the lawsuit by Carter, who accuses the defendants of actions jeopardizing his employment with the chamber. All parties deny the allegations.

Carter has been on paid leave since March 26. Last week, his and the chamber's attorneys gave conflicting reports as to whether a settlement involving his resignation had been finalized. That settlement is separate from the lawsuit and does not include an agreement to drop the pending lawsuit.

At the tape-recorded meeting on Feb. 15, chamber treasurer Damon Bentley discussed his concerns about the chamber's financial practices. Also during the meeting, Judy Hawley and Sylvia Whitmore, were told they were being removed from the chamber executive committee. All three are defendants in Carter's lawsuit.

1 C.R. 525

151 May 31,2008 Chamber tape tells of heated exchange Mary Ann Cavazos CR526 Exhibit N-1 to Cavazos Affidavit

152 • 50 CENTS SATURDAY, MAY 31, 2008 CITY EDITION

·chamber tape tells of heated exchange Recording released after a legal battle IY MAllY AJflf CAVAZOS Call~n:- A recording of a Corpus Christi ChamberofCommercemeetlngob· talned Friday by the CGU.r-Timu contains a eontentlous exchange bet ween CEO Terry Carter and other chamber otllcla.le. The Ca..Ckr-Tim•s obtained the recording &15:20 p.m. Friday after legal wrlJl!llng. A Judse on March 26 ftrst ordered that the recording be made available to all partie.t in a lawsuit by caner ap.inst the chamber, some ch am· ~,.:~~~t~~ ~ Carter, who has been ~ on paid leave sinee ~ that date, filed suit March 19 alleging actions jeopar- d izing his employment. The defen- dants deny all claim$. The recording contains numer- ous chamber meetings, including a Feb. 15 meeUng referenced In thll": tawsutL The total recording indicates a lenJth of five houn:, 29 m inutes. The aegmentconta.lnl~the Feb. 15 meeting Is one hour, nine minutu. It ghu no lndieator u to when the meeting bep.n or ended. The Feb. 15 segment wu lden~ tJti.ed baled on tntervlewJ, corre• s:pond ence amana chamber offi~ clala, and allcgationa cont&ined in theautt. The voices ofchamber treuurer FROM THE COVER Damon Bentley, Carter, chamber

CHAUBER./h>m lA for personal use?'" tion. That's the p roblem.• Bentley: •No."' Carter later left the room chairman-elect Robert Gon- Carter: "'Are you making and Bentley could be heard zalez, chamber attorney Van any accusations t hat I have giving his financial report. Huaeman,chalrmanFredcUe intentionally, intentionally The recordini's release Frt~ M&liiDC2; Jr. and ell:eeutive misled an executive comllllt · da,y resulted from a motion by commltt« members Judy tee or members of this board the CaUer-Tim.c.s to compel Hawley and Sylvia Whit- of directors? Intentionally?"' its relea.se In accordance with mor e w ere recognizable Bentley: "'I'm not solng to 214th Di.strlctJud.ge:J~ Long- on t he recording. Bentley, a.nswer that."' oria's March 26 order that it be Hawley and Whitmore are Carter: •Why not?"' made available to all parties. named defendants In Cart· Bentley: •tt'S nota Question CaU •r~Timu attorney er's lawsuit. for me to answer rizht ·now. Jorge Rangel61ed the motion Ea~.rt y ln t he aecment a I'm cotng to CIYe the !Uuliu~ ·l \u~¥1.Jw.y w.Cttr he mtule sever- content ious exchange be· of facts. There's no opinions al requests for the recording tween Cart er and Bentley that I have. There's jll!t facts, after March 26. can be heard, u the cham~ Terry. ·- I have a 1\dudary re· Since Feb. 15, the record- ber ofl\dals discuss whether aponsibility -· Don't call me Ins had been In Huseman's to proceed with Bentley's n- lieut enant commander and custody. n&.Dcial report. don't stare me down.• On Fr iday morning, t he Bentley: "'I really don't Carter also c.an be heard In parties reached a.n agreement want Terry sitting here star- a n ell:change with Hawley, in on the releaseof the recording, ing me down .• which he uks why she won't beading off a. scheduled 10:30 Carter: "'Why? If you've look him in the face. · a.m. hearing on the issue in got a problem with me, get "Oh, I have a probl~m," Longoria's oourt. In my face and say 'Terry, here it is.' ... Ueutena.nt com· Hawley replied. "I have a biz problem, Terry. ... I have a ConlclCt Mary Ann CatJClWS 1 C.R. 526 mander ... Art: you making problem with tr u.stlns your at 886·36!3 orca~@ any accusations that I have leadership with this organita· aJller.cam mi••nnf"t'lnri • t,..... ,..,v f~•"tl ""

153 June 13, 2008 Ex-Chamber CEO mediation to continue Mary Ann Cavazos CR527 Exhibit N-1 to Cavazos Affidavit

154 Soc:tVm O • • BUSINESS&OPINION

CORRECTION: Please see 11.2, 611412008

Ex-Chamber CEO's me ation to continue .,...,..,_ aTMArf.U.CA.VAZOS lawsuit. lty• ~=-.bu~ ~=~fttsrematned tobepa.ld !j ure. One defendant, the CaU.r- would be productiYe to do10 at thls

[ has been set. nm.u, did not participate. an=e::~=.~~ Attomey.lobnBell,_.onc poiot In the litlptloo.The C.U... A severance agreement that nmu intends to agrusiYely de- chamber oftlclaJs Sylvia Wblunon: canen anomey, Rene Rodriguez, prevlously described u nearly eon- dudedlsnow!lnal,~ald and Judy Hawley, said the medla.-

- procoss will proceed. feud q&lnst tbe claima that Mr. tion was unsuccessful and t.ht.liti· Carter hu filed a.M anticipates tbat the facti and the law will show under way, with former chamber chairmen Bud Harris and Debbie U ndsey-Opel leadln& the &earth. I .

Thunday. "Thel&wauhllveryddeod&ble," that tbe CclUf'-7\met i.a:ln DO way They hope to hire an Interim for 60 '!bat-otluepanlefrom BeD saki. Uable to Mr. Carter." to 90 days wbUe • natloaal oeatth Catter'llawsu.Jt apinst the eham- Attorney Robert Anderaon, RodriJUez aaJ.d Thurtday that for a. permanent CEO proeeeda, ber, aome chamber officials, the representing chamber treuurer hll cli~nt's stveranu: ~ent Martinez saki. Col£tr..1'i.'I'I'&U and others. The ~e¥­ Damon Bentley, utd there l.a no wtth \he c:b.amberwasco'mpletedlo erance agreement did not lnclude plan atthi$point forfuturemed:l.l· lateMoy.CbarnberclWrmanFr

&l •

. ~ ·~• June l4, 2008 • CALLER-TIMES

PAGE2 CORRECTIONS CLARIFICATIONS A headline on Page 10 Friday Incorrectly reported the sta- tus of mediation In a lawsuit filed by former Corpus Christi Chamber of Commerce CEO ( 'Carter. The headline \ .•d have said thatThurs· day's mediation session ended without an agreement and those Involved aren't in agree- 1 C.R. 527 ment about how the matter ... ue .....:............,

155 TAB3

156 Exhibit A-23

157 larger clients have called me with serious concerns that I don't have answers for. I am very uncomfortable with the Chamber's method of accounting and lack of information getting to the board. Does anyone have any suggestions on how to proceed with this? Kent Cooper

·- - - ·-----------·---· From: Damon Bentley [mailto:dbentley@utoplaworldcuisine.com] Sent: Tuesday, February 26, 2008 2:05PM To: 'Freddie Martinez Jr.'; 'Judy Hawley'; 'Robert Gonzalez'; 'Sylvia Whitmore'; 'Bud Harris': 'Butch Escobedo': 'Chuck Cazalas'; 'Dan Garza'; 'Debbie Lindsey- Opel'; 'Dick Drilling'; 'Gary Eifler'; 'Gary Eifler x2 copy'; 'Gary Malone'; 'Howard Ainsley'; 'Howard Ainsley x2 copy'; 'Joanna Davidson'; 'Joe Guzman'; 'John Michael'; 'Kent Cooper'; 'Laurie Cook'; 'Leon Loeb'; 'Manuel Ugues': 'Pat Townsend'; 'Ralph Coker'; 'Ralph Diaz'; 'Robert Blair'; 'Sandra Alvarez'; 'Sean Murphy'; 'Trent Hill'; 'Trent Hill X2 copy' Subject: Attention Chamber Board of Directors

February 26, 2008

Corpus Christi Chamber of Commerce Board of Directors,

I sincerely appreciate all of the Board members that have contacted and thanked me for the review I provided at the Board meeting last Wednesday. Many of you also have given me sound advice on how to proceed forward with my fiduciary duties to the Chamber Board and its members .

It was unfortunate that the CEO's letter sent to the members of the Board prior to my presentation at the called meeting on 20 Feb, misrepresented both the intent and the facts to be presented in the Treasurer's report. The CEO's letter, which quickly became public, may have compromised our membership's clear understanding of the severity of issues with which the Board of Directors must deal with In the coming weeks.

Two additional pieces of correspondence, purportedly sent from us, the Board of Directors, to our members misrepresent a number of findings to our members and may pose potential issues of liability. In order to articulate my concerns to those of you who were not present at the 20 Feb Board meeting, and to address the misrepresentations included in the two subsequent letters from the Chamber leadership, I provide the following fa cts for your consideration. Page 3 of 11 CCOOS49

158 I was asked by the Board and our Chairman to review our financials in connection with our CEO's request for a raise, performance bonus increase and contract extension. The timeline was set by the Board and our Chairman. I had no malicious intent or political agenda as the CEO has inferred in both private and public venues. I simply was conducting my fiduciary duty as your Treasurer. As soon as I felt there were issues with the financials, I contacted the Chairman. After I later discovered what I thought was a crucial problem with the use of Building Fund dollars to supplement the Chamber's operating expense account, I once again immediately contacted the Chairman. Due to the persistent avoidance of calling an Executive Committee meeting to address the issue by the Chairman, I contacted two other Executive Committee members and shared the Information with them. After still not receiving a response from our Chairman or Chai r~Eiect, the three of us requested, via certified letter. that the Chairman use the scheduled 15 Feb meeting to address these issues. The letter is included as an attachment to this email.

In the Executive Committee meeting on 15 Feb, our accountant confirmed that, based on his review of the information presented, all of the "financial adjustments" about which I had questions were valid concerns. He went on to further say that the use of Building Fund dollars to supplement the Chamber operating expenses could possibly forfeit the Foundation's 501 c3 status because of the link between the CEO's bonus to the financial performance of the Chamber. In closing, I asked the accountant if he felt the Chamber of Commerce has "financial problems", to which he replied, "Yes". As your Treasurer, it was my duty at that point to report this to you.

The Executive Committee meeting on 15 Feb was taped. I requested after the meeting that I receive a copy of the tape to accurately and completely disseminate the information discussed for my presentation to the Board. Unfortunately, the CEO took the tape and immediately left the premises. Attempts to immediately contact him were unsuccessful. I received a call from the Chairman later that day confirming that the CEO was bringing the tape back and that I would receive a copy. I made several attempts to obtain the tape over the weekend without success. On Monday, I was told by the Chamber's attorney, that the recording was too divisive and that unless the Chairman directed him, he was not going to release it to me. I called the Chairman who stated he was not going to authorize the release of the tape due to counsel by our attorney. I sent a registered letter to the Chairman on 23 Feb asserting my right to this tape and demanding a P;~ge 4 of 11 C<.:OOSSO

159 copy within 24 hours of the receipt of the letter. More than 24 hours have lapsed after the letter was received by the Chairman and the copy has still not been made available. I have included this demand letter for your review. It is my assumption that if the accountant had stated in the Executive Committee meeting that the Chamber financials were fine, the tape would have been readily available for your review at the full Board meeting last Wednesday.

After learning that I wouldn't receive a copy of the tape for my presentation on Wednesday, I contacted the accountant and requested a letter with his recollection of the main points of the meeting. He stated that he would provide such letter, but that he required a letter of Indemnification prior to doing this. I requested the Chairman sign this letter and facilitate this process, but the accountant never received the letter of indemnification. Since that time, the accountant has sent me an email stating that he no longer will discuss this matter and that the Chamber has become a "high risk" engagement that he may no longer want to be associated with. This is very troubling considering this is coming from a person who the CEO considered the Chamber's CPA at the time of the 15 Feb meeting.

To respond to the CEO's letter to the Board that has now been made public, I offer the following responses to his "three immediate concerns." 1) The timeline for the CEO's evaluation was set by the Chamber Board of Directors and the Chairman called the evaluation meeting as a direct response from the CEO's request for a raise, performance bonus and contract extension. As unfortunate as it was that the CEO had surgery, the tlmellne was set without any knowledge that the CEO was scheduled for surgery. 2) The statement I made to the paper was the statement that the Chairman, Chair-Elect and I agreed would be made to any press inquiries and that anything above and beyond that would be directed to the Chairman. If the tape were available from the meeting, this could be confirmed; unfortunately it is not. I have stated, "No comment" to all and any other inquiries about this issue to all media sources and have continued that practice up to this date. The CEO is the one who made this information public by sending a letter to the Chamber Board of Directors in an attempt to discredit the findings prior to the presentation. 3) I never hid anything from the CEO and at the Executive Committee meeting, I invited the CEO to respond to the points I had raised. It was our attorney who recommended to the CEO to take pause and respond in writing at a later date.

It is undeniable the financials for 2007 as presented to the Executive Page 5 of 11 C:C00551

160 Committee and Board are inaccurate. inconsistent with the process used in previous years and a misrepresentation of the Chamber's bottom line. My main concerns after our 31 Jan evaluation meeting were that 1) the CEO's performance bonus is directly linked to the financial performance of the Chamber, 2) suspected irregularities in booking expenses and revenues that created the "Net Operating Income" for 2007, and 3) these irregularities had the effect of justifying a performance bonus under his Contract. At the core of this matter are three very obvious findings:

o The CEO deferred his pay for Nov and Dec 2007 without booking it as an expense in 2007: $19,992

In the CEO's preemptive letter to the Board, he states that his deferred pay should have been booked in 2007 and that he brought this to my attention at the Executive Committee meeting on 18 Jan. This is not true. Judy Hawley, an Executive Committee member before she was expelled on 15 Feb, was at this meeting and can attest to this statement. The CEO did state that he had deferred a portion of his pay for personal tax purposes. I found this odd, but made the assumption that the booking of this entry was done correctly. He further states in his letter to the Board, "I immediately went to the bookkeeper to see what had happened and Instructed him to contact our CPA and get the correct entries and make them to the books, which he did. This was simply a bookkeeping error that was immediately corrected." This also is not true. The financials on 28 Jan, 10 days after the Executive Committee meeting, still did not reflect the deferred pay as a 2007 expense. The adjustment wasn't made until after I questioned whether the deferred pay was recorded as an expense in 2007 at our evaluation meeting on 31 Jan. Our book keeper stated that it wasn't. I wasn't brought an adjusted financial until 4 Feb, a full17 days after the CEO claims he "immediately corrected" this error on 18 Jan. Regardless of when it was corrected, the undeniable fact is that the financlals presented to the Executive Committee and the Board of Directors were inaccurate and the request for a raise, performance bonus and contract extension were done so on the basis of an inaccurate financial report.

o The CEO used Building Fund dollars to supplement the Chamber financials: $18,312

After the Building Fund was moved from the Chamber to the Chamber Foundation in Oct 2007, a check was written to the Foundation from the Building Fund account for $18,312 on 14 Nov. A check was then drafted for $18,312 from the Foundation to pay the Chamber for *overhead" based on

CCODSS2 Page 6 of 11

161 an Oct invoice from the Chamber for telephone expense ($9,800), services/ utilities expense ($7, 732) and office printing expense ($780). At a meeting I had with the accountant in his office, he stated to me that the CEO should have never shifted the Building Fund from the Chamber books to the Foundation books for the use of supplementing the Chamber's finan cials. This contradicts the CEO's claim in his letter to the Board that the CPA's firm was consulted about the transfer of the Building Fund for the use of operating expenses. In a statement provided by the Chamber staff to me on 4 Feb, it reports that our accounta'n t felt that our Building Fund "should be used for the original intentions of building maintenance, property upkeep and capitalized equipment."

Needless to say, whether this is an accounting problem or not, the use of Building Fund dollars in its most liberal interpretation could not possibly be thought to be used for Chamber operating expenses. If this were the case, the CEO could simply unilaterally charge the Foundation whenever he wants and dwindle down that account to zero and post a profit each and every year. Transfer of the Building Fund to the Foundation was represented by the CEO for the intent of providing a tax deduction for those who gave to the Building Fund in our upcoming building campaign. One would have to believe that if someone donated money to this account they would expect that money to be used for the new building, not to pay for current operating expenses of the Chamber.

I want to be clear that the movement of the Building Fund from the Chamber of Commerce to the Foundation does not automatically give the CEO unilateral authority to use these funds for whatever he wishes. The Building Fund is still held In a separate account and was not lumped into the operating account of the Foundation. Even though the Board was informed of the movement of the Building Fund to the Foundation, the Executive Committee or the Board never approved the funds to be available for unilateral use by the CEO for operating expenses.

o The CEO booked January 2008 membership renewals in 2007: $63,903

This is a matter of fact. I am not questioning whether modified accrual, accrual or cash basis should be used. I am simply pointing out the fact that by using this "modified accrual" system, and doing so when it benefits the bottom line, you open up the possibility for manipulation of the numbers. Any and all adjustments that are made should be disclosed when it directly affects the financial performance and subsequently the CEO's bonus. In

Page 7 of 11 CCOOSS3

162 fact, 2007 received the benefit of most of Jan 2007 renewed dues ($58,336 booked on 3 Jan 2007) and most of Jan 2008 renewed dues ($63,903). This creates a distorted view of our financial performance for the past year.

If you make the above adjustments to the 2007 P&L, you receive a much different picture of our 2007 performance, which is undeniably more accurate when comparing year-to-year performance from 2006 to 2007 based on consistent methods of accounting.

Original Net Operating Income: + $40,425

Pay Adjustment: $19,992

Building Fund Adjustment: $18,312

2008 Renewed Dues Adjustment: $63.903

Adj usted Net Operating Income: $61,782

(Total Swing of $102,207)

In addition, there are several miscellaneous findings that I neither have the resources or expertise to investigate further but that I feel need to be scrutinized. They are as follows:

Foundation financials have never been presented to the Executive Committee :;ince I have been on the Exet.;utive Cornmittee i:l::i required in the by-laws.

Special events (Salute to the Military, Conquer the Coast, State of the City, etc.) are kept "off the books" and only net income is presented to the Executive Committee even though full accounting has been requested by at

Page 8 of 11 CCOOS54

163 least one Executive Committee member.

A comparison of the year-end membership lists provided by staff reflects a significant decline in member organizations during 2007.

The by-taws require an audit each year. A review was conducted last year without approval from the Executive Committee to deviate from the by- taws. Not one member of the Chamber leadership can say when the fast audit was conducted.

The CEO's explanation for not conducting an audit was that of cost and availability. It is hard to believe that we do not have enough money to conduct an audit, but during this same time period, we have requests by the CEO for a raise and bonus.

Our accountant conducted the 2006 "review" and stated in that review (and stilt thought this was the case as of the meeting on 15 Feb) that the Chamber was on an accrual basis of accounting.

I have been told several times when I have questioned the use of modified accrual basis that the accountant knew we were on this form of accounting and approved it. This contradicts the previous point that the accountant thought we were using accrual basis.

The Executive Vice President reported to the Executive Committee on 31 Jan that he was "asked" to defer his pay in Oct 2007 because the Chamber was in a "cash crunch" and they needed to pay bills. Our fragile cash position and need to ask staff to withhold pay was never reported to the Executive Committee or the Board at any time by the CEO.

$77,630 of the Building Fund was used from 1 Jan to 31 Oct. 2007 for the purpose of moving to the CVB side of the Chamber building. The original budget for this move was estimated by the CEO to be $36,000 according to the Board minutes of 24 Sep. $55,847 of these funds were capitalized. Some of the capitalized expenses are suspect such as a $255 "lunch" expense.

Significant contracts are signed and authorized by the CEO without RFPs or knowledge by the Executive Committee or the Board.

In the end, this comes down to trust and accountability. Removing Executive Committee members who voice sincere concerns, keeping taped meetings from other Board members, yelling in an attempt to intimidate Page 9 of 11 ccoosss

164 Board volunteers, leadership refusing to sign a letter of indemnification that silenced the accountant and attempting to justify a raise based on disputable numbers do not change my fiduciary responsibility. Unfortunately, they do make It much harder to perform my duties, but my duties still remain.

An audit has now been called for. I have not been appointed to the audit committee as was reported to the Caller Times. My overarching concern is that while an audit is demanded in this situation, an overhaul of our financial policies and procedures is also of utmost importance. An audit will address how we may or may not have complied with generally accepted accounting principles, but it will not address the policy questions regarding early booking of revenue, deferment of expenses, transfer of funds between the various Chamber entities and other procedural matters. I urge all Board members to immediately and diligently secure all records relating to the business of the Corpus Christi Chamber of Commerce so that critical information is safeguarded.

In closing, I would like to thank all of you for your courage and friendship. The truth is sometimes difficult to interpret and I hope that the facts above assist you in finding that truth. I leave you with the following quote from Winston Churchill, "The truth is Incontrovertible, malice may attack it, ignorance may deride it, but in the end, there it is."

With Respect and Devotion to Duty,

Damon L. Bentley

Treasurer, Corpus Christi Chamber of Commerce

Terry H. Carter President & Chief Executive Officer Corpus Christi Chamber of Commerce 361-881-180 0

CC00556 Page 10 of 11

165 tcarter@theccchambcr.org

==============================================~============================= =~====:=== =====~============ Disclaimer: This e-mail message and all information enclosed, Including any attachments, is for the sole use of the intended reclplent(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure, or distribution of the information enclosed, in its entirety or in part, Is strictly prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and immediately destroy all copies of the message. For further assistance or questions please contact the email administrator at Corpus Christi Chamber of Commerce. 361-881 -1800. =~~================,=====:====~===:======~====~===== ===;=====================

CCOOSS7

Page 11 of 11

166 TAB4

167 Exhibit A-1 0

168 Treasurer's Due Diligence at Request of Executive Committee • After the meeting, I reviewed the following documents from the Chamber

- 2006/2007 Financials - 2006 Audit Review - Salaries of all Staff for 2007 - Building Fund P&L - Chamber and Foundation By-laws -Accounting policies and procedures - Personnel policies and procedures - Stand alone budgets for the last 3 special events - 2006/2007 membership reports - December 2007 dues report (early pay) - Statement of 8tJilding Fund (purposes and intentions) CCOOS80

157 ..

169 Findings: Payroll Reporting

• CEO withheld his pay for Nov & Dec 2007. He had stated that this was for tax reasons in his presentation to the Exec Committee.

• The withheld pay was not shown on the 2007 books as a payable.

• After the CEO evaluation meeting (not after our exec committee meeting), Waller (Finance Director) stated he contacted our CPA (Thompson) via phone and was told that the salary should have been booked in Nov & Dec. Waller made an adjustment to the books for a minus $19,992.

CC0058l

170 Findings: Payroll Continued

• Executive Director (Trevino) stated prior to our evaluation meeting that the CEO told him that they were in a "cash crunch" in October and that he needed to withhold his pay to pay bills. He did so.

• This led me to look at October's financials closer (where we supposedly showed a net ordinary income of -8,307.62).

CCOOS82

171 Findings: Foundation Books

• On 31 October, the Chamber invoiced the Chamber Foundation for $18,312.87 to pay Jan- Oct expenses for the following percentages, categories and amounts:

• 60% of Chamber's Telephone Exp of: $16,334.43

• 60% of Chamber's Services/Utilities of: $12,886.10

• 10% of Chamber's Office Printing of: $7,805.41

• Total Billing: $18,312.87

CC0053l

172 Findings: Foundation Books

• At no time did the Executive Committee or the Board vote to bill the Foundation for these expenses.

• Billing the Foundation for these expenses did not occur in 2006 according to Trevino (Pres of Foundation) .

• This is what led me to the Foundation financials ...

CC00584

173 Foundation Findings: Use of Building Fund

• On 14 November, $18,312.87 in funds were disbursed from the Building Fund to the Foundation in order to pay the Chamber of Commerce the utilities expense invoice. This was previously booked as an expense reimbursement in October on the Chamber financials.

• The Building Fund was established with proceeds from the sale of the Chamber's property to the GSA to be used for building improvements or a new location for the Chamber.

• Using Building Funds for utilities expenses is inconsistent with this objective.

CC0058S

174 Building Fund Findings • At no time did the Executive Committee or the Board of Directors vote for the Building Fund's movement to the Foundation.

• At no time did the Executive Committee or the Board of Directors vote for the Building Fund to be used for operating expenses of the Chamber.

• From Jan 1 to Oct 31, 2007, the Building Fund was depleted by $77,630.

• $51,847 of this was capitalized for various move-in expenses to the old CVB space.

CC00586

175 Findings: Building Fund

• At no time did the Executive Committee or Chamber Board vote to expend $77,630 to move from one side of the building to the other or authorize use of the Building Fund for this purpose.

• Use of Building Fund dollars from a 501c could be a "serious problem" if used to increase the NOI that is linked to a performance bonus according to the CPA (Thompson). The CPA will no longer speak on this subject and the tape from the meeting has not been made available to review his comments. CCOOS87

176 2008 Renewals • $63,903 of renewed 2008 dues were booked in December 2007 vs 2008.

• This was $53,000 over budget. When asked if this was normal, the Finance Director stated that it was and that this happened in 2006 as well. After reviewing the Dec 2006 P&L, this is not the case. Only $10,589 were received ... $5,811 under budget for that month.

• In Dec 2006, $2,076 of Jan 2007 renewed dues were booked for 2006 and $58,336 were booked on Jan 3. Therefore, 2007 received the benefit of both Jan 2007 and Jan 2008 renewed dues.

CCOOSS8

177 Summary of 2007 Adj ustments • Original NOI: +$40,425

• Pay-Adjustment - $19,992 • Building Fund Adjustment: -$18,312 • 2008 Renewed Dues Adj: - $63,903

• Adjusted NOI: -$61 ,782

This is a $102,207 swing ...

CC00589

178 Accrual -Cash - Modified Accrual Withholding of pay & not booked during time period Cash basis for expense

Foundation charged for expenses (actually building fund) ... books it in Oct, but receives in November Accrual basis for an expense reimbursement .. . even if acceptable, entire time period (Jan - Oct) should have been accrued. We also didn't continue to bill the foundation (inconsistent)

$63,903 renewed dues received and booked in December Cash basis for income CC00590

179 Miscellaneous Findings

• Foundation Financials have never been presented to the Executive Committee as required in the By-Laws

• Special Events are kept "off the books" and only net income is presented to the Executive Committee even though full accounting has been requested

• A comparison of the end of year membership lists provided by staff reflects a significant decline in member organizations during 2007.

CC0059J

180 Miscellaneous Findings • The by-laws require an audit each year. A review was conducted last year without approval from Exec. Com.

• Dove -Thompson conducted the review and stated ·in their review (and still thought this was the case as of the meeting last Friday) that we were on accrual basis at that time.

• I have been told several times when I have brought up the modified accrual basis that the CPA knew we were on this form of accounting and approved it.

• Checks for the Chamber of Commerce have never been signed by the Treasurer (Accounting policies and procedures contradict by-laws)

ccoo;n

181 CEO's 2006 Evaluation: Performance Objectives for 2007 The Executive Committee was unable to reach consensus on the CEO's achievement of these Performance Objectives from his 2006 Evaluation: • Maintain the level of the Chamber's media coverage at 2006 levels or better.

• Continue to foster a working relationship with the area's other business organizations (CCREDC, CCHCC, PICC, etc.)

• Set an aggressive goal for membership retention, and lead effort to attain it.

• Develop and foster a professional, working relationship with the City, County, and Port leadership.

• Coordinate at least (2) joint information-sharing meetings with the Hispanic Chamber of Commerce.

CC00593

182 Analysis and Recommendations • The Chamber of Commerce and Chamber Foundation need a complete and thorough audit from an outside accounting agency (full audit vs. a review).

• The audit should include the building fund, special events, and contracts.

• Best accounting practices need to be implemented to ensure transparent financial transactions.

• Policies and procedures for all aspects of operating the Chamber of Commerce need to be developed and followed.

CCOOS94

183 ., ., <>- 0 0 u u

C'· tn c 0 ·-....,tn Q) ::J a

184 TABS

185 Exhibit A-15

186 MEMORNDUM FOR: Doard of Directors, Corpus Christi Chamber of Commerce

FROM: Terry Carter, CEO

DATI<:: February 17,2008

SUBJECT: Allegations concerning inappropriate busincs.~ pr~ctices

Ladies and Gentlemen:

The specially culled meeting for Wednesday, february 20th was culh:d at Board Direction for the singular purpose of receiving a recommendation from the Executive Co!Tunittce regarding my employment contract. The Executive Committee will report that they have been unable to make a recommendati on.

I would appreciltle your consideration at that meeting to eon.~idcr the following facts in response to allegations that have been made both privately and publicly regarding my job pcrfonnance. Up until this time I have not been afforded on opportunity to address the allegations and may not be given that opportunity during Wednesday's Board meeting.

As I understand, there are four allegations:

J. Th11t J with malice favorably affected the net nperating profit on the yeur-end P&L statement by deferring my November und December income and not showing it as an expense.

R.liSPONSE: l differed compensation in 2006 (documentation is Available to support this defcnal) and elected to do so again in 2007 for ta~t reasons. My wife made approximately SOk more this year than last year. None of her additional income had taxes withheld during 2007. Jam happy to provide the documentation to suppo11 this fuel. The Chairman was notified in October 2007 of my intention In defer my income. The correct bookkeeping entries are to expense on the P&L the defc1rcd compensation und show it ns a liability on the balance sheet at the time thnt the compcnsulion should have been paid. Our bookkeeper failed to make these entries and I failed to check the en try before they were presented. I am the one tlutl found the error during the January !'lltccutivc Committee meeting and brought it to the attention of our Treasurer, Damon Ucntley. J:ollowing the meeting, I immediately went to the bookkeeper to sec what had happened and instructed him to contact our CPA, Dnrryl Thompson, ond gel the correct entries and make t11cm to the books, which he did. This was simply n bookkeeping error that was immediately corrected.

2. That I am using a modified accrual accounting method that according to Damon Bentley should not be used.

CCOOS59

187 RESPONSE: We arc using a modified accrual basis of accounting that has been !lppr(wcd by the Board of Directors. When I was employed in August 2004, I inherited an organization that had vc:ry inconsistent accounting and financial controls and practices. My instructions from the Boord was to fix it and do .~o fast. In consultation with our then Treasurer, narron nergstrom, and our then CPA, Kendra Kennison, we put into place a modified accrual basis of accounting. This treats revenue on a c~sh basis so that you record the revenue when you receive it and accrue certain expenses. This basis of accounting was approved by the Board of Directors in September 2004 and has been in place since that time. One of our current Board members was present at tbe meeting and will validate this tiJCI.

3. Transfer of the building fund from the Chamber of Commerce (a 50l(c)(6)) corporation) to the Chmnbcr Founda tion (a 501 (c)(3)) without Roard approval.

RESPONSE: The transfer of these funds was done in consultation with our CPA. We had u discu~~ion with our CPA about both the propriety of making the transfer, the reason for doing so, and the exact entries to affect the transfer. During the course of the conversation, we discussed ifthcrc were any restrictions that wou ld preclude making the trnnsfer. Ken Trevino researched archived documents relating to the building and buildi ng fund and could not find ony restrictions of any nature on the building fund. We concluded that not being able to lind restrictions was insufficient. Therefore, our Cl> A talked with his senior partner, Mr. Joe Dove, who set up the building fund. Mr. Dove confirmed that there never were any restrictions placed on the "building" fund . During the December Board meeting, Leon Loeb asked about the funds. I fully explained to the Board what we bad done.

4. That I used a portion of the building fimd after it was transferred to the: Foundation to pay certain operating expenses.

RESPONSE: That is correct. The Chamber of Commerce hns for many ycnrs housed the Foundation and its operations, which include among other things Leadership Corpus Christi. The Chamber has never sought any reimbursement from the .F oundation for the cost of providing space, administrative, overhead and managerial support. I caused to be invoiced the roundation for about $18,000 for telephone and utility support During "FY 07, that represented about60% of the total cost oftclcpl10ne and electricity. The Foundation has never been charged for space allocation, bookkeeping services, managerial oversight or administrative support. This was discussed with our Treasurer, Damon Bentley, during a two-hour FY'08 operating budget meeting. My lield notes developed in preparing the budget, reflect that T had some question as to whether 60% was a reasonable number. At no time, did Damo11 Ot:nlley ever question or contribute any dialogue to that convcr!Xtlion. If he h11d rniscd any exceptions during the budget meeting, the percentage would have been adjusted.

CCIJOSGO

188 5 There seems to be some concerns raised as to whether the by-laws of the Chamber arc tx:ing followed to the letter of the Jaw. Spedfically, were there 5 members on the 2008 Nominating Committee as opposed to the required (, 7'!

RESPONSE: Ladies and gentlemen, we as management und you as our Directors make every effort to comply with our Bylaws as closely as possible. There is no way that I can attest that in every single case aud illStancc that the bylaws arc complied with 100% of the time. What I can say is that we make a very good effort to comply with the bylaws and its intentions. If we arc to comply with 100% of the bylaws, you as directors must approve every prospective member before they join the Chamber. You must also approve every member that is dropped for non-payment of dues. This distracts from your ability to work nt a strategic level. My recommendation is that the bylaws shou ld be reviewed, edited and in some cases rcwtiuen to reflect the modem operations of a chamber of comrn~rce that represents a mid-size American city.

CLOSfNG COMMENTS: I am not calling into quest ion the motives of any individual that questions the operations of our Chamber. Ow· records have always been open to any director or officer of the corporation. 1 have insisted on complete transparency with respect to all aspects of the management ofthe Chamber of Commerce.

However, never in my professional career has my integrity been called to question as right now. There is NO Allegation that any illegal activity or misappropriation of money has taken place. That leaves this essentially as a matter of bookkeeping practices. I have three immediate concerns:

l. What was of such critical and grave w·gency that these discussions had to take place while I was in Cardiac Intensive Ca re at Shoreline Hospital I 8 hol\J's after having undergone a 5-hour open-hc11rl surgery?

2. Who provided unauthorized information to the local newspaper that was clearly one-sided and seemed very much designed to embnrrass the Chamber, the Chamber s taff: Chamber Di rectors and our lilmilies.

3. I have not been allowed to respond or otherwise defend any of these allegations ul uny meeting to date. The chairman has advised me that I may not be ullowcd tube present at the entire Board meeting in Wednc~dfty and so I present these facts to you in advance.

CC00561

189 TAB6

190 EXHIBIT "M"

191 ( CAUSE NO. 08-1360-F

TERRY CARTER § IN THE DISTRICT COURT § vs. § 2141h JUDICIAL COURT § CORPUS CHRISTI CHA11J3ER OF § COMMERCE, SCRIPPS TEXAS § NEWSPAPERS, LP d/b/a CORPUS § CHRlSTI CALLER TIMES, DAMON § BENTLEY, JUDY HAWLEY, SYLVIA § WHITMORE, et al. § NUECES COUNTY, TEXAS

STAT E OFTEXAS § § COUNTY OF NUECE S §

AFFIDAVIT OF ELVIA AGUILAR

BEFORE ME, the undersigned authority, personally appeared Elvia Aguilar, who, after being duly sworn by me, upon her oath, testified as follows:

( I. "My name is Elvia Aguilar. I am over the age of 18 years and competent to make this Affidavit. All statements contained in this Affidavit are within my own personal knowledge and are true and correct.

2. I graduated from Baylor University with a Bachelor of Arts degree in 2005, with a major in journalism. After graduating from Baylor, I worked as a reporter for the San Antonio Express-News' bilingual publication, Conexion, from June, 2005 until June, 2006. At that time, I started working for the Caller-Times as a busj.ness reporter. As such, 1 was in charge of covering banking, tourism, real estate, business and finance issues in the Coastal Bend area. This included the Co1pus Christi Convention and Visitors Bureau, the Co1pus Christi Chamber of Commerce, and Corpus Christi Regional Economic Development Co1poration's 4A board, among other groups and organizations. In July or August, 2008, I began my current position with the Caller-Times as an education reporter.

3. Since I was the business reporter for the Caller-Times, sometime during the rooming of February 15, 2008, my direct editor, Tom Whitehurst, assigned me to assist with a story j:egarding the Corpus Christi Chamber of Commerce. As a result of my news-gathering activities regarding the matter, .I authored or contribute.d to the following articles regarding Terry Carter and the Co1pus Christi Chamber of Commerce between February 15, 2008 and June 13, 2008~ which is the time p~riod during which the articles about which Terry Carter is complaining . /

\ in the above referenced lawsuit, were published by the Corpus Christi Caller- Times: EXHIBIT

.I 455

192 ( a. "Financial, Management Questions Raised at Corpus Christi Chamber", published ori February 15, 2008; b. "Corpus Christi Chamber Pulls Two Off Panel", published on February 16, 2008; c. "Corpus Christi Chamber Meeting to Discuss Financial Irregularities", published on February 20, 2008; d. "Chamber of Commerce: Financial Questions Lead to Call .for Audit", published on February 21, 2008; e. "Chamber GEO Shifted Funds, Letter Says", published on February 27, 2008; f. "Ex-Chair' Airs Her Chamber Concerns", published on February 29, 2008; g. "Petition Seeks Chamber Changes", published on March 3, 2008; h. "About 80 Sign Petition on Chamber Operation", published on March 4, 2008; 1. "Chamber Board, CEO to Enter Talks", published on March 8, 2008; j. "Chamber Treasurer Granted Temporary Restraining Order Protecting Tape of Meeting", published on March 19, 2008; k. "Chamber Unrest Ends up in Court", published on March 20, 2008; 1. "Chamber to Discuss Petitioners' Concerns, published on March 21, 2008; m. "Chamber Puts CEO on Paid Leave", published on March 26, 2008; n. "Chamber CEO on Paid Leave", published on March 27, 2008; o. "Chamber Finances Move to Forefront", published on March 31, 2008; p. '!Chamber Had Deficit, Board Tells Members", published on April 1, 2008; q. "Chamber, in Need of Audit, Renews Accountant Search", published on April 29, 2008; r. "Chamber <;>ffers Contract Settlement to Carter, his Attorney Says", published on May 2, 2008; •s. "Chamber Makes Offer, Carter's Attorney Says", published on May 3, 2008; • t. "Chamber, Carter's Attorney Confinn Severance Agreement", published on May 23, 2008; • u. "Chamber's 'Acting CEO Resigns"; published on May 27, 2008; and v. "Chamber Acting CEO Resigns", published on May 28, 2008.

True and correct copies of the foregoing articles are attached hereto and incorporated herein by reference as Exhibit "M-1 ". . I 4. As part of my research and news-gathering activities in connection with my preparation of the f~regoing articles, I interviewed the following individuals: i a. Lucy Reta, Van Huseman and 'Judy Hawley as sources for the February 15th article; ( b. Sylvia Whitmore and Van Huseman as sources for the February 16, 2008 article;

2 456

193 ( c. Butch Escobedo, Lawie Cook, Freddie Martinez and Mark Scott as sources for the February 21, 2008 article; d. Lucy Reta and Kendra Kinnison as sources for the February 27, 2008 article; e. Freddie Martinez, Robert Gonzalez and Sylvia Whitmore as sources for the February 29, 2008 article; f. Steve Woerner, Tom Dobson, Dusty Durrill and Carol Scott as sources for the March 3; 2008 article; g. Freddie Martinez, Sylvia Whitmore, Carol Scott and Judy Hawley as sources for the March 4, 2008 article; h. Freddie Martinez, Carol Scott, Leon Loeb, and Laurie Cook as sources for the March 8, 2008 article; i. Van Huseman and Carol Scott as sources for the March'20, 2008. article; j. Freddie Martinez and Carol Scott as sources for the March 21, 2008 article; k. Van Huseman and Rene Rodriguez as sources for the March 26, 2008 article; l. Freddie Martinez, Van Husem~ and Rene Rodriguez as sources for the March 27, 2008 article; m. Ken Trevino, Carol Scott and Freddie Martinez as sources for the March 31 , 2008 article; n. Michelle Peters, Damon Bentley, Laurie Cook, Carol Scott, Bud Harris, Ken Trevino and Van Huseman as sources for the April I, 2008 article; ( and my att~ndance at the Chamber of Commerce general membership meeting on March 31, 2008; o. Ken Trevino. as source for the April29, 2008 article; p. Van Huseman, and Rene Rodriguez as sources for the May 2, 2008 article; q. Van Huseman, Rene Rodriguez and Ken Trevino as sources for the May 3, 2008 article; r. Van Huseman as source for the May 23, 2008 article; s. Freddie Martinez as source for the May 27, 2008 article; and t. Freddie Marpnez as source for the May 28, 2008 article

5. Additionally, as part of my research and news-gathering activities in connection with my preparation of the foregoing articles:

a. I attempted .to reach Plaintiff, Terry Carter, for his comments for the stories published on February 16th, February 20th, February 21'1, February 27lll, February 29111, March 3rd, March 4th, March &lb. I was unsuccessful in my attempts' as Plaintiff did not respond to my messages. Further, per Plaintiffs attorney, Rene Rodriguez, Plaintiff had no comment for the March 26th article and declined to comment for the March 27th article. .

b. I attempted¥> reach Sylvia Whitmore for comments for the February 15lll article. I was not successful in contacting her. (

3 457

194 ( c. I attempted to reach Freddie Martinez, the chairman of the Corpus Christi Chamber of Commerce, for his comments for the stories published on February 16th and March 3rd. MJ:. Martinez did not respond to my messages.

d. I, together with my co-worker, Denise Malan, attempted to reach all of the Chamber of Commerce Board members on or abou~ February 18th.

e. I attempted to reach Darrell Thompson, the Chamber of Commerce's CPA during the time period in question, did not return my telephone calls for the February 27tii article.

f. I attempted to reach Van Huseman, the attorney for the Chamber of Commerce. He did not return my telephone messages for his comments .for the February 15th and 29th articles.

g. I attempted to reach Damon Bentley for his reaction to the Plaintiffs lawsuit for the March 20th article. He did not return my calls.

6. Additionally, as part of my research and news-gathering activities in connection with my preparation of the foregoing artiqles, I reviewed and relied upon the following written ~ources, all of which are attached hereto· and incorporated c· herein by reference as Exhibit "M-2":

a. Plaintiff Terry Carter's memorandum to the Chamber of Commerce Board .of Directors dated February 1i\ . b. Darrell Thompson's e-mail to Damon Bentley dated February 20th; c. The Chamber of Commerce Board of Directors' letter to its members dated February 22nd; d. Damon Bentley's e-mail to the Chamber of Commerce Board of Directors dated February 26th; e. Sylvia Whitmore's letter to the Chamber of Commerce Board of Directors dated February 28th; . f Damon Bentley's lawsuit filed on March 18th, styled: Damon ·Bentley v The Corpus 'Christi Caller-Times cmd Terry Carter; responsive pleadings and Orders; g. Terry Carter,'s lawsuit filed on March 19th, styled: Terry Carter v Corpus Christi Chamber ofCommerce, eta/., responsive pleadings and Orders; h. The Chamber of Co~erce Petition; and 1. Chamber of Commerce invitation to the March 31 , 2008 Annual Membership Meeting. ·

Additionally, on M~y 30, 2008, I listened to a portion of an audiotape containing the February 15, 2008 Corpus Christi Ch~ber of Commerce meeting which the Caller-Times had obtained on May 30, 2008 pursuant to a Motion to Compel that ( had been filed by th~ Corpus Christi Caller-Times' attorney.

4 458

195 ( 7. In addition to my own newsgathering in connection with the aforementioned articles that I authored, Dan Kelley, Beth Wilson, Denise Malan md Fanny Chi.rinos, reporters at the Caller-Times, contributed to the articles based on information they had gathered during their own news gathering activities.

8. In interviewing the above-named persons, I asked them to elaborate on the matters raised in Mr. Bentley's e-mail of February 26, 2008 to the Chamber Board of Directors, Ms. Whitmore's letter of February 28, 2008 to the Chamber Board of Directors, and Mr. Carter's memorandum to the Chamber. Board of Directors on February 17, 2008. They were unwilling to do so. In researching and writing .the aforementioned articles, I relied in good faith on the sources and infonnation listed in paragraphs 4 . and 6 because they, particularly, Damon Bentley, Sylvia Whitmore and Judy Hawley, were high-ranking Chamber officials who, by virtue of their then and former positions with the Chamber of Commerce, were in a position to be knowledgeable about the matters and issues involved, regarding the Corpus Christi Chamber of Commerce and Terry Carter. At all times I believed that the matters about which I was writing were newsworthy because they involved a controversy between high-ranking officials of a significant local organization, the Corpus Christi Chamber of Commerce, and its high-profile CEO and President, Terry Carter. I also relied on information I obtained from a long-time Chamber employee, Lucy Reta, who was known by me ( to be reliable. ·

9. At no time did Terry Carter contact me, or to my knowledge, anybody else at the Caller-Times, to point out that any statement contained in the articles listed above in paragraph 3 :vas ~accurate or incorrect.

10. Prior to and at the time of the publication of the articl~s listed above in paragraph 3: (a) I had no knowledge that any of the statements in said articles, including, but not limited to, the ·statements about which Terry Carter is complaining in the above referenced lawsuit, was false; (b) I never entertained any doubts as to the truth of any of the statements contained in said articles, including, but not limited to, the statements about which Terry Carter is complaining in the above referenced lawsuit;' (c) I had no knowledge nor suspected that any of the statements in said articles, including, but not limited to, the statements about which Terry Carte~ is complaining in the above referenced lawsuit, nor each article as a whole; nor the totality of said articles, could create a false or substantially false i.inpression regarding Terry Carter in the minds of the ordinary reader of said articles.

11. Prior to and at the tin1e of the publication of the articles listed abov~ in paragraph 3, I believed that all of the statements contained in said articles, including but not limited to, the statements about which Terry Carter is complaining in the above referenced lawsuit, were true and correct. (

5 459

196 ( 12. Prior to and at the time of the publication of the articles listed above in paragraph 3, I did not and do not now, bear any personal ill will toward Terry Carter."

"FURTHER AFFIANT SAYETI! NAUGHT."

CL.:~ Elvia Aguil·

SWORN TO AND SUBSCRIBED BEFORE ME, the undersigned authority, on the 24th day of September, 2009.

~:~~t~J!~~;\ ROXANE MARIE IGLESIAS ~~.'.. It ..:.._,e No18ry ~lie. State of Texas .~ My Commission El

(

6 460

197 TAB7

198 Exhibit A-25

199 . • • February 28, 2008

Corpus Christi Chamber of Commerce Board of Directors

The action taken by the Chamber of Commerce Board to establish an audit committee is a great step. At this time, I am still very concerned about three issues:

• The interpretation that I am not officially a member of the Executive Committee, especially in light of the fact that the Chairman had requested that I stay on when the 2007 Chairman left the city. Furthermore, Article V, Section 1: of the Corpus Christi Chamber of Commerce Bylaws states ... "AII officers shall take office on the first day of the new year and serve for a term of one (1) year or until their s uccessors assume the duties of office". Since no one has assumed the duties of Immediate Past Chair, that person would be me.

• The correspondence which has been sent by the Chamber CEO to the Board and Chamber Members glossing over the fi nancial irregularities and the declining membership numbers.

• The obstruction of duties by denying the lreasurer access to critical information and advise of financial professionals employed by the Chamber of Commerce. The Treasurer's concerns are very credible, and appeared to be mostly ignored. There was continued refusal of the Chair and Chair Elect to respond to attempts to schedule an executive meeting immediately to wor1< together to address irregularities. There was refusal of Chamber staff to cooperate w ith the Treasurer on a task he was given by the Board and Executive Committee. Finally, refusal of the Chamber CEO to release the tape of the Executive Committee meeting which was held on February 15.

The Chamber needs to strengthen, and follow, its accounting procedures and its accountability to its members. As stated previously, the action taken by the Chamber Board to establish an audit committee is"a great step, but is not sufficient to reassure me and others that the Chamber's operations are transparent and open. Executing contracts without Executive Committee or Board authorization, moving funds to other accounts. running special events off the books, arbitrarily filling board seats . . . all of these issues are about trust. confidence in the leadership, procedures in place which ensure transparency and accoun tability of the Chamber CEO to the Board and the Membership

I love the Corpus Christi Chamber of Commerce. I have devoted many of my years of volunteerism to this organization beginning in the 1970s. It is, and

CCOOS76

200 .... • • should continue to be, a member-driven organization. Those of us who have worked for years to strengthen the Chamber want to insure it is financially secure.

I know I speak for myself, Damon Bentley and Judy Hawley in that we did everything we could to have the Executive Committee function as It should; to move forward with the performance evaluation and recommendation back to the full Board as we requested. By "kicking" Judy Hawley and I off the Executive Committee, we all now know what chaos that has created.

When the Treasurer identified areas of financial concern, his first call was to the Chamber Chairman, requesting that we convene to move forward Immediately with a full audit. His position was that it would take that level of scrutiny to provide the Board and Chamber Members with an accurate assessment of the Chamber's financial status, membership levels, etc.

It is incumbent on the Board of Directors to insure that this 85+ year organization continues to speak for the entire business community of our city; that the voice is an advocate for a pro-business elected leadership, a pro-business environment, and that it is an information resource for Issues that are important to businesses, both large and small. Somehow, we seem to have forgotten our mission, and we need to speak it loud and clear. Prosperity. Together.

Respectfully,

Sylvia A Whitmore

CCOOS77

15062286 135934/00001