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1 REPORTER'S RECORD
VOLUME 1 OF 1 VOLUMES
2 TRIAL COURT CAUSE NO. DC-16-11377
3 JOANNA PENA, ET AL ) IN THE DISTRICT COURT
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4 )
vs. ) DALLAS COUNTY, TEXAS
5 )
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6 HMK, LTD., ET AL ) 95TH JUDICIAL DISTRICT

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10 STATUS CONFERENCE

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18 On the 6th day of April, 2017, the following

19 proceedings came on to be held in the above-titled and

20 numbered cause before the Honorable, Judge Ken Molberg

21 Presiding, held in Dallas, Dallas County, Texas.

22 Proceedings reported by computerized stenotype

23 machine.
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Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 A P P E A R A N C E S

2 MR. MICHAEL HINDMAN

SBOT NO. 24000267
3 Hindman / Bynum P.C.
Three Energy Square
4 6688 North Central Expressway, Suite 1000
Dallas, Texas 75206
5 Telephone: (214) 941-4611
Attorney for Plaintiffs
6
MS. MELISSA MILES
7 SBOT NO. 90001277
City of Dallas
8 7CN Dallas City Hall
1500 Marilla
9 Dallas, Texas 75201
Telephone: (214) 671-9544
10 Attorney for the City of Dallas

11 MR. CHARLES MCGARRY

SBOT NO. 13610650
12 Attorney at Law
701 Commerce Street, Suite 400
13 Dallas, Texas 75202-4579
Telephone: (214) 748-0800
14 Attorney for Defendants
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Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 I N D E X

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Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 4

1 P R O C E E D I N G S

2 THE COURT: Cause Number 16-11377, Pena and

3 others and City of Dallas versus HMK Limited.

4 Counsel, would you state your

5 appearances, please.
6 MR. HINDMAN: Michael Hindman for the

7 plaintiffs.

8 MR. MCGARRY: Charles McGarry for the

9 defendants.

10 MS. MILES: Melissa Miles for the

11 intervenor, City of Dallas.

12 THE COURT: All right. Good morning,

13 counsel.

14 MS. MILES: Good morning, Judge.

15 THE COURT: The last time we were here, I

16 had some optimism that major portions of this case could

17 be resolved without serious fallout to the people who are

18 caught in the middle.

19 As you probably know, this Court has

20 somewhat limited power to deal with potential

21 adverse results, absent your cooperation. I'd like

22 to know your views of where we are, where we stand

23 today, and what you anticipate in the future. I'll

24 also ask about -- I just saw, Mr. McGarry, your

25 counterclaim that was filed yesterday, and I have

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 5

1 not had a chance to look at that. But I want to

2 inquire a little bit about that, so I'm informed.

3 Let me go to you, Ms. Miles. Where are

4 we in this litigation?

5 MS. MILES: Judge, the parties have met

6 since you last saw us to talk about the possibilities.

7 From a very sort of 50,000-foot view, the City has

8 mustered its resources and asked others, philanthropists,

9 catholic charities, charitable organizations to step up

10 and help us in this effort to evaluate the specific needs

11 of individual tenants and families that look to be

12 displaced by sort of everyone's version of the most likely

13 outcome.

14 We had, as recently as this last weekend,

15 a housing fair where we worked individual cases and are

16 following up with individual families. We have

17 many resources onboard. Many, many of the tenants have

18 moved out. HMK has demolished many of the homes since

19 we last saw this Court.

20 Of those remaining, I think we -- I

21 think it's fair to estimate we have about half of

22 the stock that we started with.

23 THE COURT: What is that in terms of

24 numbers, 150 or --

25 MS. MILES: I think that's a rough estimate

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 6

1 of what's currently occupied. I think a number of those,

2 it would be the defendants' position, are subject to being

3 evicted for -- and, I mean, this -- I don't want to speak

4 for him, but he gave the City the impression at our last

5 meeting that it would be for nonpayment. And we -- and we

6 certainly don't have anything to say, would ask the Court

7 to intervene in that, unless that turned out not to be the

8 actual case.
9 THE COURT: Well, let me ask it this way.

10 Then I'll go over here to you, Mr. McGarry. Mr. Hindman,

11 I'll come to you in a little bit.

12 Where are we headed? Where are we going?

13 MS. MILES: I think our -- the City's goal

14 is to work with both our resources and the resources of

15 the charitable organizations and philanthropists in the

16 city who have stepped forward to help and to have -- and

17 to have a short and long-term solution plan for every

18 family who asked us for help. And I think that we're well

19 on our way to meeting that goal.

20 We are confident that we'll meet that

21 goal. We've heard it -- we've heard -- and this is sort

22 of funny. We hear it through the media instead --

23 without a direct communication. We hear it through the

24 media that somehow the City needs to extend this

25 temporary injunction. Maybe your Honor's heard similar

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 7

1 things. Yet we've -- yet we've not been addressed by a

2 single tenant -- we've not yet met a single situation

3 where we feel like we'll be unable to meet short or --

4 short and long-term needs in the tenants.

5 So although we remain open to revisiting

6 the terms of the temporary injunction, we do that -- we

7 expect to do that on a case-by-case basis after we've

8 had an opportunity to actually evaluate whether or not

9 there's some need that we can't meet for that family.

10 For example --

11 THE COURT: Well, June is fast approaching.

12 MS. MILES: It is, and we have many

13 resources in place. For example, we have identified 30,

14 give or take three probably, families who've said we'd

15 really like the opportunity to -- we'd like the

16 opportunity to buy this house or -- or one like it.

17 They're in West Dallas, and we've put together the

18 resources to make homeowners out of those tenants who say,

19 great, we can make that happen.

20 And we've gone to HMK and said, let --

21 can we make homeowners out of these tenants. Let them

22 stay exactly where they are. And we haven't been able

23 to make any progress on that front, so we're faced with

24 trying to find another -- another house for them

25 hopefully to own because that's what they would like --

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 8

1 like to do.

2 But that's really -- that's the most

3 difficult to solve problem that we have right now is

4 that they want to buy the house they're in. We have the

5 ability to let them -- help them be homeowners of that

6 particular home and stay exactly where they are. And

7 HMK is uninterested in selling to the tenants. They're

8 interested in selling to somebody, but not to the

9 tenants. That's the hardest to solve problem for us

10 right now.

11 So we're looking at -- so we're looking

12 at short and long-term solutions for those families

13 because HMK's taken off the table a possibility of them

14 just staying where they are. Another example, just to

15 give the Court some good news for the week in this case,

16 for example, Habitat for Humanity has come in -- we knew

17 that they would -- and offered to boy a number of --

18 probably around a third of the lots that were going to

19 become vacant lots when Mr. Kraish demoed them. When

20 they become -- when they became unoccupied, then he

21 demos. He's immediately demoing the structures.

22 So we know that Habitat is going to come

23 in and buy or has purchased a number of lots, and so

24 far, they have reported to us that every single one of

25 those families who has come to them and applied to be an

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 owner of a new Habitat home that will be built on that

2 lot has been approved.

3 THE COURT: So tell me again how many we're

4 talking about.

5 MS. MILES: The -- and it's -- it's not a

6 large -- it's not a large number. And I don't have it,

7 and I don't -- if someone applied yesterday and was denied

8 or wasn't approved, I don't know about that. If -- I'm

9 talking about at last conversation with Habitat, and

10 that's probably a three-week old, right, so maybe someone

11 hasn't been approved. But I think the number was at -- I

12 think the number was at -- I want to say it was 8 or 11,

13 but it was a larger number than we even -- than we even

14 expected.
15 So -- and that's -- and that's

16 communicating directly with Habitat. I hear grumblings

17 behind me, but I don't see -- but I don't think that's

18 Hab- -- but I'm not sure that's Habitat speaking, and

19 we're speaking directly with them. So that's been very

20 good news. So we need a short-term solution for that,

21 so we've identified temporary -- we've identified a lot

22 of temporary housing and funds available to help

23 families with that with relocation, with security

24 deposits, with, you know, moving, putting down deposits.

25 We've identified money for down payments for

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 10

1 homeownership, home repair programs. We stand -- we

2 stand ready -- we stand ready, and no one's going to be

3 made homeless in June. We can assure the Court of that.

4 THE COURT: All right. Mr. McGarry, let me

5 have your perspective on this.

6 MR. MCGARRY: Yes, Your Honor. I can

7 report that HMK has been busy in unilaterally finding a

8 resolution to -- to these issues regarding the disposition

9 of these families in these homes. When this case started,

10 we had 320 properties. And out of those, 80 of those

11 tenants have voluntarily relocated. 60 -- contrary to the

12 representation of the City, 60 has been actually been sold

13 to the tenants, and they've already purchased.

14 THE COURT: Out of the 320?

15 MR. MCGARRY: Out of the 320. 20 were sold

16 to Habitat for Humanity, and that leaves, according to my

17 numbers, about 160. Out of that 160, we'll say

18 approximately 50 are inevitably going to be evicted

19 because they're multiple months behind even since January.

20 So they're -- you know, they -- if they're not paying even

21 the meager rent that they owe now, they're not going to be

22 able to buy a new place or -- so, I mean --

23 THE COURT: So you're saying there are 50

24 evictions anticipated as we are --

25 MR. MCGARRY: 50 evictions anticipated,

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 11

1 correct. And that leaves 110, and Habitat, as it happens,

2 is interested in buying about 110 properties, though not

3 necessarily the same 110. And so the issue as far as

4 we're concerned is that we still have 110 families to find

5 some place to relocate them until new housing is

6 available. And also contrary to what -- I think the

7 City's impression, we had a meeting with the Mayor

8 that Ms. Miles attended, and we specifically

9 offered to extend the temporary injunction to give us time

10 to come up with a solution for these last 110houses.

11 THE COURT: Now, let me stop you right

12 there.

13 Is -- is that knowledge that you have?

14 MS. MILES: Well, to be -- to be clear --

15 THE COURT: Now, just need an answer to my

16 question.

17 MS. MILES: Well, what --

18 THE COURT: It's either yes or no or I

19 don't know.

20 MS. MILES: Knowledge of --

21 THE COURT: That there were 110 properties

22 left in the balance assuming that they're right on their

23 number of evictions for nonpayment of rent and --

24 MS. MILES: Assuming -- yeah, if they evict

25 150 -- I mean, I'm sorry. If they evict 50, yes, that

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 12

1 sounds about right.

2 THE COURT: I mean, I can't keep people in

3 there if they're not paying their rent. I mean, that's --

4 MS. MILES: Yes, sure. And that's the

5 first thing -- yeah, and that's the first thing we would

6 acknowledge. And to be clear I wasn't -- I didn't mean

7 to --

8 THE COURT: I already gave a bunch of them

9 a pass on that at their expense, considerable expense, I

10 imagine.

11 MS. MILES: Sure. And, Your Honor, to be

12 clear, when I spoke about the homes that HMK tenants would

13 like to buy, that doesn't seem to be on the table. I was

14 talking about West Dallas. HMK has reported to us --

15 we've not verified -- but they have reported to us that

16 they have sold several homes in South Oak cliff to

17 families --
18 THE COURT: Okay.

19 MS. MILES: -- so --

20 THE COURT: Okay.

21 MS. MILES: We've remained focused on the

22 families that we still need a solution for them.

23 THE COURT: Of course. Okay. I didn't

24 mean to interrupt you, Mr. McGarry.

25 MR. MCGARRY: One part of my representation

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 13

1 there I thought that the Court was asking about was that

2 we did in fact tell the Major we are willing to extend the

3 injunction to find additional time to deal with these last

4 110 families. And, you know, we're confident that this is

5 a problem that will resolve itself with time.

6 And, you know, because it does take time

7 to build new -- new homes for these people. And, you

8 know, we only have -- recently have some demolished lots

9 that they can start building on. But they haven't

10 closed a sale on the lots in West Dallas. They've

11 closed on some in South Dallas.

12 But we did tell the Mayor that we were

13 willing to extend it and that we actually have a plan

14 for some of our property to redevelop it into a -- a low

15 income housing development. But obviously that's going

16 to take like a year at least to actually come to

17 fruition for people to be able to move in. And so

18 our -- our view is that the best course as far as

19 finding a solution for the families is more time. And

20 we're willing to extend the temporary injunction on its

21 current terms to a new trial date to do -- to

22 accommodate that.

23 And like I said, we're talking about 110

24 families and whatever time it takes to build, and we're

25 talking about building new structures, so it's --

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 14

1 THE COURT: What's the City's position on

2 that, Ms. Miles?

3 MS. MILES: Well, the City's position, Your

4 Honor, is that we've heard this from no one except --

5 except the defendant. And what they're really asking for

6 is to extend their income stream for housing that they

7 don't want to put any money into. And when we asked to at

8 least see if there's any imminent threat to life or safety

9 in the houses, they -- they -- they threaten -- they

10 threaten to sue the City, if catholic charities so much as

11 ask that question of tenants when they went to the homes.

12 Again, we are happy to look at individual

13 case-by-case bases, but until we are confronted with at

14 least one individualized situation where -- where that

15 family really has no other better choice than to stay

16 where they are, then we don't we think it's premature to

17 be talking about extending a situation that frankly on

18 its face really just benefits the income stream of

19 Mr. Kraish.

20 THE COURT: Well, that's not necessarily

21 the only benefit. I mean, that may be one of the

22 benefits.

23 MS. MILES: But until we know -- until the

24 benefit for someone else is more than hypothetical, then

25 we -- then we wouldn't --
Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 THE COURT: I mean, if --

2 MS. MILES: -- consider it.

3 THE COURT: -- all right. Do you want

4 address that?

5 MR. MCGARRY: Very quickly because there's

6 a certain irony to this that I'd remind the Court that

7 this case started with my client's decision to all the

8 properties and --
9 THE COURT: No, I understand.

10 MR. MCGARRY: -- because that's his

11 statutory right, and so continuing the income stream is

12 not the motivation here. It's the side benefit, but,

13 again, we're only talking about 110 out of 320 properties

14 that we would be extending. But -- but, you know, our

15 option is to close the property. And if we -- if we, you

16 know, are forced to a conclusion prematurely, that's our

17 right to do.
18 We just close the properties down and

19 everybody gets evicted. And I thought that's what the

20 City intervened to prevent, and they were the ones that

21 wanted to extend the status quo and not have these

22 evictions. And I'm now saying we're willing to agree to

23 the City's unreasonable position by giving these people

24 more time to have other options from the Court.

25 THE COURT: Well, I think Ms. Miles says

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 16

1 that the City wants to enforce the ordinance at some

2 point.
3 MR. MCGARRY: Well, that was probably some

4 part of our agreement that that not happen because we

5 concede that these properties don't comply with the

6 current ordinance. And we were stuck in a -- between a

7 rock and hard place. I mean, our only option was to get

8 fined into bankruptcy or to close the properties. And

9 we're trying to find a way -- I mean, we're going to close

10 these properties eventually, but, I mean, the goal here is

11 to not do that until everybody has a place to go.

12 THE COURT: How do you call the income --

13 extended income stream a benefit when it's a reducing

14 benefit constantly throughout 300 and whatever it was down

15 to roughly 110 because there are 50 non-payors? I mean,

16 why would that be the motivation for this? Why do you

17 think?
18 MS. MILES: 50-, $60,000 a month would be

19 motivation to me, I think, particularly when a great deal

20 of income stream has been taken away. I think -- I think

21 the deals aren't happening. I think the deals aren't

22 happening as quickly for HMK as they might have -- as they

23 might have predicted. But I do believe it's disingenuous

24 to say that the concern is with the tenants.

25 THE COURT: Are we still moving in the

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 17

1 right direction here as far as these people are concerned?

2 MS. MILES: Yes. Judge, we absolutely are,

3 and we are --

4 THE COURT: What -- are we?

5 MR. MCGARRY: Well, we are, but so far,

6 it's been all unilateral action on our part. I mean, we

7 did ask the City for some help in developing new stock for

8 low income housing that hasn't come to the floor. It's

9 been people like Habitat, but there's a lag there between

10 the time that, you know, they can have something available

11 and also some of the other landlords may very well make
12 some of their properties available as a place for our

13 tenants to relocate during this interim period.

14 But there's no agreement in place for

15 that, but I'm saying all the progress that's been made

16 over the last seven months has been due to our

17 unilateral actions.
18 MS. MILES: Your Honor --

19 THE COURT: I bet Ms. Miles sees it

20 differently.
21 (Laughing)

22 MS. MILES: Well, Your Honor, that's --

23 that is so -- such a jaded thing to say. It's -- it's

24 sort of the progress that's -- it depends on what is

25 progress? What is progress? Is demoing properties

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 18

1 progress? You know, perhaps we didn't really assist with

2 that. Is getting -- is evicting tenants progress? That

3 may be progress for HMK. But we didn't assist with that.

4 The progress in addressing the needs and

5 future needs of the tenants, I wouldn't call it

6 unilateral on the City's part. I think HMK is dealing

7 with agreeing to sell lots to Habitat for Humanity, and

8 we applaud that. We think that's part of the solution

9 that we need, but it's only part of it.

10 Our efforts --

11 THE COURT: Are y'all talking to each

12 other?

13 MS. MILES: Well, we're -- I mean, we're

14 trying -- part of the problem, Your Honor, if -- and I

15 debated bringing this up, but I -- it's such an elephant

16 in the room every time we try go forward. Mr. Kraish has

17 an unlicensed lawyer who presents himself, who takes the

18 role of a lawyer in every conversation we have, in every

19 meeting we have, in every -- except when we come in front

20 of this Court, we hardly ever see or hear from

21 Mr. McGarry.

22 And this unlicensed lawyer presents --

23 his story, and then when -- and then it's -- and then it
24 winds up being something that Mr. Kraish doesn't want to

25 do. There's a lot of confusion, and I wrote to the

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 19

1 Court about this before, and the Court asked the

2 defendants to respond to what I was saying in the

3 e-mail. I said the same thing in the e-mail to Court.

4 And they stayed silent to this Judge -- to this Court's

5 request that addressed that matter.

6 It's gone really too far in my humble

7 opinion, Your Honor. But it's complicating the issues.

8 We are trying to talk, but we are not always getting a

9 straight story or a consistent story. We'd much rather

10 speak with the owner of the properties and the owner's

11 licensed lawyer. And to keep that story square and

12 consistent and on track, and that has been part of the

13 problem.

14 But we are talking -- the unilateral

15 effort on the City's part was to gather the information

16 from the tenants that was essential to sort of square

17 one, you have to know who are the people out there?
18 What do they need? What do they want? What's important

19 to them? Do they have children? Is there -- do they

20 need a house, not an apartment? Are they receiving

21 services from an organization like medical services that

22 may be ZIP code specific or -- or -- or school district

23 specific? A lot of information to gather.

24 We went and -- we asked. The catholic

25 charity stepped up and said, we'll do this. We'll go

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 20

1 information gathering, and HMK did its best to obstruct

2 that. So the idea that they're unilaterally helping

3 tenants is just sadly not true.

4 THE COURT: Mr. McGarry, do you want to

5 speak to that?
6 MR. MCGARRY: Well, yes. I'm not aware of

7 any meeting that has taken place that I haven't attended.

8 As I said, I think the original question from the Court

9 was, are you guys talking to each other? And as I

10 mentioned, we had a meeting not that long ago that the

11 Mayor attended, that Ms. Miles attended, I attended, my

12 clients attended. And all the things that I've been

13 talking about today were discussed. And -- and the only

14 thing that I guess was left unresolved was the City's

15 position on whether or not they wanted to give us --

16 THE COURT: Well, what -- my problem --

17 look, here. My problem is that once I see this sort of

18 what I call gamesmanship, there -- both sides can be

19 accused of -- from what I'm seeing here, both sides can be

20 accused of a little gamesmanship in this deal. Well, that

21 goes back to the very first concern I ever had, and that

22 was the people in -- in these houses.

23 MR. MCGARRY: Right.

24 THE COURT: And y'all can joust all day

25 long between yourselves, but what are we going to do about

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 21

1 that?

2 MR. MCGARRY: Well --

3 THE COURT: And when you tell me, oh, we've

4 been doing all of this and the other side hasn't and

5 Ms. Miles says, no, we've been doing all this and y'all
6 have been obstructionists, you know --

7 MR. MCGARRY: Well, all I'm hearing that

8 the City --
9 THE COURT: -- that to me --

10 MR. MCGARRY: -- I'm sorry.

11 THE COURT: -- does not bode well for the

12 people in the middle.

13 MR. MCGARRY: Well, all -- I'm sorry.

14 THE COURT: And I don't know if maybe each

15 side thinks too highly of themselves. You know, this is a

16 problem. And if there's a resolution -- there has to be a

17 resolution, and it's got to be handled in good faith by

18 all parties.

19 MR. MCGARRY: Yeah. If I may, all I heard

20 the City say that they've done is get catholic charities

21 to do a survey of our tenants. That's all I've heard them

22 say that they've done.

23 THE COURT: Well, I mean, from what I'm

24 told, you wouldn't even let them do that.

25 MR. MCGARRY: Well, I did have severe

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 concerns, and I'll tell you exactly why. It has to do

2 with the counterclaim that we filed. We have severe

3 concerns about them contacting the tenants directly

4 because our counterclaim is based on personnel of the City

5 advising the tenants not to pay rent.

6 THE COURT: Is that true?

7 MS. MILES: No.

8 MR. MCGARRY: Well, we have the evidence,

9 Your Honor, and we're -- and that's the basis of the

10 counterclaim.

11 THE COURT: Well, you see what I'm saying

12 then about both of you?

13 MS. MILES: He --

14 MR. MCGARRY: Well, except that as far as

15 the Court's ultimate concern with placing the families,

16 that's what we're working on.

17 THE COURT: Okay. Well, that's -- I don't

18 want to get into a policy debate. Frankly, that's far

19 outside of my jurisdiction, as ya'll know.

20 MR. MCGARRY: And just one other mention as

21 far as a status report, the plaintiffs' case has been

22 abated for want of a DTPA letter, which we've still not

23 received. And I intend -- I would like to ask the Court,

24 I could do it in a formal motion or just ask it informally

25 now, that the plaintiffs' case either be dismissed without

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 23

1 prejudice or at least settled. Because there was

2 obviously a different agenda from the plaintiffs'

3 perspective as opposed to the City's perspective. The

4 City does seem to be interested in a solution.

5 And the plaintiffs, I'm not quite sure.

6 I thought they were interested in litigating, but,

7 again, there's been no DTPA letter in six months. And

8 as the things stand, the case is going to be abated

9 through trial date. And I don't know if they need more

10 time, but honestly I think the agendas are different

11 enough that they -- that case should be at least

12 severed.

13 THE COURT: Let me ask Mr. Hindman to speak

14 to that.
15 MR. HINDMAN: Your Honor, we -- as of now,

16 I think it's been filed already, have removed the DTPA

17 claims from the lawsuit, so they're -- they are

18 gone. And, frankly, just in terms of logistics, you know,

19 from the very beginning, the idea of doing all that would

20 need to be done to prosecute a class action lawsuit in the

21 that short amount of time by the end of the school year --

22 THE COURT: Right.

23 MR. HINDMAN: -- was simply impossible.

24 But, of course, we understood the Court had to put a date

25 for trial for -- to make the TI legitimate, and also we

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 understood the reasons for that date. And the deal was

2 made be -- to -- the agreement as to the TI was made

3 between the City and defendants. We were not technically

4 a party to that agreement.

5 However, our -- our clients and the class

6 potentially -- or, you know, potential class benefited

7 from it substantially weighing, you know -- there are

8 certainly some things we didn't like about that in terms

9 of HMK continuing to, you know, abrogate their

10 obligations to provide basic services, legal service --

11 you know, required services to their tenants and collect

12 money anyway. As much as that churns my stomach, they

13 get to profit off these people and exploit them further.

14 As we stand here today, I believe it's

15 probably in the best interest of my clients generally

16 and the class potentially to extend the TI to allow this

17 problem to continue to -- the housing issues to continue

18 to work themselves out. We're prepared obviously to

19 prosecute the claims that belong to each and every

20 tenant, whether or not they're a part of the 350 or not.

21 THE COURT: Right.

22 MR. HINDMAN: There's a wide number beyond

23 that that we potentially would represent.

24 THE COURT: There's your answer,

25 Mr. McGarry, no DTPA.

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 MR. MCGARRY: No DTPA. Okay. Well, then

2 the plaintiff would be right, that if the abatement's only

3 now being lifted, but there's obviously inadequate time to

4 litigate that case.

5 THE COURT: All right. Before I go any

6 further, Mr. McGarry, just inform me a little bit about

7 your counterclaim. What --

8 MR. MCGARRY: The counterclaim -- so

9 against the plaintiffs was for frivolous lawsuit, and

10 against the City was for the tortious interference. And

11 we do have videotape of City people telling tenants not to

12 pay rent, and that's tortious interference. It cost us

13 some rent, cost us -- actually some of the properties that

14 have been bulldozed were bulldozed because they no longer

15 maintained tenants because the tenants were instructed not

16 to pay rent. And so tortious interference as far as the

17 City, frivolous lawsuit against the plaintiffs.

18 THE COURT: All right. Very well.

19 Anything further?

20 MR. HINDMAN: No, Your Honor.

21 THE COURT: All right. Let me encourage

22 y'all to -- encourage all parties here to get out there

23 and try. And, yeah, I'm -- you know, like I said earlier,
24 I had an ounce of optimism at the outset. I'm not sure

25 I've got an ounce of optimism left after today. But maybe

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 y'all --

2 MR. MCGARRY: I think --

3 THE COURT: -- maybe y'all can prove my

4 fears wrong.

5 MR. MCGARRY: -- yeah. I think all the

6 parties have expressed some optimism that time will

7 resolve the issue as far as where to place these people.

8 MR. HINDMAN: I -- Your Honor --

9 THE COURT: I mean, we do have some very,

10 very critical interests here. I understand that

11 Mr. Kraish is a property owner entitled to his

12 property. The City is entitled to enforce its

13 regulations, and the tenants are -- as far as I'm

14 concerned, are entitled to not be thrown out in the

15 street, if you get my drift.

16 MR. MCGARRY: As long as they pay rent.

17 THE COURT: I understand that.

18 MR. MCGARRY: Yeah.

19 MR. HINDMAN: May -- I just wanted to add

20 one thing, and I don't know -- I've not been a part of any
21 discussions between the City and the defendants

22 whatsoever. I don't have -- what I heard today is all I

23 know about those discussions or what's been reported

24 or misreported. But I will add that prior to the TI being

25 entered into, we did have a mediation. City Square had

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 reached out to me, a charitable organization, and at that

2 time, they were prepared to buy all HMK houses, had a plan
3 to potentially -- to -- you know, the ones that could be

4 fixed would be fixed. The ones that couldn't would be

5 raised.
6 There'd be a -- a temporary house the

7 family could be moved into while they built a new house

8 on that plot. They were willing to do all at that time.

9 That discussion went nowhere. I don't know whether or

10 not HMK has had any discussions with City Square about

11 their continuing interest in that project. But as to

12 the 110, that might be a source. I have no way to talk

13 about that with anybody other than here in open court.

14 But I will suggest to everybody who's

15 listening here today that that is potentially

16 another resource that to my knowledge has not been

17 tapped in helping to resolve this problem. And I

18 believe that I can -- you know, I can certainly

19 represent to the Court they've given me authority before

20 to say that they are willing to pursue that avenue. And

21 I have kind of additional knowledge that those resources

22 can be made available to do that.

23 MS. MILES: And we have a set -- if I may,

24 Your Honor, just 20 seconds. And we have -- I can't get

25 into the total details of it, but we have other

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 philanthropists who were willing to buy the additional

2 stock of occupied houses and with a similar plan let the

3 families become owners. If the house can be fixed, fix

4 it. If it can't, raise it temporarily, relocate and bring

5 them back to a new home that they own.

6 There have been multiple plans

7 presented to HMK, and we've moved heaven and -- well the

8 catholic charity had heaven covered, and we had earth

9 covered. But we've moved heaven and earth to come up

10 with these solutions that would be good for tenants and

11 good for maintaining the neighborhood and to give

12 options to folks. We have hit a brick wall. That's

13 where we're at.

14 MR. MCGARRY: We --
15 MS. MILES: So the idea that we need to

16 extend a TI -- that's where I'm coming from when I say,

17 Your Honor, that's a bit disingenuous. It just feels so

18 very disingenuous to me that anyone that -- that's coming

19 from a heart filled with concern for the tenants.

20 MR. MCGARRY: We -- the Mayor mentioned an

21 unnamed philanthropist to us in our meeting, and we

22 specifically told the Mayor that we would entertain an

23 offer. We're just still waiting for it. But it's still
24 not going to be enough time between now and June 3rd

25 to -- to get anything done and get these people taken care

Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
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1 of while any new offers are made.

2 THE COURT: All right. I want to thank you

3 all for coming down and filling me in. I -- I don't know

4 that I'll issue any orders after this. I just needed to

5 hear from you about -- you know, you hear a lot of things
6 out there on the street, and I needed to hear it directly

7 from you.

8 So anything else?
9 MR. MCGARRY: No.

10 MR. HINDMAN: No, Your Honor.

11 MS. MILES: Thank you, Judge.

12 THE COURT: All right. Thank you.

13 MR. HINDMAN: Are we excused?

14 THE COURT: In recess.

15 MS. MILES: Thanks, Judge.

16 (Proceedings adjourned)

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Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991
 30

1 STATE OF TEXAS )
2 COUNTY OF DALLAS )
3 I, Deana K. Rouse, Official Court Reporter in
4 and for the 95th District Court of Dallas County, State
5 of Texas, do hereby certify that the above and foregoing
6 contains a true and correct transcription of all portions
7 of evidence and other proceedings requested in writing by
8 counsel for the parties to be included in this volume of
9 the Reporter's Record in the above-styled and numbered
10 cause, all of which occurred in open court or in chambers
11 and were reported by me.
12 I further certify that this Reporter's Record
13 of the proceedings truly and correctly reflects the
14 exhibits, if any, offered by the respective parties.
15 I further certify that the total cost for the
16 preparation of this Reporter's Record is $195.00 and will
17 be paid by Mr. Carney.
18 WITNESS MY OFFICIAL HAND this 13th day of
March, 2017.
19 /s/ Deana K. Rouse
20
Deana K. Rouse, Texas CSR 7939
21 Expiration: 12/31/2017
Official Court Reporter
22 95th Judicial District Court
600 Commerce Street, 630C
23 6th Floor, East Tower
Telephone: (214) 653-6747
24 Facsimile: (214) 653-7991
Dallas, Texas 75202
25 deanakrouse@yahoo.com
Deana K. Rouse
Official Court Reporter, 95th District Court
T: (214) 653-6747 - F: (214) 653-7991