VARCO calls San Benito’s attempt to collect rent a ‘shake down’

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SAN BENITO — A real estate company is trying to stop city officials from collecting tenants’ rent at San Benito’s first resaca-side commercial development.

Amid a year-long legal battle, VARCO, a Brownsville-based firm, is requesting a judge order officials to stop their attempts to “shake down” tenants at the Resaca Village plaza.

In Cameron County’s 107th state District Court, Judge Benjamin Euresti has set a Jan. 14 hearing to consider VARCO’s request for an injunction after signing the company’s Dec. 31 request for a temporary restraining order demanding city officials “be immediately enjoined and caused to cease and desist from collecting any and all rental payments from the tenants of the Resaca Village Commercial Plaza.”

In its request, VARCO names a list of defendants including Mayor Rick Guerra and City Manager Fred Sandoval along with city commissioners and members of the San Benito Economic Development Corporation, demanding they “be immediately enjoined and caused to cease and desist from asserting any and all ownership rights and/or interests in the Resaca Village Commercial Plaza.”

The temporary order also demands officials “be immediately enjoined and caused to cease and desist, be prohibited from communicating with the tenants of the Resaca Village Commercial Plaza, including, but not limited to, any and all communications related to the attempts by defendants to have the tenants sign a notice of attornment, a termination of lease with VARCO and a separate and subsequent lease with SBEDC.”

“We believe they have no legal right to collect rent,” Paul Serafy, part of a team of attorneys representing VARCO, said in an interview, adding he found out officials were requesting tenants pay them rent on Dec. 20.

“They were interfering with VARCO’s right to receive rent,” he said.

While City Commissioner Tom Goodman said he wants to settle the dispute, Serafy argued city officials have not responded to VARCO’s attempts to resolve the conflict.

”It is a shame we still can’t work things out with VARCO,” Goodman said. “The longer this goes on, the more attorneys’ fees — nobody wins. It costs them and it costs us.”

At City Hall, Sandoval, who serves as executive director of the city’s economic development corporation, has not responded to requests for comment.

Meanwhile, Michael Pruneda, the EDC’s attorney, has not responded to messages requesting comment.

The parties’ rent dispute comes amid a bitter year-long legal battle over Resaca Village’s ownership.

Last March, San Benito officials filed a lawsuit, claiming VARCO breached its 2018 contract when it failed to comply with the city’s agreements granting extensions on the four-phase project’s completion, originally set for 2022.

Then after officials tried to evict VARCO from the Resaca Village project site, Justice of the Peace Jesus “Chuy” Garcia rejected the city’s eviction action in a May hearing.

Around September, the parties’ talks broke down after a few weeks of mediation.

“Usually it gets a lot uglier before it gets better,” City Attorney Javier Villalobos said in an interview.

In a case that’s drawn some of the area’s top lawyers, Villalobos described VARCO’s request for a temporary restraining order as “unusual.”

“It’s pretty unusual to have a TRO once a case has attorneys involved on both sides,” he said.

Now, in VARCO’s request for an injunction, the company is claiming officials including Sandoval and Guerra along with city commissioners and EDC members have launched a “civil conspiracy to interfere with Varco’s outstanding contractual obligations.”

“The court further finds, at all times relevant in this litigation, SBEDC and the San Benito city commission have been engaged in a civil conspiracy to interfere with VARCO’s outstanding contractual obligations,” the temporary restraining order states.

“The common link between the two entities is defendant Fred Sandoval, who operates as both the executive director for SBEDC and city manager for the city of San Benito,” the temporary order states. “Similarly, defendants Ricardo Guerra, Deborah A. Morales and Thomas W. Goodman II serve as members of the board of directors for SBEDC and on the San Benito city commission — Guerra as the city’s mayor and Morales and Goodman as commissioners.”

“While on its face there is an apparent commonality of purpose and concerted, united effort between the SBEDC and the city commission to interfere with VARCO’s contracts, the actions taken by defendants remove all doubt that they are engaged in an ongoing civil conspiracy,” the temporary order states.

Since about Dec. 20, the temporary order states that officials including Sandoval and the city commission “have begun interfering the individual tenants at the Resaca Village directly, informing them that, effective Jan. 1, 2025, all rents would be due and payable to SBEDC, rather than VARCO,” a move the company describes as the EDC’s “attempted shakedown of VARCO’s tenants at Resaca Village.”

“The court finds that SBEDC’s attempted shake down of VARCO’s tenants at Resaca Village has no legal basis,” the temporary order states, claiming officials are violating Texas Local Government Code’s Section 501.157, “which limits the remedies available to an EDC even if VARCO had breached the performance agreement.”

In VARCO’s request for an injunction, the company argues the city’s “tortious interference” is causing the firm “irreparable harm.”

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