County seeks expert to advise on potential insurance payout in Sanchez lawsuit

MARFA — A lawsuit brought against Presidio County by Katie Sanchez in 2018 still looms large over local officials, who have yet to receive a definitive judgment from a higher court. Sanchez was once the director of the Office of Management and Budget, a position that was eliminated after she ran unsuccessfully for county treasurer in 2018. Shortly thereafter, she sued the county on the grounds that it had violated her First Amendment right to run for office.

While the county’s defense argued that removing Sanchez’s office was a simple cost-cutting measure, internal emails unearthed in the lawsuit and previously reported on by The Big Bend Sentinel suggested Frances Garcia, who still holds the office of county treasurer, worked to cut Sanchez’s position on retaliatory grounds. Over the summer, a federal jury sided with Sanchez, and ruled for the county to pay $2 million in compensatory and punitive damages — the highest amount suggested by Sanchez’s attorney.

At last Wednesday’s commissioners court meeting, County Attorney Rod Ponton informed the commissioners that the county had received a letter from TAC (the Texas Association of Counties), who has provided lawyers for Presidio County’s defense in this case and will be responsible for paying the damages if the federal judge sides with the jury’s ruling. The letter from TAC warned county officials that the risk pool reserves the right to not pay the settlement.

If approved, the Sanchez decision would max out the county’s insurance policy, which is currently $2 million. Sanchez’s camp has requested an additional $252,395 to cover attorney fees accrued over the course of fighting this case. The county will be on the hook for any amount over their policy, and Ponton has repeatedly warned that insurance premiums will go up regardless of the final dollar amount.

The letter from the TAC risk pool raised the sobering possibility that the county might have to financially shoulder the burden of the entire lawsuit, which would translate into higher tax rates for Presidio County residents.

“It’s a shot in our back,” said Commissioner Buddy Knight at Wednesday’s meeting.

Ponton explained that TAC is nervous about offering an insurance payout for a judgment against the county reflecting “fraud, dishonesty, or bad faith” of its employees, but stressed that the letter quickly got into the tangled minutiae of insurance law. He suggested hiring an expert to help the county negotiate its insurance policy with TAC. “It’s a very specialized corner of the law, so I want the best person around,” he said.

Ponton seemed to think that the legal advice the county needed would clarify the difference between “fraud, dishonesty, or bad faith” and the language used to justify the punitive damages assessed against Garcia by the jury in Pecos this summer. Civil suit settlements including punitive damages awarded for what Ponton called “willful conduct” of county employees should hypothetically be covered by the insurance policy, so the change in TAC’s tune caught the commissioners by surprise. Commissioners voted to authorize Ponton to “engage counsel … to ensure payment of any future judgment against Presidio County and Frances Garcia.”

County Judge Cinderela Guevara — the only dissenting vote at the fateful commissioners court meeting in 2018 that axed Sanchez’s position — plans to head into executive session at the October 27 meeting in Presidio to discuss the letter. “It seems like it’s just a disclaimer,” she said, but echoed Ponton’s opinion that more information was needed to help the county navigate its next steps.