As part of its trial court defense strategy, Texarkana, Texas, thinks the Arkansas side needs to be a part of the water rights lawsuit.

But lawyers for seven smaller cities suing TWU, which Texarkana, Texas, owns with Texarkana, Ark., say that Arkansas was not part of the contract that the lawsuit centers around.

The discussion about adding the Arkansas side to the lawsuit seemed to surprise officials in Texarkana, Ark. Mayor Horace Shipp declined comment, citing a lack of knowledge and involvement in the case. So did City Attorney Ned Steward.

"Generally speaking, the city of Texarkana, Ark., is not interested in being brought into a lawsuit," he said.

Lawyers for New Boston, Hooks, DeKalb, Wake Village, Maud, Avery and Annona -- known collectively as the "member cities" in the lawsuit -- squared off with Texarkana, Texas, before 76th District Judge Jimmy L. White on Jan. 30, according to a court transcript obtained by the Gazette.

The Gazette and members of the public are excluded from all hearings and court filings in district court. After White refused to drop the lawsuit at Texarkana, Texas' motion to dismiss, the city appealed White's decision to the 6th Court of Appeals, where the matter is presently pending.

The Jan. 30 hearing transcript was filed as part of the appeal.

According to the transcript, James N. Haltom, a lawyer for Texarkana, Texas, said they filed a motion to abate, or put on hold, the case in Bowie County on Jan. 23, three days after the deposition of TWU Director Bill King was taken.

Haltom told White that their first belief was that it was solely a contractual dispute.

However, the TWU defense team later decided that "it became a case involving fiduciary relationships and alleged breach, alleged fraud, exemplary damages were involved, and the city of Texarkana, Arkansas, was not made a party."

Haltom argued that both Texarkanas decide what happens at TWU, since they jointly own it, and that money received from TWU is used by both cities to fund the operations there.

Haltom said if the court did not bring the Arkansas side into the lawsuit, then it should be dismissed.

White disagreed and refused to dismiss the lawsuit.

Haltom said in the hearing that the member cities "allege overbilling. This is an attack on the joint operation and management of Texarkana Water Utilities. It's not an attack on Texarkana, Texas, or Texarkana, Ark., separately."

Haltom also said that regardless of the outcome of the lawsuit, both Texarkanas will be directly affected, especially their relationship. He said it would require additional lawsuits between the two cities to find out who owns the interest and who pays money, if that is the outcome.

He said even if there was any overbilling, which is what the lawsuit centers around, "both cities have gotten their pro rata share, and necessarily, they paid their proper pro rata share on any amount that should be brought against them."

TWU Finance Director Webb Stanley testified at the hearing that he was employed by both cities, not just one, and that it was also his opinion that the relationship between the two cities would be affected.

David Blanke, who represents the member cities, asked Stanley during his testimony why they did not argue to bring Texarkana, Ark., into the lawsuit sooner if Stanley knew about the contract and the lawsuit specifics 18-20 months ago.

Sixty percent of operations at TWU is designated for Texarkana, Texas, while 40 percent is designated to Texarkana, Ark., Stanley testified.

Stanley agreed the member cities contract was only with Texarkana, Texas, but said the language in the contracts states that after the facilities were built by the Lake Texarkana Water Supply Corp. they were transferred to Texarkana, Texas. Then, he said, Texarkana, Texas, contracted with the seven member cities and Texarkana, Ark., for the "supplying of water and also for the payment of the debt."

Blanke said besides the contract issue, it was simply inappropriate to bring the Arkansas side in.

"What we have, your honor, is Mr. Stanley and these others at TWU, 60 percent of their brain committed to the managerial responsibilities that they have for Texas and 40 percent to Arkansas, simply sitting idle and not exercising that responsibility, that 40 percent responsibility, for Arkansas to get in this case and intervene...," said Blanke.

However, Haltom argued that they were not aware of Arkansas involvement all along, and he took issue with the statement made by Blanke that TWU's brain is divided.

"I know Mr. King, I know Mr. Stanley, his brain is not divided 60/40. That's an easy illustration, but it's like this lawsuit. It's totally commingled," said Haltom.

Blanke maintains that it is a lawsuit about a contract.

"All we seek is breach of contract damages; by fiduciary duty, those water rights that I described to you are held by only Texarkana, Texas; and again, fraud damages, your Honor, and all that can be sought only against Texarkana, Texas, and it can skirmish if it wants with Texarkana, Ark., at some later date."

Blanke said there was no suggestion that the damages or water rights that it seeks are held by anyone other than the Texas side.