Sierra Club Foundation vs. Ray Graham III: the case that won't die

  • Ray Graham (L) and Bob Bouchier visit Ganados del Valle woolgrowers

    Ray Graham

In 1853, Charles Dickens wrote Bleak House, about a lawsuit so long pursued that the principals were dead and the original issues lost in the mists of time. Ray Graham III vs. the Sierra Club Foundation is no Jarndyce vs. Jarndyce, but it may be on its way.

The multimillion-dollar fight between the two began in 1971 when Graham, an heir to the Firestone fortune, donated $100,000 to the Sierra Club Foundation to buy grazing land in New Mexico. About the only facts no one contests are that Graham's money never went toward the purchase of land and that the legal wrangling will continue.

So far, three lawsuits have yielded vastly different results. The first went to the Sierra Club and the second to Graham. Now, a third, soon to be decided in San Francisco, appears headed in the Sierra Club's favor. Each has provoked another round of finger-pointing and the expenditure of hundreds of thousands of dollars in legal fees. Meanwhile, the idea that originally convinced Graham to give money to the Sierra Club through its tax-exempt arm, the foundation, has yet to be fulfilled: No land has been bought to help Hispanic shepherds graze their livestock in a sustainable fashion.

"This could have been resolved long ago," says Gene Gallegos of Santa Fe, an attorney who has a long association with the feud. "There's no rational reason for this - other than pride."

The seesaw of the law

The legal seesaw began in 1989, when Graham brought a lawsuit against the Sierra Club Foundation for misusing his money. A federal judge in San Francisco ruled that Graham, as the donor, lacked standing to contest how his money was spent and dismissed the case. Score one for the Sierra Club.

Graham then turned to New Mexico Attorney General Tom Udall - ironically, a longtime ally of the Sierra Club. In 1992, Udall filed a lawsuit against the foundation on behalf of a Hispanic grazing cooperative, Ganados del Valle. Udall and Graham contended that Ganados should have received the land that should have been bought with Graham's donation. The foundation settled that lawsuit for $900,000 before it went to trial (HCN, 10/16/95). Score one for Graham.

Though the media portrayed the settlement as a stinging defeat for the Sierra Club, the organization did not drop the matter. In 1995, the foundation sued Graham, claiming that he had brought his original suit to smear the Club. On May 5 of this year, a San Francisco Superior Court jury found that Graham did have revenge on his mind and that he owed the foundation $672,000 in attorneys' fees and damages. A judge will decide within days whether to uphold the jury's decision.

So why did the Sierra Club Foundation pay $900,000 in New Mexico and then take on Graham in San Francisco? The answer reveals much about the complicated relationship between the two.

For the foundation's lawyer, Peter Adang, the answer is simple: The political cards were stacked against the foundation in New Mexico, where the nonprofit, fund-raising wing of the Sierra Club was up against a politically popular attorney general defending a Hispanic group in front of a Hispanic judge. "The board read the writing on the wall," says Adang.

But in San Francisco, he says, the foundation was able to portray its version of events to an unbiased judge and jury. The Sierra Club's case rests largely on evidence that Graham had given his money with no strings attached. Then, 18 years later, Adang says, Graham brought his original suit not to contest the use of his money, but to hurt the Sierra Club's reputation, because he was angry about a private land dispute with the foundation.

"Graham never wanted the case to go to trial. He intentionally tried to hurt the Sierra Club during its centennial fund-raising effort," says Adang, who presented more than a dozen articles as evidence in the current San Francisco case. "We have letters which show that he and his lawyers wanted to push the media button."

Graham admits that he and the foundation owned adjacent properties along the Rio Grande River in the late 1980s and that, due to faulty surveying, the deeds to the properties overlapped by 2.8 acres. He says he wanted the foundation to turn over the disputed land to him; the foundation refused.

But Graham maintains that had nothing to do with his concern about the donated money, and points out that the Rio Grande land dispute has since been resolved to everyone's satisfaction. It was news reports about Ganados shepherds illegally herding their sheep onto a wildlife refuge that rekindled his interest in the fate of his donation, he says. He was also piqued, he says, by a request from another environmental group connected with the Sierra Club asking for $10,000 toward obtaining grazing lands. "I said, 'it's a great idea, but whatever happened to the $100,000 I gave already?' "

"The Sierra Club is desperate to prove that it's OK to deceive a donor," says Graham. "I trusted those people to follow through on purchasing the land. Instead, they have portrayed me as an arrogant wetlands developer."

Graham says he is most distressed at Brant Calkin, the former president of the Sierra Club, who oversaw the effort to buy grazing lands in New Mexico. After searching for nine years, Graham says, Calkin approached him in 1980 about using his money to buy threatened redwood forest in California. Graham says he agreed to sign a letter, which said that his donation could be used for "the general support of the Sierra Club," because he understood the foundation would eventually buy land in New Mexico. Graham says he added a paragraph to the letter stating as much.

What body of evidence

The Sierra Club Foundation and Graham both agree that the 1980 letter is not a legally binding document. But it was allowed as evidence in the current San Francisco case. A slew of other evidence was not, according to Graham, the New Mexico attorney general's office and attorney Gene Gallegos, who has represented the Ganados del Valle organization.

The disallowed evidence, they say, includes internal memos and letters the foundation had been ordered to turn over to the New Mexico attorney general's office in the 1992 case brought by New Mexico. The documents show that the Sierra Club Foundation knew it had failed to honor Graham's donation, had loaned the money to another project and had scrambled to get the project back on track when it found out that Graham wanted an accounting of his donation.

"I'm absolutely flabbergasted at the outcome of the San Francisco trial," says Gallegos. "There's absolutely no question that the Sierra Club took this money from Ray and used it for purposes other than what it was intended."

The recent San Francisco trial is "like a play without the final act," says Kay Roybal, a spokesperson for the New Mexico attorney general's office. The foundation settled the case in New Mexico because it had a weak case, not because it wouldn't get a fair trial, says Roybal. "Santa Fe is a very strong environmental town and the jury selected for the New Mexico case included several environmentalists."

"If the Sierra Club says it couldn't get a fair trial in New Mexico, then did Ray Graham get a fair trial on their home turf?" adds Gallegos.

Sierra Club lawyer Adang says the judge's decision to keep the evidence from the New Mexico case from the San Francisco jury was not unusual. In most settlement cases, both parties declare that they are not admitting guilt. "Why would anyone settle a case if they thought it could be used against them in a future trial?" he asks.

Adang says the foundation is happy about the jury's award, which would cover attorneys' fees and $25,000 in compensation for damages to the foundation's reputation. It is concerned, however, that Ganados del Valle has not used the New Mexico settlement money to purchase land. "To my knowledge the money hasn't been used for that purpose," he says.

The money is being held in an interest-bearing account, according to Gallegos, and will eventually be used to buy grazing land when the right property comes up for sale.

Meanwhile, another round in the legal battle looms ahead no matter what the San Francisco judge decides. That in itself is tragic, says Fred Nathan, an assistant attorney for New Mexico. "This wasn't a case of environmentalists versus People for the West," says Nathan. "Sadly, this was environmentalists pitted against environmentalists."

Graham, who describes himself as an idealistic young man of 30 when he gave the money to the Sierra Club, says the legal battle has taken a financial and emotional toll. But, like the aging contestants from the Sierra Club, he is not about to stop. Any appeal of the San Francisco case, he says optimistically, should allow the documents withheld from the jury as evidence.

Says Graham, "I'm not about to get pushed over now."

* Paul Larmer, HCN senior editor

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