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Lexin v. City of San Diego

California Court of Appeals, Fourth District, First Division

December 23, 2013

CATHY LEXIN, Plaintiff and Appellant,
v.
CITY OF SAN DIEGO, Defendant and Respondent.

Order Filed 01/22/14

APPEAL from a judgment of the Superior Court of San Diego County No. 37-2011-00084354- CU-MC-CTL, William S. Dato, Judge.

Jan I. Goldsmith, City Attorney, and David J. Karlin, Deputy City Attorney for Defendant and Appellant.

Gibson Dunn & Crutcher and Nicola T. Hanna for Plaintiff and Respondent Cathy Lexin.

Coughlan Semmer Fitch & Pott and Raymond J. Coughlan, Jr. for Plaintiff and Respondent Ronald L. Saathoff.

Sheppard, Mullin, Richter & Hampton, Robert D. Rose, Karin D. Vogel; Polek Law Group and Frank J. Polek for Plaintiff and Respondent John A. Torres.

David A. Hahn for Plaintiff and Respondent Mary Vattimo.

Law Offices of Frank T. Vecchione and Frank T. Vecchione for Plaintiff and Respondent Terri A. Webster.

Damiani Law Group and Lisa J. Damiani for Plaintiff and Respondent Sharon K. Wilkinson.

Goldfarb & Lipman and James T. Diamond, Jr. for League of California Cities as Amicus Curiae on behalf of Defendant and Appellant.

ORDER MODIFYING OPINION AND DENYING REHEARING

THE COURT:

It is ordered that the opinion filed herein on December 23, 2013, be modified as follows:

1. On page 6, the last sentence of the second full paragraph is modified to read as follows:

The city attorney failed to muster a majority vote, although the council reportedly rescinded the resolution prospectively.

2. On page 8, first sentence of the first full paragraph, the word "refusal" is changed to "failure" so the sentence reads:

At the hearing, the board members argued the city council's adoption of resolution R-297335 coupled with its subsequent failure to retroactively rescind the resolution implicitly satisfied the criteria of section 995.8, subdivision (b).

There is no change in the judgment.

Appellant's petition for rehearing is denied.

McCONNELL, P. J.

This is the latest appeal arising from the City of San Diego's (the City) infamous underfunding of its employment retirement system. In 2002 the Board of Directors (board) of the San Diego City Employees' Retirement System (SDCERS) approved the City's proposal to modify the funding plan to delete the potential of a balloon payment if the underfunded ratio fell to a certain level, in exchange for the City's resolution to indemnify the board members from liability for "any claim or lawsuit" arising from the approval.[1] In Torres, supra, 154 Cal.App.4th at pp. 224-226, this court held the resolution required the City to pay attorney fees the board members incurred in enforcing their right to costs of defense in two civil actions brought against them by the then city attorney arising from their approval of the modification.

In this appeal, the issue is whether the City's resolution also requires it to pay the board members' criminal defense costs in Lexin, supra, 47 Cal.4th 1050, an action the San Diego County District Attorney brought against them for felony violation of the states' conflict of interest statute, Government Code section 1090.[2] The City appeals a summary judgment for the board members in their declaratory relief action, contending (1) the resolution does not apply to criminal proceedings and (2) section 995.8 precludes an award of defense costs because, after commencement of the criminal action, the city council did not hold a formal hearing to determine the provision of a defense would be in the City's best interests and the board members "acted... in good faith, without actual malice and in the apparent ...


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