The court case over whether the city should pay the legal costs for six former pension-board members is now one step closer to being a done deal. The most recent appeal filed by the city attorney's office in March of last year has been denied, leaving the city on the hook for $5,419,516 in legal fees, interest, and late fees incurred by the former board members.
The 4th District Court of Appeal published their final ruling on January 22. Despite the decision, the city council has voted to petition the state supreme court to hear the case.
The case dates back to the 2002 pension debacle, when pension-board members increased benefits while at the same time decreased payments, eventually resulting in an estimated $2 billion underfunded pension account. Around the same time, city-council members adopted a formal resolution that guaranteed legal indemnification for boardmembers in the case of any lawsuits.
At the time, councilmembers reasoned that boardmembers "may, from time to time be subjected to claims and suits for actions taken in [that] capacity...there is a need to protect and encourage individuals who volunteer their time and their talent to serve in the public interest."
In 2005, district attorney Bonnie Dumanis filed criminal charges against the former pension-board members. The accused — Cathy Lexin, Ronald Saathoff, John Torres, Mary Vattimo, Terri Webster, and Sharon Wilkinson — requested the city defend them in court. Failing to muster an adequate number of council votes, Lexin, Saathoff, Torres, Vattimo, and Wilkinson were forced to hire outside legal counsel.
Dumanis eventually dismissed the charges. Cleared of any wrongdoing, the pension-board members turned to the city to pay their legal fees. In January 2012, they sued the city for legal costs. Nine months later, superior court Judge William Dato ruled in their favor, granting them nearly $5.5 million in legal fees: Lexin, $1,708,621; Saathoff, $774,837; Torres, $434,621; Vattimo, $945,696; Webster, $1,060,297; and Wilkinson, $495,441.
"The plain language of the City's resolution requires it to pay criminal defense costs and there is no statutory impediment," reads the December 23 judgment. "The board members were not accused of theft-related crimes; the City was not a victim, but rather solicited the approval of [the 2nd pension agreement]; the board members based their defense request on a resolution the City passed to specifically provide them with a defense to any claim or lawsuit arising from their approval of [pension agreement]; the City has never found the board members acted with fraud or outside the course and scope of their employment; and the board members' approval...has effectively been determined not to be criminal."
According to Tom Mitchell from the city attorney's office, the city must submit their petition to the state supreme court by February 3.