Torres v. City of San Diego

• Decision Date: 25 July 2007
• Docket Number: No. D049111.,D049111.
• Citation: 64 Cal.Rptr.3d 495,154 Cal.App.4th 214
• Court: California Court of Appeals
• Parties: John A. TORRES et al., Plaintiffs and Respondents, v. CITY OF SAN DIEGO, Defendant and Appellant; Bruce Herring, Intervener and Respondent.

64 Cal.Rptr.3d 495

154 Cal.App.4th 214

John A. TORRES et al., Plaintiffs and Respondents, v. CITY OF SAN DIEGO, Defendant and Appellant Bruce Herring, Intervener and Respondent.

No. D049111.

Court of Appeal, Fourth District, Division 1.

July 25, 2007.

Michael J. Aguirre, City Attorney, and Joe Cordileone, Deputy City Attorney, for defendant and appellant.

Sheppard, Mullin, Richter & Hampton, Robert D. Rose and Frank J. Polek, San Diego, for plaintiff and respondent John A. Torres.

Coughlan, Semmer & Lipman, R.J. Coughlan, Jr., and Cathleen G. Fitch, for plaintiff and respondent Ronald L. Saathoff.

Law Office of Frank T. Vecchione and Frank T. Vecchione, San Diego, for plaintiff and respondent Teresa A. Webster.

Damiani Law Group and Lisa J. Damiani, San Diego, for plaintiff and respondent Sharon K. Wilkinson.

Gibson, Dunn & Crutcher and Nicola T. Hanna, Irvine, for plaintiff and respondent Cathy Lexin.

Hahn & Adema and David Hahn, for plaintiff and respondent Mary Vattimo.

Schwartz Semerdjian, Haile Ballard & Cauley and Kristen T. Dalessio, San Diego, for intervener and respondent.

McCONNELL, P.J.

Plaintiffs, John A. Torres, Ronald L. Saathoff, Cathy Lexin, Terri A. Webster, Sharon K. Wilkinson and Mary Vattimo, and plaintiff-in-intervention, Bruce Herring, are former members of the Board of Administration of the San Diego City Employees' Retirement System (SDCERS).¹ The board members sued the City of San Diego (City) for specific performance and declaratory relief, alleging that under a City resolution and Government Code section 995 the City was required to pay for their defense in a civil action the San Diego City Attorney, Michael Aguirre, filed against them on behalf of the People of California, and in another civil action in which he filed a cross-complaint against them on behalf of the City. The board members obtained summary judgment against the City. The City filed a late notice of appeal and we dismissed the matter.

Subsequently, the trial court issued an order awarding the board members attorney fees incurred in this action, under the City's resolution. The City has timely appealed the order, but also purports to raise issues pertaining to the summary judgment. We dismiss the appeal to the extent it concerns the summary judgment ruling as we lack jurisdiction to consider it. We affirm the order on the attorney fees incurred in this action.

FACTUAL AND PROCEDURAL BACKGROUND

In July 2005, Aguirre, on behalf of the People of the State of California, filed a first amended complaint against the board members (with the exception of Vattimo) for the recovery of economic benefits wrongly received and injunctive relief under the Political Reform Act of 1974, as amended. (People v. Grissom (Super. Ct. San Diego County, 2005, No. GIC850246).) The complaint alleged that in 1996, in connection with their service with SDCERS, the board members violated conflict of interest laws by voting to increase employee pension benefits without providing the required funding, thereby creating an "unfunded liability ... for which the City ... was to be responsible and for which revenues from future years would pay."

Also in July 2005, Aguirre, on behalf of the City, filed a cross-complaint against the board members for declaratory relief, breach of trust, breach of fiduciary duty, fraud, negligence and conspiracy. The underlying complaint was by SDCERS against Aguirre and the City. The cross-complaint alleged the same misconduct as alleged in People v. Grissom, and added that the board members violated Government Code section 1090, which prohibited them from taking action on contracts in which they had a financial interest. (SDCERS v. Aguirre, Super. Ct. San Diego County, 2005, No. GIC841845.) The record contains no evidence the San Diego City Council (City Council) approved Aguirre's filing of either of these civil actions.

In 2002 the City Council had unanimously adopted a resolution designated 297335. The resolution's preamble explains that SDCERS board members "may, from time to time be subjected to claims and suits for actions taken in [that] capacity," and "there is a need to protect and encourage individuals who volunteer their time and their talent to serve in the public interest." The resolution provides that "the City shall defend, indemnify and hold harmless all past, present and future members of the Retirement Board against all expenses, judgments, settlements, liability and other amounts actually and reasonably incurred by them in connection with any claim or lawsuit arising from any act or omission in the scope of the performance of their duties as Board Members."

The board members tendered the defense of the two civil actions to the City based on the resolution and Government Code section 995.² That created an unusual situation, of course, as Aguirre, the City Attorney, filed the actions and the provision of a defense would require the City to pay both prosecution and defense costs.

The City Council sought legal advice on the matter from the law firm Procopio Cory Hargreaves & Savitch, LLP (Procopio). In a July 2005 memorandum that was later publicly released, Procopio concluded the City was obligated to provide the board members a defense in the two civil actions, notwithstanding the City Attorney's role in the lawsuits. The following month the City Council voted 4 to 2 to provide a defense, but a vote of five was required to carry the matter. The board members thus retained their own defense counsel.

In August 2005, the board members, excluding Herring, sued the City for specific performance and declaratory relief, seeking a defense in the civil actions based on Resolution R-297335 and Government Code section 995. Herring filed a complaint-in-intervention against the City for the same relief.

The board members filed a motion for summary judgment. After a January 2006 hearing, the court confirmed its tentative ruling granting the motion on the grounds that under resolution R-297335 and Government Code section 995 the board members are entitled to recover from the City all attorney fees and costs incurred in the two civil actions. Under Government Code section 995, the duty to defend is mandatory unless the public entity finds any of the following: "(1) The act or omission was riot within the scope of his or her employment. [¶] (2) He or she acted or failed to act because of actual fraud, corruption, or actual malice. [¶] The defense of the action ... by the public entity would create a specific conflict of interest between the public entity and the employee or former employee." (Gov.Code, § 995.2, subd. (a).) Government Code section 995.2, subdivision (c) "appears to have been intended to allow a public entity to withdraw from the defense of an employee in conflict of interest situations because it is unreasonable to require a public entity to finance litigation directed against it." (Stewart v. City of Pismo Beach (1995) 35 Cal.App.4th 1600, 1606, 42 Cal.Rptr.2d 382.) The board members submitted undisputed evidence, however, that the City Council never made any finding under Government Code section 995.2.

The court also determined that in a later noticed motion the board members could request attorney fees incurred in this action. The judgment, entered on March 6, 2006, contained blank spaces for the later entry of the amounts of fees and costs each board member incurred in this action.

The following May 10, the City filed a notice of appeal of the judgment, Torres v. City of San Diego, D048687. Torres filed a motion to dismiss and the City filed opposition to the motion. We dismissed the appeal as untimely on June 1.

In June 2006 the City Attorney's Office served on the parties a request to dismiss the board members from the cross-complaint in the SDCERS v. Aguirre action. In October the City Attorney's Office filed a request to dismiss the complaint in People v. Grissom, and a dismissal was entered. When that case was dismissed, the court was considering a motion by board member Lexin to disqualify the City Attorney's Office from representing the People based on conflicts of interest such as its provision of legal advice to Lexin regarding the subject matter of the lawsuit.³

The board members then moved for attorney fees incurred in this action. The motion was supported by declarations from the board members' attorneys attesting to the amount of fees and costs incurred, and by detailed time entries.

The City opposed the motion on the ground attorney fees are not authorized by contract, statute or law. The City argued that neither resolution R-297335 nor Government Code section 995 provide for the recovery of fees by the prevailing party in an action to obtain a defense or indemnity. The City did not contest the amount or reasonableness of the fees requested.

In reply, the board members argued the plain language of the resolution entitles them to attorney fees incurred in enforcing the City's duty under the resolution to provide them with a defense in the underlying civil actions. The hearing was originally scheduled for June 2, 2006, but the court continued it to June 23 to allow the City "to provide supplemental briefing on whether . . . Resolution R-297335 provides a legal basis for an award of attorney's fees" to the board members. Originally, the board members sought attorney fees under Government Code section 800 and Code of Civil Procedure section 128.5.

On June 23, the court issued an order that granted the motion for fees on the basis of the resolution. The court awarded the board members various amounts for fees and costs incurred in this action, totaling $182,342.50 and $6,176.16, respectively, and the individual awards were added to the judgment. The City timely appealed the June 23 order.

DISCUSSION

I

Motion to Dismiss

A

The board members have moved to dismiss the City's appeal insofar as it purports to raise issues pertaining to the summary judgment, which...