City of Bell Decision Distinguishable, Because Theft-Related Charges Are Different Than City-Approved Actions For Indemnification Purposes.
Board of Directors of San Diego Employees‘ Retirement System approved City of San Diego’s proposal to purportedly “underfund” the employment retirement system in return for City’s resolution to broadly indemnify the board members from “any claim or lawsuit” arising from the approval. Earlier, an appellate court had decided the indemnification applied to two civil lawsuits brought against board members by the then City Attorney relating to the modification approval.
Now, in Lexin v. City of San Diego, Case No. D062970 (4th Dist., Div. 1 Dec. 23, 2013) (published), the same appellate court had to decide whether the indemnification allowed the board members to shift criminal defense costs to the City arising from felony conviction charges that the members violated the conflict of interest statute in the approval process.
Yes, the indemnification was very broad and did apply to criminal defense costs, said the reviewing court. City’s resolution was crystal clear in allowing for indemnification.
City also argued that Government Code section 995.8 precluded defense costs because there was no appropriate city hearing on the indemnification requests. Not so. The statute does not specify the type of hearing required, with the original City vote on resolution showing that a broad indemnification was agreed to.
Finally, City wanted the appellate court to conclude otherwise based on the indemnification denial in City of Bell v. Superior Court, 220 Cal.App.4th 236, petn. for review pending, reviewed in our October 15, 2013 post. The 4/1 DCA found City of Bell distinguishable, because it involved theft-related claims rather than City-approved actions well known to and ratified by City.
BLOG UNDERVIEW--City of Bell is subject to a petition for review, which was extended for consideration through February 11, 2014 in a December 17, 2013 state supreme court order.
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