Please don’t sue us!

Too often, it seemed that the former Council led by Mayor Marie Gilmore was wont to attribute its decisions to a desire to avoid litigation:  “We can’t do this, because if we do someone will sue,” went the refrain.  Or, “we’ve got to do this, because if we don’t, someone will sue.”

Whether anyone had a solid case on the merits against the City didn’t really matter. Hearing – or imagining – the sabers rattling in the background was enough.

It was this attitude that got the City a Housing Element that re-zoned more parcels for multi-family housing than state law required, and four-year public safety contracts that added a minimum of $2.6 million to the General Fund deficit.  And it was this attitude that forced citizens to go around Council to prevent Crab Cove from being turned into a residential development.

In its first meeting last Tuesday, the new Council headed by Mayor Trish Spencer showed signs that it is headed down the same path.  Unfortunately, like its predecessors, it may have gone – or have been led – astray.  Maybe it’s time to consider a different approach.

Before the former Council’s term expired at 8 p.m. on December 16, the defeated and termed-out incumbents rammed through introduction and final passage of ordinances green-lighting the Del Monte development project proposed by Tim Lewis Communities.  In so doing, Ms. Gilmore and her allies rejected pleas by Ms. Spencer and incoming Vice Mayor Frank Matarrese to let the new Council make the final decision about whether to move forward with the Del Monte project.

Ms. Spencer then placed on the agenda for the new Council’s first meeting an ordinance repealing the ordinances passed by the prior Council approving the development agreement, master plan, and density bonus application.  “This is the way to give the new council an opportunity – if they want an opportunity – to revisit this project,” Ms. Spencer told The Alamedan.  “I think this is procedurally the only way to do it.”

Among other backers of the Del Monte project, Tim Lewis’ Jim Meek denounced the move. “I’m extremely disappointed,” Mr. Meek said.  “Let’s not undo what has been done.”

Janet Kern

City Attorney Janet Kern

Given the aggressive tone of Mr. Meek’s letter to supporters, an analysis surely was called for of the merits of any potential claim by Tim Lewis arising from repeal of the Del Monte ordinances. Interviewed by The Alamedan, City Attorney Janet Kern was hardly reassuring about the City’s position.  City staff “isn’t aware of a prior council ever considering the repeal of a development agreement that confers vested rights, which may be legally protected from repeal,” she told The Alamedan.  She added that, “a repeal will ‘likely’ create legal and political consequences, but [she] declined to elaborate.”

It would have taken only a simple Lexis or Westlaw search for Ms. Kern or her staff to discover that her concerns were unfounded and that, in fact, repeal of the Del Monte ordinances would not have violated any of Tim Lewis’s “vested rights.”

Take Vol. 58 of the California Appellate Reports, Fourth Series, off your bookshelf – it’s right next to “Joy of Cooking” – and turn to page 860.  There you’ll find a case – 216 Sutter Bay Associates v. County of Sutter – whose facts are remarkably similar to the Del Monte situation:

  • The Board of Supervisors of a rural county decided it wanted to make formerly agricultural land available for development and adopted a General Plan amendment (GPA) to that end.
  • Opponents – we’ll call them the “anti-development” crowd – collected signatures to hold a referendum on whether the GPA should stand.  In the next election, they also supported three Board candidates who promised to “hold the line” on development.
  • The anti-development candidates won, ousting two of the supervisors who adopted the GPA (the third chose not to seek re-election).  The new Board now had an anti-development majority.
  • Between the election and the end of its term of office, the old Board approved 19 development agreements for projects in the area covered by the GPA.
  • Immediately after taking office, the new Board passed three ordinances “repealing” all of the development agreements approved by its predecessor.

Three of the developers sued, alleging that the new Board had deprived them of “vested rights.”  The trial court denied the claim.  One developer appealed, and the Court of Appeal affirmed.

Contrary to the appellant’s contention (like the one raised by Ms. Kern), the developer had not acquired any “vested rights” when the former Board passed the ordinance okaying the development agreement.  The agreement itself provided that it did not take effect until 30 days after approval by the Board.  (The Del Monte development agreement contains a similar provision).  Moreover, under the state Government Code, ordinances become effective 30 days after final passage.  (Section 3-12 of the Alameda City Charter says the same thing).

The new Board acted within that 30-day window to reverse its predecessor’s decision (as Ms. Spencer proposed the new Council do).  The appellate court held that the repeal ordinances passed by the new Board

operated to rescind the legislative acts encompassing plaintiff’s development agreement.  That development agreement was not complete at the time of the rescission.  Nor had any rights vested under that development agreement at the time of rescission.

(emphasis supplied).  It concluded that the Board had “acted legally” in adopting the repeal ordinances.

It is hard to see why a court would rule differently if the new Council had passed the Del Monte repeal ordinances proposed by Ms. Spencer.

The comments made by Council members during the open session suggest they may not have gotten this message.

Everyone on the dais except the Mayor pointed to anxiety about litigation risks as one of the reasons for voting not to repeal the Del Monte ordinances.  Councilman Tony Daysog was the most explicit — and the most wary.  “My real concern about this issue,” Mr. Daysog said, is “the possibility of litigation, particularly in the context of having reached an agreed-upon development agreement on December 16. . . . When you enter into a contract with a developer, that’s high-stakes stuff.”  The City of Mammoth Lakes had gone bankrupt after losing a suit brought by a developer, Mr. Daysog noted.  “The downside risk that concerns me the most [about repeal] is a lawsuit, the outcome of which is similar to what happened in Mammoth Lakes.”

In fact, even now the City has not yet “entered into a contract” with Tim Lewis.  By its own terms and under the City Charter, the development agreement won’t take effect until January 15, 30 days after the final passage by the prior Council of the ordinances approving the agreement.  If the new Council rescinded (or “repealed”) those ordinances before then, it would not violate any of Tim Lewis’s “vested rights.”  That’s what the 216 Sutter Bay Associates case holds.

So how come the message never got through to Mr. Daysog?  Could it be that, when she briefed Council in closed session, Ms. Kern never mentioned 216 Sutter Bay Associates?

Ordinarily, we’d dismiss that suggestion out of hand.  We find it difficult to imagine that Ms. Kern, a member of the California Bar since 1991, simply missed or misunderstood a case so squarely on point.

Except . . .

Back during the campaign, Ms. Gilmore, joined by candidates Jim Oddie and Stewart Chen, refused to answer a question at candidate forums about whether they supported the existing master plan for Harbor Bay Isle.  According to the ex-Mayor, the reason for her refusal was that the City Attorney had advised her that, if she answered, she would be disqualified from voting on any Harbor Bay development proposal subsequently brought before Council.

Not only was this evasiveness unwelcome to voters, it was based on a false premise.  In fact, in a case involving the City of Fairfield, the California Supreme Court had announced a rule just the opposite of the one asserted by the City Attorney.

“Campaign statements,” the Supreme Court held, “do not disqualify the candidate from voting on matters which come before him after his election.”  Indeed, “A councilman has not only a right but an obligation to discuss issues of vital concern with his constituents and to state his views on matters of public importance.”  Accordingly, the Supreme Court rejected a developer’s attempt to disqualify two councilmen who had publicly opposed a project during a recent campaign from voting on a subsequent permit application.

Did Ms. Kern miss or misunderstand this case, too?  If so, she ought to be grateful that the prior Council just gave her a $209,600-a-year contract for another four years (with annual raises of 2.5% in the final three years).  If a big law-firm associate had failed to find – or cite – controlling authority on two separate issues, she’d no longer have a job.

Of course, even assuming that the City Attorney failed to advise Council or Ms. Gilmore, respectively, of the dispositive precedent, we can’t be sure that either would have acted differently had they been fully informed.  Council still might have decided not to repeal the Del Monte ordinances because they saw no reason to re-consider the project; Ms. Gilmore still might have decided to dodge the Harbor Bay question because she didn’t want to offend Ron Cowan.  But in those instances neither could contend that they were simply following the law.

The harm caused by incomplete, or plainly erroneous, legal advice is obvious.  A more subtle danger arises from superficial, or unduly pessimistic, risk assessments.

We harken back to December 2012, when City staff presented the new four-year contracts with the public safety unions to Council.  Originally, staff tried to sell these contracts to the public as a financial boon to the City, since they provided for increased, albeit minimal, pension cost-sharing.  But it was impossible to ignore the bottom line:  the wage and benefit increases outweighed the cost savings.  So staff had to come up with an alternative pitch.

What they hit upon was the claim that, as part of the negotiations, the firefighters’ union had agreed to drop a previously undisclosed “grievance” arising from the City’s alleged failure to honor a “me-too” clause in the previous contract.  According to City Manager John Russo, satisfying this grievance would have cost the City $7.1 million over the next four years – far more than the net amount the new contracts added to the General Fund deficit during the same period.

Staff’s view of the City’s position on the merits of the grievance was bleak.  “Our attorneys – and I share their opinion – believe that we are likely to lose” if the union pursued the matter, Mr. Russo told Council and the public.  And he presented a legal memorandum signed by Ms. Kern in which she accepted the union’s version of events and discounted statements by former City officials.  Echoing Mr. Russo, she concluded that, “the City has significant exposure on this grievance.”

Lisa Goldman

Former Acting City Manager Lisa Goldman

At the time, it all seemed a little too neat – and, as it turned out, it was.  In fact, Mr. Russo’s immediate predecessor, Acting City Manager Lisa Goldman, had held a contemporaneous hearing on the grievance at which she reviewed the relevant documents and heard testimony from representatives of the City and the union.  Ms. Goldman found that the me-too clause had been included as the result of a clerical error.  The union’s arguments to the contrary “are neither persuasive, nor are they supported by the record of these negotiations.”

Ms. Kern’s memo did not mention Ms. Goldman’s findings, and neither Mr. Russo nor Mayor Gilmore brought them up during the meeting at which they were urging approval of the new contracts.  When the Merry-Go-Round got a copy of Ms. Goldman’s memo a year later, Mr. Russo told us that “I was certainly given [the] impression” that Council already knew about her views.”  In any event, he said, “The City Attorney’s Office had and continues to have a different opinion about the value of the IAFF grievance than that expressed in [Ms. Goldman’s] 2010 memo.”

Again, even assuming that Mr. Russo was mistaken about Council’s knowledge, the majority very well might have authorized the contracts anyway despite Ms. Goldman’s dismissal of the grievance.  After all, the Mayor and two of her colleagues owed their election in 2010 to support from the firefighters’ union.  But maybe the two Council members who weren’t on the IAFF Local 689 slate could have made the case – to the public – that the grievance wasn’t such a slam-dunk loser for the City after all.  In that case, why not fight rather than succumb to a negotiating ploy?

Which brings us to the overarching problem:  As long as Council treats the legal advice offered by the City Attorney as “classified information” (to use Councilman Oddie’s phrase), we’ll never know the weight our elected officials gave it in their decision-making process.  And so we’ll never know whether, or to what extent, Council was influenced by a poorly researched legal opinion or a poorly reasoned risk assessment.

To us, these are things the public should know.  And the way to make them known is to require the City Attorney, whenever a legal issue relevant to a matter to be considered by Council arises, to prepare a written memorandum summarizing her views – and then for Council to make the memo public.

This may seem like an odd proposal coming from a lawyer trained to uphold the sanctity of the attorney-client privilege.  But it’s really not.  In private civil litigation, the privilege usually is deemed waived whenever a party relies on advice of counsel as a defense.  (Just ask the Bank of America about the Wachtell, Lipton memos).  Why should the rule be different for a municipality?  Moreover, in the governmental context, public officials often are forced to turn over otherwise privileged memoranda they’ve asserted justify their actions.  (Just ask the Bush administration about the John Yoo memos).  Again, why should local politicians be treated differently?

In fact, just last year the Russo/Gilmore administration did almost exactly what we’re recommending.  When Council was asked to adopt the Crab Cove initiative as an ordinance, Vice Mayor Marilyn Ezzy Ashcraft (among others) fretted about the financial and legal consequences of such a decision.  Chief among her concerns was the risk of a successful lawsuit by the developer – ironically, it was Tim Lewis – who had contracted to buy the property from the GSA.  So Council directed Ms. Kern and staff to prepare a memo assessing the potential impacts, including litigation risks, and to publish it as an exhibit to the staff report for the next meeting.

As our regular readers may recall, we weren’t terribly impressed by Ms. Kern’s work product.  But at least she laid out the applicable law so that Council and the public would know the basis for any potential claim.  The memo thus framed the subsequent discussion about whether to adopt a “companion measure” to the Crab Cove ordinance.

Why shouldn’t this procedure be followed in every case in which a lawsuit is a realistic possibility?  If it were, both Council and the public would be better informed and any “bad” legal advice would be exposed before it led to an ill-considered decision.  No longer would the mere fear of litigation carry the day.  Instead, Council would be compelled to meet the issue head on.

Is it too much to hope for a Council referral?

Sources:

Memos on IAFF Local 689 “grievance”: Lisa Goldman analysis; Janet Kern memo (Legal Memo Re_ Grievance Dispute)

Memo on impact of Crab Cove ordinance: Initiative Impact Report

216 Sutter Bay Associates v. County of Sutter, 58 Cal.App.4th 860 (1997): 216 Sutter Bay Associates

City of Fairfield v. Superior Court, 14 Cal.3d 768 (1975): City of Fairfield

 

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in City Council, Development, Firefighters and tagged , , , , , , , , , , , , , . Bookmark the permalink.

3 Responses to Please don’t sue us!

  1. 2WheelSmith says:

    I agree. The release of more legal opinions has the potential to significantly improve our municipal decision making process by making our leaders more accountable to our citizens.

  2. Karin Lucas says:

    Thank you for raising the issue of our current City Attorney’s professional competence. Her latest employment contract as Alameda City Attorney (approved by the former City Council) runs from January 10, 2015 to January 9, 2019. Alameda may be stuck with poor legal advice for four more years.

  3. laura says:

    Past Superintendent Vital ran AUSD the same way, her legal council would advise BOE in Closed Sessions and had absolute zero tolerance for public discussion/questioning of BOE’s decision-making process. This administrative shift was vastly different for AUSD, the majority of BOE members got consistently “scared legal” and only Trish Spencer continued to challenge it.

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