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By Shawn Raymundo
The city last month filed one last appeal to its insurance carrier as it seeks to overturn previous denials to cover Mayor Pro Tem Gene James’s legal expenses in a defamation lawsuit filed against him by a former political ally.
The California Joint Powers Insurance Authority has three times over the past year denied the city’s and James’s prior requests to provide the elected official with coverage and legal representation, finding that that the allegations raised in the suit were not based on any actions the mayor pro tem took as a councilmember.
June 25, according to City Attorney Scott Smith, was the deadline to submit the appeal to the JPIA and challenge the three rejections through binding arbitration—the city’s last available remedy and a process estimated to cost the city between $20,000 and $30,000.
In the June 24 letter to the JPIA requesting arbitration, the city said it disagreed with the insurance pool’s rejections to indemnify James, arguing that he was acting within the scope of his duties as an elected official when he allegedly made a defamatory claim about his former political associate, Jim Bieber, to other San Clemente residents in private text messages.
Those texts, the city has said, represent the councilmember’s fulfillment of his duty to engage with constituents.
“As will be shown during the arbitration, the alleged remarks were made within the scope of James’ duties under California law,” the letter stated. “Specifically, the alleged remarks were made during a conversation between Mr. James and certain of his constituents affiliated with Plaintiff (Bieber) regarding James’ meeting with another City councilmember …”
Bieber’s lawsuit filed in Orange County Superior Court last year accuses the councilmember of making false claims to those constituents by telling them Bieber had threatened to kill James during a heated exchange at a bar in early 2020.
Bieber, in his complaint, denies ever making such a threat.
James, who was preparing to run for reelection at the time the lawsuit was filed, has argued the complaint was politically motivated. He also has acknowledged speaking with residents via text messages to explain Bieber’s alleged threat—a conversation that came about after being seen meeting with then-Councilmember Chris Hamm.
Believing that the lawsuit warrants coverage from the insurance pool, councilmembers during their mid-June meeting approved the plan to request arbitration.
“I feel like there’s a good argument to be made that this was in the course of councilmember duties,” Councilmember Chris Duncan said during the June 15 meeting, when he and Mayor Kathy Ward voted to move forward with the challenge, while Councilmember Steve Knoblock abstained from voting.
“As a councilmember, I have particular interest in ensuring that councilmembers are represented and get to exercise their due process right throughout the entire process and seek representation for allegations that are made against them as a councilmember,” Duncan continued.
The latest vote ended a months-long standstill as a result of the council not having a quorum to deliberate and consider the matter. James has had to recuse himself from any discussions during closed and open council sessions because of his financial interest, while Knoblock, a witness in the complaint, has also recused himself.
Councilmember Laura Ferguson has also repeatedly recused herself for reasons that were unclear prior to the June 15 vote, at which time she stated that she “will possibly be a potential witness in this case.”
Ferguson explained to San Clemente Times that she may be called as a witness because, according to her, the alleged exchange between Bieber and James occurred during a farewell party she had hosted for a mutual friend at the Red Fox Lounge.
“So, these words that were allegedly said that created this whole defamation lawsuit were a result of being at this location,” she said. “I was there, and I didn’t see or hear anything of the sort that may have allegedly happened, which means that I could potentially be called as a witness.”
As of this posting, Bieber’s attorney, Paul Carter, had not responded to an email requesting comment regarding Ferguson’s claim of being a witness. James did not wish to comment on the matter.
During a previous attempt on May 4 to consider the issue in a public session, Ferguson, after announcing her recusal, stated: “Had I participated in that, I would’ve voted no, because I see that as a gift of public funds.”
“I believe it’s a very personal matter between two people, and I don’t see this as being anything done in terms of action of city business at all,” Ferguson said last week. “It was an event that was done after hours, after council meeting hours at a local bar, to celebrate a friend.”
The city initially had until May 24 to request arbitration. However, following the May 4 meeting, when the council didn’t have a quorum to take up the discussion, Smith—along with city management and the city’s risk management office— had asked the JPIA to extend the deadline.
“When the council was unable to assemble a quorum, we contacted the JPIA, and they agreed to give the city more time to make that decision,” Smith explained.
At the mid-June meeting, the council was also slated to consider whether the city itself should provide James with legal defense in the lawsuit—expenses that could exceed $100,000. Knoblock opted to participate solely in the discussion on the JPIA challenge and asked to bifurcate the two decisions.
“Because I’m a witness in this matter, I’ve recused myself a number of times, and because I didn’t want to show partiality to either the claimant (Bieber) or the defendant (James), because both of them I know—known for a substantial period of time,” Knoblock explained.
“I’m going to sit in for this reason: because I believe that all members of the council are entitled to proper representation,” Knoblock continued, after noting that his recusal had contributed to the lack of quorum.
He further added that the issue of whether a councilmember is owed representation is related to the council’s decision to censure Ferguson last fall, when she wasn’t provided her own legal counsel from the city.
“I think every councilmember is entitled to proper representation when needed, when appropriate,” he said. “And it should extend to all those parties with whom—even with whom—they vigorously disagree or have civic or personal matters of disagreement.”
Wanting to give the council a quorum, Knoblock said he believed he could be impartial and would abstain from voting.
Speaking with SC Times last week, Knoblock reiterated his position that he wanted to remove his recusal while still abstaining from voting, out of fairness, so the council could have a quorum.
Asked to expound on his decision to participate in the discussion on the JPIA matter but not deliberate on the proposal to fund James’s legal expenses, Knoblock said there are a number of distinctions between the two.
“One is the insurance professionals weighing in on the insurance provision,” he explained, referring to the carrier’s obligations to the city. “The other is the city using tax dollars.”
In the city’s latest letter to the JPIA, it asked that the arbitration process “occur as soon as reasonably practicable,” because it “wishes to resolve this dispute expeditiously.”
As of this posting, JPIA Executive Officer Jonathan Shull had not returned SC Times’ phone call requesting comment.
The next court hearing on the lawsuit is scheduled for July 12.
Shawn Raymundo is the city editor for the San Clemente Times. He graduated from Arizona State University with a bachelor’s degree in Global Studies. Before joining Picket Fence Media, he worked as the government accountability reporter for the Pacific Daily News in the U.S. territory of Guam. Follow him on Twitter @ShawnzyTsunami and follow San Clemente Times @SCTimesNews.