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By Shawn Raymundo

A vote on whether the city should provide Mayor Pro Tem Gene James with legal defense in a privately filed lawsuit against him couldn’t move forward on Tuesday, May 4, as Councilmember Laura Ferguson recused herself from discussion, leaving the council without a quorum.

“I won’t be participating in that,” Ferguson had announced near the onset of the council’s meeting. “Had I participated in that, I would’ve voted no, because I see that as a gift of public funds.”

James, who is facing a defamation complaint filed by a former political associate of his, recused himself from the matter, as he has a financial stake. Councilmember Steve Knoblock, a witness in the lawsuit, was absent from the meeting, and would likely have had to recuse himself as well.

The city has previously made the determination that the lawsuit against James warranted coverage from the California Joint Powers Insurance Authority. However, the state insurance pool has denied previous requests for coverage over the past year.

The remaining three councilmembers were slated to vote on whether to waive attorney-client privilege before also deciding to file one last appeal for coverage to the JPIA, as well as decide on having the city step in to provide James with legal defense.  

By the city’s own estimates, the cost to cover James’ expenses in the suit could exceed $100,000. That would be on top of the roughly $26,000 already spent to help get James covered by the city’s insurance carrier.

Another $20,000 to $30,000 could’ve been spent had the council voted Tuesday to challenge the insurance carrier’s previous rejections one last time through a binding arbitration process. According to the city, it has until May 24 to seek arbitration.

With Ferguson’s recusal, leaving only Mayor Kathy Ward and Councilmember Chris Duncan, the council was short one member to deliberate. It’s unclear how the city intends to proceed.

City Attorney Scott Smith wasn’t immediately available to provide comment, as of this posting.

An email from Smith confirming the $26,000 price tag came after San Clemente Times published an in-depth report on the city’s nebulous involvement in the defamation complaint.

Smith had previously explained that the city council in closed session has been unable to vote on pursuing arbitration because it lacked a quorum. James, as well as Knoblock and Ferguson, have recused themselves.

“As a result, we have decided to recommend at the next City Council meeting that the Council waive the attorney-client privilege and decide the matter in open session,” Smith had explained in an email.

James on Monday, May 3, had told SC Times that he had no other comment on the matter other than to state: “I have not been involved in those discussions.”

The city had retained special counsel Alan Burns of Harper and Burns to offer his own independent opinion on the matter had the council waived attorney-client privilege.

Acknowledging the prohibition of public funds being used toward private matters, including a lawsuit, the city, in its report, stated that it’s obligated to “make a determination on this issue whenever such claims or demands are presented.”

Below is the initial version of the story published on May 3.


After making the determination that a privately filed lawsuit against Mayor Pro Tem Gene James warranted coverage from the state insurance pool, the city is now asking councilmembers on Tuesday, May 4, whether it should step in to provide legal defense.

By the city’s own estimates, the cost to cover James’ expenses in the defamation suit filed against him by a former political ally last year could exceed $100,000. That would be on top of the roughly $26,000 already spent to help get James covered by the city’s insurance carrier.

Over the past year, the California Joint Powers Insurance Authority has denied three previous requests from the city and James to provide the elected official with coverage and legal representation in the lawsuit.

Taxpayers could be also be on the hook for another $20,000 to $30,000, if the council votes Tuesday to challenge the insurance carrier’s previous rejections one last time through a binding arbitration process.

Asked for his remarks on the matter, James on Monday, May 3, said he had no other comment other than to state: “I have not been involved in those discussions.”

An email from City Attorney Scott Smith confirming the $26,000 price tag comes after San Clemente Times published an in-depth report on the city’s nebulous involvement in the defamation complaint.

Smith had previously explained that the city council in closed session has been unable to vote on pursuing arbitration because it lacked a quorum. James, along with Councilmembers Steven Knoblock—a witness in the complaint—and Laura Ferguson have recused themselves.

“As a result, we have decided to recommend at the next City Council meeting that the Council waive the attorney-client privilege and decide the matter in open session,” Smith had explained in an email.

Late last week, the city released its agenda report for the upcoming council meeting, highlighting the anticipated costs associated with the lawsuit. According to the report, it’s up to the council whether it will waive attorney-client privilege before making two decisions: providing James with legal defense and pursuing arbitration.

The city has retained special counsel Alan Burns of Harper and Burns to offer his own independent opinion on the matter should the council waive attorney-client privilege during Tuesday night’s discussion.

Acknowledging the prohibition of public funds being used toward private matters, including a lawsuit, the city, in its report, stated that it’s obligated to “make a determination on this issue whenever such claims or demands are presented.”

Since last July, James, as well as city management and the city attorney have lobbied the CJPIA to cover his legal costs, which would entail finding and hiring a defense attorney, as well as potentially paying for any damages resulting from the lawsuit.

The CJPIA, which comprises more than 100 public agencies—mostly cities—has denied James’ and the city’s previous requests for indemnity, with the most recent denial issued in late March.

The city has argued that James 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. 

“The circumstances surrounding the events leading to James’ allegedly defamatory statements support the conclusion that the Action arises from James’ position as a city councilmember,” the city’s attorneys, including Smith, had written in a Jan. 25 letter to the CJPIA’s appeals committee.

However, Jonathan Shull, the insurance pool’s CEO, has previously explained that the allegations against the mayor pro tem were not based on any actions he took as a city official.

An Orange County Superior Court judge last November made a similar ruling by denying James’ Anti-SLAPP (strategic lawsuits against public participation) motion in the lawsuit. The court found that the text messages with constituents didn’t “involve an issue of public interest.”

The lawsuit is now proceeding based on the merits of the case, which will later be heard in court in late 2021.

As a comment for the initial story regarding the city’s unclear involvement in the matter, James had the following to say:

 “It would not be prudent to comment on an extraordinarily frivolous lawsuit directed at me as a public official and meant to distract me from conducting my official duties,” James wrote. “However, it is important to note this continued harassment will never deter me from the important issues facing San Clemente such as fighting the Toll Road, keeping vacation rentals from littering our city, cutting our city budget and supporting our businesses as they recover from the pandemic.”

The open session of the council meeting on Tuesday is scheduled to begin at 6 p.m. The meeting will be livestreamed on the city’s YouTube channel.

SR_1Shawn Raymundo
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.

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