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By Shawn Raymundo

The City of San Clemente may lose its insurance coverage if members of the city council continue to violate the California Joint Powers Insurance Authority’s policy on interacting with claimants and opposing attorneys, the city’s insurance carrier warned this month.

In a Nov. 4 letter directly to Councilmember Laura Ferguson, the JPIA admonished the elected official for speaking to a constituent about matters related to a claim filed against the city, cautioning that further communications would result in the carrier rescinding its coverage.

“Please be aware that the communication already undertaken, and any future correspondence of this sort,” violates a section of the Liability Memorandum of Coverage “and will give rise to a rescission of coverage,” wrote Norm Lefmann, the JPIA’s assistant executive officer.

Ferguson acknowledged that she had spoken with constituents who had reached out to her about maintenance issues and concerns involving city infrastructure. She argued, however, that she wasn’t aware one had filed a formal claim against the city, which the JPIA is tasked with defending.

“I want people to be safe and healthy in this town so if it means I advocate for maintenance issues to be addressed, I’m going to keep doing that, and no one’s going to keep me from doing that,” Ferguson told San Clemente Times this week.

Discussing the matter last week, the city council voted to establish a subcommittee tasked with reviewing contingency plans should San Clemente lose its coverage, assign Councilmember Steve Knoblock as the city’s representative to the JPIA, and issue a letter, signed by all five members, acknowledging its commitment to follow the policy.

According to the JPIA, Ferguson had been communicating with a family that had filed a claim against the city alleging dangerous conditions of public property near the Del Cerro and Vista Montana intersection.

Ferguson, the JPIA continued, was contacted by a member of the family this past September. She then emailed City Manager Erik Sund, with the claimant included, asking about his plans to address the issue.

Citing California case law, Ferguson wrote that “a city may very likely share blame if it knows dangerous conditions exist and doesn’t do anything to fix it. I’m not implying anything here, but (considering) these two incidents have been brought to our attention, I’d like to know what your plans are for any accident reconstruction or seeking traffic engineering expertise on these matters before something even more tragic occurs.”

The JPIA letter also referenced two separate instances in which Ferguson spoke with residents via email—with Sund included—about maintenance on the Mariposa bridge along the Beach Trail and about street striping.

“While we understand your need to communicate with constituents and show your advocacy, you should refrain from making conclusionary statements regarding failed maintenance, dangerous conditions and insinuating there is a liability to the City,” Lefmann wrote.

He continued that Ferguson’s statements could “prove challenging if and when litigation is filed against the City, and will no doubt be used” as exhibits in the plaintiffs’ arguments.

During the council’s Nov. 16 meeting, Ferguson reasoned that Sund should regularly provide councilmembers with the names of residents or business owners who file a claim against the city, so the elected officials know whom not to speak with on such matters.

“Being in the dark on that is a big liability, and that falls on the city manager and not on individual councilmembers when we don’t know,” Ferguson said, later adding: “If they had filed a claim or lawsuit, we shouldn’t be talking to them. But if we don’t know that they did, we can’t possibly know, right?”

Regarding the bridge issue, Ferguson noted this week that she didn’t tell the residents anything that hadn’t already been made public by city staff.

The JPIA, in the letter, also noted that this wasn’t the first time it’s had to warn the city and councilmembers of violating the policy on claimant interactions.

In October 2019, the insurance carrier notified former Councilmember Dan Bane, then-mayor pro tem, that a councilmember had contacted the attorney representing Bill Humphreys—the city’s previous Marine Safety chief, who had filed an employment complaint against former City Manager James Makshanoff and Sund, then the assistant city manager.

“We are aware that there have been multiple occasions where one or more members of the city council have proactively contacted Ms. (Heidi) De Groot,” the JPIA said in the letter, which never named the elected official in question.

“The California JPIA highly discourages councilmembers from becoming involved in employment matters, especially those involving confidential investigations,” the JPIA added in the 2019 letter.

Ferguson this week said she was the councilmember who had asked Humphreys’ attorney to sit in on his interview with the investigator assigned to the case—a request that De Groot granted, but the investigator, Carl Botterud, had declined.

As of press time, Lefmann had not responded to requests for comment.

Mayor Pro Tem Gene James, believing the latest letter to be an urgent issue, asked the council to take up the matter for discussion last week, proposing the subcommittee, new JPIA appointee and letter.

“This is a moment not to be divisive, not to argue; this is a moment for us to come together in the interest of the city, work with the JPIA and move forward,” James said.

Mayor Kathy Ward said the potential rescission of coverage was a “direct threat to all the citizens of San Clemente. “

“The JPIA in the coverage is very important,” Ward said. “It protects everyone in the city, and we are supposed to protect that coverage under the MOU.”

Ferguson asked that the council also develop a procedure for Sund to notify councilmembers of all claims. However, both James and Ward argued that Ferguson’s proposal wasn’t an urgent matter for them to take up for discussion that night. 

“I just don’t understand why I get pushback when I’m trying to improve the city and reduce the liability; why there’s pushback … every time I say we should, I get pushback,” she said, adding: “I just find it amazing that you don’t want him (Sund) to tell us stuff.”

Initially, James had proposed that he and Councilmember Chris Duncan serve together on the subcommittee that will be tasked with working with the city’s risk management department to draw up a contingency plan in the event the JPIA rescinds coverage.

Touching on his experience in insurance coverage, Councilmember Knoblock volunteered to sit on the subcommittee with Duncan. Duncan, whom James had also proposed to represent the city at JPIA member meetings, asked that Knoblock instead be the council-appointed representative.

In a 4-1 vote, with Ferguson opposed because her proposal wasn’t considered, the council formed the contingency-plan subcommittee with Duncan and Knoblock; appointed Knoblock as the representative to the JPIA; and asked staff to draft a letter that will be brought back for deliberation and the councilmembers’ signatures during the Dec. 7 meeting.

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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comments (1)

  • The letter from the JPIA is more about the hundreds of thousands of dollars they had to pay out to settle ex City Manager James Makshanoff’s law suit as it is about some maintenance email. What they do share is Laura Ferguson’s involvement. With decades working for a city, she clearly knows better.

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