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By Shawn Raymundo
Allegations and other details raised in a defamation suit against Mayor Pro Tem Gene James did not involve city business, the city’s insurance carrier said this month, denying for the fourth and final time a request to cover the elected official’s legal expenses.
In an attempt to overturn the insurance provider’s three previous rejections, the city this past June requested an arbitration hearing, exhausting all of its options to have the California Joint Powers Insurance Authority indemnify James.
Following an Oct. 13 hearing among officials with the city and the JPIA, the arbitration panel upheld the insurance pool’s prior denials, concluding that James did not qualify for coverage in the defamation suit brought against him by a former political associate, Jim Bieber.
The lawsuit, filed in Orange County Superior Court in May 2020, accuses James of making a defamatory claim about Bieber in a series of text messages with constituents.
James had raised the claim—that Bieber threatened to kill James during a heated exchange at a bar in early 2020—after the residents questioned him about a meeting with then-Councilmember Chris Hamm.
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 in court filings that the complaint was politically motivated while acknowledging the text message chain in question.
As of this posting, James had not responded to requests seeking comment.
Determining that the JPIA owes James coverage, the city has reasoned that the mayor pro tem was acting within the scope of his duties as an elected official when he claimed in text messages to San Clemente residents that Bieber had threatened to kill him.
“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 …,” the city said in a June 24 letter to the JPIA.
The JPIA, however, has not seen it that way, and has denied all attempts by the city to indemnify James and provide him with legal representation.
“The facts do not indicate that the allegedly defamatory May 2 text exchange about Mr. Bieber’s alleged prior threat involved city business,” the JPIA said in formal letter to the city, echoing its prior rejections over the past year and a half.
“The Bieber complaint does not allege that Mr. James was in the scope of his duties when he made the defamatory statements, does not name the City of San Clemente as a defendant, and does not allege that any government claim was filed before the complaint was filed,” the letter also stated.
As part of its decision, the arbitration panel also cited a November 2020 court ruling that denied 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, dispute or controversy.”
The lawsuit is now proceeding based on the merits of the case. The next court hearing is scheduled for Dec. 20.
City Attorney Scott Smith said after the arbitration panel’s decision that the city’s pursuit of coverage for James is “played out.”
“That’s the last resort … last resort as far as JPIA coverage goes. I think that’s over,” Smith said, noting that it’ll be up to the city council on whether the city itself should cover James’ legal costs—expenses that the city estimates could exceed $100,000.
As of Oct. 18, the city had spent just shy of $41,290 for its attempts since last year to have the JPIA cover James, according to the city’s contracted law firm, Best Best & Krieger. About $6,700 of that total represented the cost to pursue arbitration.
Previous opportunities by the council to vote on whether the city should step in and provide legal defense has hit roadblocks as a result of a lack of quorum.
James has had to recuse himself from any discussion on the matter because of his financial interest, while Councilmember Steve Knoblock, a witness in the complaint, has also recused himself.
Ferguson has also repeatedly recused herself. During a June 15 council meeting, she said that she “will possibly be a potential witness in the case.” And before that, in May, she said she didn’t want to participate in the matter, as she “would’ve voted no, because I see that as a gift of public funds.”
The council will next meet on Nov. 2 at the San Clemente Community Center, with closed session scheduled for 5 p.m. and public session slated for 6 p.m.
Editor’s Note: This story has been updated to include Best Best & Krieger’s breakdown of costs related to the pursuit of JPIA coverage.
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.