The judge hearing the challenge to a decade’s worth of employee pension benefits today called a special hearing for Wednesday morning after an appellate court issued a ruling that could impact City Attorney Mike Aguirre’s contention that pension deals in 1996 and 2002 are void.
Judge Jeffrey Barton is in the midst of ruling on a motion from Aguirre that seeks to have the benefit boosts included in the 1996 and 2002 deals voided. The motion, argued in court Monday, would allow the city to wipe hundreds of millions of dollars in debt from its books and avoid a lengthy jury trial.
The judge said Monday not to expect a ruling this week. But today he called for the Wednesday hearing after a California appeals court ruled on a case that uses an argument that appears to be similar to Aguirre’s – that a government contract can be voided if a public official runs afoul of the state’s conflict-of-interest laws.
Aguirre contends that pension board members violated the statute, known as Government Code 1090, in approving pension deals that offered employees benefit boosts and eased the city’s annual obligations to the pension fund in the short-term. He argues that the pension benefit boosts given to all city employees are in turn void. If successful, the case could halve the city’s $1.4 billion pension deficit.
“Regardless of whether the third party who obtained the public contract is an innocent victim, the public entity is entitled to recover all consideration it paid to the third party,” the appeals court’s ruling states.
In the case in question, a contract between the owners of a housing complex and the city of Carson Redevelopment Agency was voided after it was revealed that the owners paid a $75,000 bribe to receive an $850,000 loan from the agency at 4 percent interest.
Attorneys in the pension case will discuss the ruling’s impact on the case at 9 a.m. Wednesday morning.
Check back with us later for updates.