Wednesday, Sept. 27, 2006 | City Council President Scott Peters has dropped his motion to disqualify City Attorney Mike Aguirre from the city’s main pension lawsuit, days before the dispute was slated to be argued in court. The move allows the landmark case to move closer to the scheduled October trial date.

Peters had requested that Aguirre be prevented from representing the city in the case, claiming that the city attorney never sought the City Council’s approval before bringing the case. If successful, the motion would have presumably allowed the council to dictate the city’s position in the case, whether it be to hold the legal ground that Aguirre was fighting, tweak the city’s position, or drop the case altogether.

Peters’ decision to withdraw his argument likely means that Aguirre’s lawsuit will reach trial in October. The city attorney is attacking pension deals that the city struck with its retirement system in 1996 and 2002, claiming that improprieties should wipe away $500 million in employee benefits granted in the controversial arrangements.

The council president had also hoped the challenge would settle a long running dispute over what legal action the city attorney can take in the name of the city without the council’s approval.

In a press release, Peters maintained that his motion was important for sorting out the authorities of city officials, but said he didn’t want his motion to postpone a resolution of the pension case.

“Although that I feel that the City Attorney has serious conflicts in representing the City in this case, it is in the best interest of the City to have these issues decided quickly and definitively,” Peters said. “Since it appears that the case is finally near resolution, I did not want my motion to contribute to any further delay.”

Peters, who was presiding over a City Council meeting that ran into Tuesday evening, was unavailable for further comment as of press time.

On Thursday, a judge issued a tentative ruling that would scale back the $500 million challenge because of a prior legal settlement. Attorneys argue over the true financial impact of the ruling, with Aguirre saying it would only trim his challenge by $50 million and others saying it would trim it by as much as $460 million.

Peters, along with city workers, have long said a 2000 legal settlement capped employee benefit levels, making the benefits granted in 1996 untouchable. Superior Court Judge Jeffrey Barton is expected to make a final ruling on that issue after a hearing this Thursday.

The council president argued that the impact of Aguirre’s challenge wasn’t nearly as large as advertised. He said knocking $40 million off the city’s $1.4 billion deficit would result in annual savings for the city of only about $2 million, a savings, he said, that wasn’t worth a costly and tough legal battle with its employees.

Other council members have also said they are chilly to the lawsuit, and former Mayor Dick Murphy and Councilwoman Toni Atkins also joined Peters’ motion earlier this year, but have since removed their names.

Aguirre has not budged from his position since he filed the lawsuit over a year ago.

“No matter how long it takes, we should never saddle the people of San Diego with the illegal benefits,” Aguirre said Tuesday. He said he would not comment on Peters’ attempt to remove him because “that’s behind us now.”

In his motion, Peters said Aguirre mischaracterized the permission the council granted him in August 2005 to file the lawsuit. Peters claimed the council allowed Aguirre to pursue the case in the city attorney’s name only and that he needs that specific consent to pursue the case on the city of San Diego’s behalf.

Aguirre said the council did authorize him, but that the City Charter allows him to file litigation unilaterally anyway. Councilwoman Donna Frye filed her own declaration with the court in support of Aguirre.

Also, the council president argued in the court filing that the City Attorney’s Office cannot attack the pension deals in question when, under the supervision of Aguirre’s predecessors, the office “negotiated, prepared, reviewed, approved the very legislation the City Attorney’s Office now seeks to invalidate.”

Peters continued in the filing, “The law clearly does not allow an attorney to advise its client, obtain confidential information and then later attack the decisions of its client which were based on the attorney’s advice.”

Also, the council president claimed that Aguirre’s threat to sue the city on behalf of an undisclosed client in 2002 because of the underfunding deal created a conflict of interest, since he now represents the city of San Diego. The city attorney has refused to name the client.

On Thursday afternoon, the judge will hear arguments on his tentative ruling, a retirement system motion to dismiss the case altogether and the schedule for next month’s trial.

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