City Attorney Mike Aguirre just sent a stern letter to Southeastern Economic Development Corp. Corporate Counsel Regina Petty warning her and the SEDC board against taking action on two high-profile legal issues due to be discussed at tonight’s SEDC board meeting.

The letter warns Petty against allowing the board to approve any termination agreement for outgoing SEDC President Carolyn Y. Smith. It also warns the board not to indemnify Smith for a lawsuit that Aguirre has filed against her seeking more than $250,000 in damages for bonuses and extra compensation Smith authorized for herself and her staff.

The board’s action on both matters could have repercussions for Aguirre’s lawsuit against Smith.

The board previously approved in closed session a $100,350 severance payment for Smith. A termination agreement that contained a clause limiting SEDC’s legal recourse against Smith was also worked out without any public hearing and was signed by Smith and SEDC Chairman Artie M. “Chip” Owen.

The severance payment has since been challenged in a lawsuit claiming the board violated state open meetings law by agreeing on it behind closed doors. And Aguirre has said that the clause in Smith’s termination agreement could hamper his lawsuit against her.

The board is set this evening to consider voting again on the termination agreement in open session in a possible attempt to satisfy the allegations in the lawsuit.

So Aguirre’s letter warns Petty that she should instruct her client not to approve any termination agreement for Smith and, further, to nullify the previous agreement.

A slate of four new board members is scheduled to be approved by City Council on Sept. 2 and city officials have pleaded with the outgoing board members, who have been Smith allies and whose terms are expired, to put off any important business until the new board is installed.

The letter states:

This act of rushing to take action in an attempt to bind a future SEDC Board, not to mention the attempt to encumber taxpayers’ dollars, is highly questionable and of dubious legal validity.

Another item on the agenda for this evening’s meeting is a request that the board indemnify Smith in the lawsuit Aguirre has brought against her.

Aguirre’s letter states Smith’s actions that led to the lawsuit were “outside the scope of and course of her employment with SEDC” and that therefore the board cannot accept the request to indemnify her in the lawsuit.

The letter states:

[T]o have SEDC agree to such a request by Ms. Smith only compounds a messy situation. Ms. Smith is accused of exceeding her authority, violating the terms of her employment contract and her fiduciary duty, and illegally spending hundreds of thousands of dollars. To now attempt to spend precious taxpayers’ monies on defending her only adds to the amount which will have to be recovered from her in the future.

Aguirre’s letter is just the latest missive to take aim at tonight’s board meeting. Yesterday, Councilman Jim Madaffer fired off an angry memo to the board warning that board members could be personally liable for any actions the lame duck board takes that are detrimental to the city of San Diego.

The city’s COO, Jay Goldstone, also sent Owen a second memo yesterday building on a previous memo that warned the board chairman not to allow the board to take action on personnel matters that could have long-lasting effects.

Yesterday, an SEDC committee essentially ignored Goldstone’s concerns when it voted on two such personnel matters.


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