by William W. Abbott

Can a public official who violates Government Code section 1090 sue the agency and the agency’s legal counsel (on whose advice the official arguably relied) for damages? As decided in the recent case of Chapman v. Superior Court (2005) 130 Cal.App.4th 261, the answer is no. Section 1090 operates as a specific prohibition against public officials from having a financial interest in contracts involving the public entities they serve. This obligation is separate from the more stringent requirement of the disclose and refain rules of the Political Reform Act. (Gov. Code, § 81000 et seq.)

The facts in Chapman involve a Memorandum of Understanding between a utility which agreed to sell a plant to the port district, who in turn agreed to lease the plant to Duke Energy. Thereafter, Duke entered into two agreements with one of the port commissioners. The later agreement was for consulting purposes, and specifically required the commissioner to advance Duke’s interests with respect to the power plant, even to the exclusion of the port district. Reportedly, the district’s legal counsel was aware of the agreement, but advised the commissioner that only disclosure and disqualification from voting applied. Subsequently, the commissioner resigned and under pressure from the district attorney, pled guilty to a violation of section 1090. The former commissioner then sued the port district and its legal counsel for damages and related injuries on the basis that he had received bad legal advice.

The case made its way to the appellate court via a pre-trial proceeding. The court faced two issues. First, was there an attorney-client relationship between the port district’s legal counsel and the commissioner? Second, does public policy permit a former commissioner who admits to violating section 1090 to recover damages? Factual issues were in dispute and the appellate court could not resolve the first issue. However, as to the second issue, the court found that allowing damages would be contrary to public policy and the purposes behind section 1090. The commissioner should not be able to admit that he violated 1090, then seek to be made whole for that violation by suing the agency for damages.

While the facts of Chapman are unusual, the cases serves as an ongoing reminder that California law provides two separate limitations on public officials taking advantage of public office. Officials subject to section 1090 cannot automatically assume that agency counsel is protecting the official’s private interests. In many circumstances, separate counsel must be consulted.

William W. Abbott is a partner with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.