City Need Not Retain Separate Counsel To Represent Employees In Tort Action

In City of Huntington Beach v. The Petersen Law Firm (2002) 95 Cal.App.4th 562, the California Court of Appeal, Fourth District, held that the City of Huntington Beach (City) did not have to hire separate counsel to represent its employees who were sued along with City; rather, City could hire counsel to jointly represent the employees and itself.

After City and several of its employees were sued, City retained counsel to jointly represent City and the employees. Citing potential conflicts between their interests and City’s interests, the employees objected to joint representation and hired as their own counsel, the Petersen Law Firm (Petersen). City asked the court to declare that it did not have to pay Petersen for its separate representation of the employees. The trial court ruled in favor of City, and Petersen appealed.

A public entity has a duty, upon request, to provide for the defense of an action or proceeding against an employee who has been sued in his official or individual capacity because of an act or omission in the scope of his employment. [Gov. Code § 995.] However, if the public entity determines that providing for the defense of the employee “would create a specific conflict of interest” between the public entity and the employee, the public entity need not provide for the employee’s defense. [Gov. Code § 995.2(a)(3).]

Relying on these statutes, the Court of Appeal noted that, where there is an actual conflict between a public entity and an employee, the public entity has no obligation to provide for the employee’s defense. If, on the other hand, the conflict of interest is only potential, the public entity must still provide for the employee’s defense. Even in a case involving a potential conflict of interest, however, there is nothing in the statutes that requires a public entity, which is also a party to the action, to provide for the separate defense of the employee. The Court further noted that it is the Legislature, rather than the courts, which should make the decision to extend the law to require a public entity to provide for the separate defense for its employees.

The Court of Appeal concluded that, regardless of whether the conflict of interest was actual or merely potential, City was not obligated to provide for the separate defense of its employees. Therefore, the trial court correctly concluded that City did not have to reimburse Petersen for expenses incurred in defending City’s employees.