16-0304_SAN JUAN HILLS GOLF CLUB, LP_Letter Waiver of Conflict of InterestStradling
Attorneys at Law
THOMAS P. CLARK, JR.
DIRECT DIAL: 949.725.4140
TCLARK@SYCRCOM
DAVID C. PALMER
DIRECT DIAL: 949.725.4146
DPALMER@,`SYCR.COM
STRADLING YOCCA CARLSON 8 RAUTH, P.C.
CALIFORNIA
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH
NEWPORT BEACH, CA 92660,6422
SACRAMENTO
SYCRCOM
SAN DIEGO
'
SAN FRANCISCO
SANTA BARBARA
SANTA MONICA
COLORADO
DENVER
NEVADA
RENO
WASHINGTON
SEATTLE
CITY OF SAN JUAN CAPISTRANO
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
C/O: Jonathan Sandler, Special Counsel
March 4, 2016
SAN JUAN BASIN AUTHORITY
26111 Antonio Parkway
Rancho Santa Margarita, CA 92688
Re: Waiver of Conflicts oflnterest re San Juan Hills Golf Club, LP v. City of San Juan
Capistrano and San Juan Basin Authority, Orange County Superior Court Case No. 30-
2014-00742347
Dear Ladies and Gentlemen:
This letter is to request your waiver of potential and actual conflicts of interest arising from
Stradling Yocca Carlson & Rauth's ("SYC&R') concurrent representation of the San Juan Basin
Authority ("SJBA') and City of San Juan Capistrano ("City") (the SJBA and the City are collectively
herein as the "Parties"). SYC&R currently represents the SJBA, and has been asked to continu6 to
represent the SJBA, in the litigation Imown as San Juan Hills Golf Club, LP v. City of San Juan
Capistrano and San Juan Basin Authority, Orange County Superior Court Case No. 30-2014-
00742347 ("Litigation"). SYC&R also serves as general counsel to the SJBA. SYC&R is special
counsel to the City in connection with a variety of matters, including economic development matters
and as. bond counsel in connection with the issuance of the San Juan Basin Authority Lease Revenue
Bonds (Ground Water Recovery Project), Issue of 2002. SYC&R respectfully requests that this
request for waiver of potential and actual conflicts be presented and acted upon by the City Council
at its next regular city council meeting. It is anticipated that the SJBA will act upon this request at its
next regular board meeting scheduled for March 8, 2016.
As stated above, SYC&R has represented and has been asked by the SJBA to continue to
represent it in connection with the Litigation. Under rule 3-310(C) of the California Rules of
Professional Conduct (a copy of which is attached to this letter), an attorney may not "(1) Accept
representation of more than one client in a matter in which the interests of the clients potentially
conflict; or (2) Accept or continue representation of more than one client in a matter in which the
interests of the clients actually conflict; or (3) Represent a client in a matter and at the same time in a
separate matter accept as a client a person or entity whose interest in the first matter is adverse to the
client in the first matter" unless the attorney or firm has the informed written consent of each client.
The purposes of this letter are (1) to inform you of the conflicts of interest inherent in the
ll0 C SOC/1747137v 1/022027-0007
Re: Waiver of Conflicts of Interest re Litigation
March 4, 2016
Page Two
representation of SJBA in the litigation and the City in other matters, (2) suggest that you retain
independent counsel to assist you in your analysis and evaluation of the conflict issues and the effect
of a waiver, and (3) to seek your waiver of these conflicts.
The Litigation involves various potential liabilities, including claims for money damages,
against the City and SJBA in connection with the allegations made by the San Juan Hills Golf Club,
LP in the Litigation. There is an actual, current conflict of interest because the City and SJBA are
both defendants in the Litigation and there is a possibility that the City and SJBA each may seek to
be indemnified by the other. Furthermore, on March 4, 2016, the City was granted leave to file its
First Amended Cross -Complaint. The SJBA is named as a cross-defendant in the City's First
Amended Cross -Complaint. The City's First Amended Cross -Complaint seeks: (1) a declaration of
priority of water rights held in the San Juan Basin; (2) a permanent injunction curtailing the
extraction of water from the San Juan Basin that interferes with the City's senior water rights; and,
(3) economic damages. Moreover, there is a possibility that additional future conflicts of interest
may arise because the interests of the City and SJBA may become further adverse to one another.
SYC&R has already implemented its systems and processes (an "ethical wall") to prevent the
sharing of confidential client information and communications with respect to the potential or actual
conflicts of interests. Such systems include but are not limited to (1) mutually exclusive access (both
electronically and physically) by the attorneys representing the City, on the one hand, and the
attorneys representing the SJBA in the Litigation on the other hand, to their respective files and
documents related to the services and representations described above, (2) conflict screenings of the
attorneys representing each party, and (3) continued monitoring and maintenance of the foregoing to
ensure, to the fullest extent possible, that the attorneys representing the City will not have access to
any confidential or privileged information regarding the Litigation and the attorneys representing the
SJBA in the Litigation will not have access to any confidential or privileged information regarding
the representation of the City. Notwithstanding the foregoing, SYC&R cannot and does not warrant
or guarantee that a reviewing court will not impute a conflict of interest as a result of the
representations described herein to either the attorneys representing the City and/or the attorneys
representing the SJBA in the Litigation.
DO CSOC/1747137v 1/022027-0007
Re: Waiver of Conflicts of Interest re Litigation
March 4, 2016
Page Three
As a result of the foregoing, we are required to request a written confirmation that: (1) these
facts have been disclosed; (2) you have been advised to seek independent counsel concerning the
actual and potential conflicts of interest; (3) you have knowingly and voluntarily waived any and all
actual or potential conflicts of interest in or relating to SYCR's representation of SJBA in the
Litigation; (4) you have knowingly and voluntarily waived any and all actual or potential conflicts of
interest in or relating to SYCR's representation of the City; and, (5) you consent to SYC&R's
continued representation of SJBA in the Litigation and the City.
Should you have any questions concerning this letter or the attached consent form, please
discuss them with us or with independent counsel before signing.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
David C. Palmer
Enclosure
DOCSOC/ 1747137v 1/022027-0007
CONSENT
The undersigned hereby waive any actual and potential conflicts of interest or other adverse
consequences that may arise from Stradling Yocca Carlson & Rauth's representation of (1) San Juan
Basin Authority ("SJBA") in connection with the litigation known as San Juan Hills Golf Club, LP v.
City of San Juan Capistrano and San Juan Basin Authority, Orange County Superior Court Case No.
30-2014-00742347 ("Litigation") and (2) the City of San Juan Capistrano with regard to economic
development and public finance matters. The City and SJBA are referred to herein as the "Parties."
Stradling Yocca Carlson & Rauth ("SYC&R") has advised the undersigned of Rule 3-310 of
the California Rules of Professional Conduct, enclosed a copy of Rule 3-310 for the undersigned to
review, and explained to the undersigned that there exists presently and in the future may exist
conflicting interests in, arising out of or related to the above-described Litigation which might have
serious adverse consequences to the undersigned. The undersigned acknowledge having received a
copy of the foregoing letter and have read and understand its contents. Furthermore, the undersigned
acknowledge that they have been informed and hereby consent to the following: (1) that SYC&R
continues to represent the SJBA in the Litigation; (2) that SYC&R continues to represent the City
with regard to public finance matters; (3) as a result of the foregoing representations, the undersigned
may obtain confidential information from either of the City or SJBA that may be adverse to the
interests of the other; and (4) that SYC&R shall continue to represent both the SJBA and City on
other unrelated matters.
The undersigned have had an opportunity to consult with independent counsel regarding this
matter and any and all actual and potential conflicts of interest. The signatures below are freely and
voluntarily given, and are based upon the informed consent of the City and SJBA.
Capitalized words not defined in this Consent shall have the meaning set forth in the
accompanying letter dated March 4, 2016 from SYC&R to the undersigned.
CITY OF SAN JUANCAP STRANO
Dated: L — 2016
SAN JUAN BASIN AUTHORITY
Dated: 2016
Dan Ferons, Administrator
DO CSOC/ 1747137v 1/022027-0007
CALIFORNIA RULES OF PROFESSIONAL CONDUCT
RULE 3-310
Avoiding the Representation of Adverse Interests
(A) For purposes of this rule:
(1) "Disclosure" means informing the client or former client of the relevant circumstances and of the actual and
reasonably foreseeable adverse consequences to the client or former client;
(2) "Informed written consent" means the client's or former client's written agreement to the representation following
written disclosure;
(3) "Written" means any writing as defined in Evidence Code section 250.
(B) A member shall not accept or continue representation of a client without providing written disclosure to the client
where:
(1) The member has a legal, business, financial, professional, or personal relationship with a party or witness in the
same matter; or
(2) The member knows or reasonably should know that:
(a) the member previously had a legal, business, financial, professional, or personal relationship with a party or
witness in the same matter; and
(b) the previous relationship would substantially affect the member's representation; or
(3) The member has or had a legal, business, financial, professional, or personal relationship with another person or
entity the member knows or reasonably should know would be affected substantially by resolution of the matter; or
(4) The member has or had a legal, business, financial, or professional interest in the subject matter of the
representation.
(C) A member shall not, without the Informed written consent of each client:
(1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or
(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually
conflict; or
(3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity
whose interest in the first matter is adverse to the client in the first matter.
(D) A member who represents two or more clients shall not enter into an aggregate settlement of the claims of or
against the clients without the informed written consent of each client.
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(E) A member shall not, without the informed written consent of the client or former client, accept employment
adverse to the client or former client where, by reason of the representation of the client or former client, the member
has obtained confidential Information material to the employment.
(F) A member shall not accept compensation for representing a dient from one other than the client unless:
(1) There is no interference with the member's independence of professional judgment or with the client -lawyer
relationship; and
(2) Information relating to representation of the client is protected as required by Business and Professions Code
section 6068, subdivision (e); and
(3) The member obtains the client's informed written consent, provided that no disclosure or consent Is required if:
(a) such nondisclosure is otherwise authorized by law; or
(b) the member is rendering legal services on behalf of any public agency which provides legal services to other
public agencies or the public.
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