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16-1115_CITY OF SJC/ STRATUS DEVELOPMENT PARTNERS_D8_Agenda Report_Supplementary11/15/2016 City of San Juan Capistrano Supplementary Agenda Report TO : Honorable Mayor and Members of the City Council FROM : ~Siegel, City Manager SUBMITTED BY: Jeff Ballinger, City Attorney DATE: SUBJECT: November 15, 2016 Consideration of a Joint Defense Agreement Regarding Confidential Communications and Joint Representation in Connection with the City's Approval of an Addendum to a Mitigated Negative Declaration, Conditional Use Permit 15-012, Architectural Control 15-026, Grading Plan Modification 16-008 and a Tree Removal Permit for a Hotel and Related Uses Via Resolution Nos. 16-09-06-03 through 16-09-07-07, for property located at 31872 Camino Capistrano (APN Nos. 124-160-51, 52 and 37) RECOMMENDATION : By motion, approve and authorize the City Manager and City Attorney to execute the Joint Defense Agreement with Stratus Development Partners LLC, 0 Properties, Inc., and Jackson Tidus, in substantially the form attached hereto, in connection with the City's approval of an addendum to a Mitigated Negative Declaration, Conditional Use Permit 15-012, Architectural Control 15-026, Grading Plan Modification 16-008 and a Tree Removal Permit for a Hotel and Related Uses Via Resolution Nos. 16-09-06-03 through 16-09-07-07, for property located at 31872 Camino Capistrano (APN Nos . 124- 160-51, 52 and 37) (Hotel Capistrano by Kimpton). SITUATION : After posting of the Agenda, the City received a slightly revised version of the Joint Defense Agreement. This version has been agreed upon by the applicant and his attorney. Staff and the City Attorney approve the attached revised version, and recommends approval by the City Council. Attachment 1 -Joint Defense Agreement-with red lined revisions 08 JOINT DEFENSE AGREEMENT This JOINT DEFENSE AGREEMENT ("Agreement') is made and effective this 1st day of October, 2016 ("Effective Date"), by and among the CITY OF SAN JUAN CAPISTRANO, a California municipal corporation ("City"), and the City's attorneys BEST BEST & KRIEGER LLP, a California limited liability partnership, on the one hand, and STRATUS DEVELOPMENT PARTNERS LLC, a California limited liability company,~AVJD -WQOG-; frtl-i ndi iclual , and 0 PROPERTIES, INC., a California corporation (collectively, "Stratus"), and Stratus's attorneys JACKSON TIDUS, a law corporation on the other hand (collectively, "Parties," and individually, "Party"). RECITALS WHEREAS, SPM-FAIRFIELD, LLC, a California limited liability company ("Petitioner") filed a lawsuit entitled SPM-FAIRFIELD, LLC, a California limited liability company, v. CITY OF SAN JUAN CAPISTRANO, a California public entity, and Does 1 through 10, inclusive; DAVID WOOD, an individual, STRATUS DEVELOPMENT PARTNERS, LLC, a California limited liability company, and 0 PROPERTIES, INC., a California corporation, in the Superior Court of the State of California for the County of Orange, bearing Case No. 30-2016-00878881-CU-TT-CXC ("Action"). City is the respondent and Stratus is the Real-Party-in-Interest in the above-named Action. WHEREAS, on September 6, 2016, the City Council denied an appeal and affirmed the Planning Commission's approval of an Addendum to a Mitigated Negative Declaration, Conditional Use Permit 15-012, Architectural Control 15-026, Grading Plan Modification 16- 008 and a Tree Removal Permit for a hotel with 102 rooms, a restaurant, banquet facilities, swimming pool, spa and related uses ("Project"), via Resolution Nos. 16-09-06-03 through 16- 09-07-07, for property located at 31872 Camino Capistrano (APN Nos . 124-160-51, 52 and 37) ("Property"). WHEREAS, based on the claims made by Petitioner in the Action, and in light of Project condition of approval number 4, City and Stratus have concluded they have common legal interests in defending against Petitioner's allegations in the Action, and have and may assert joint and/or common defenses, common claims and/or cross-claims in the Action, and it is in their best interests, and consistent with the law, to cooperate with each other to advance such joint and/or common defenses, claims and/or cross-complaints in the Action without waiving any privilege. WHEREAS, as a result of the claims asserted by Petitioner in the Action, City and Stratus desire to share information (including, but not limited to, documents, factual material, mental impressions, memoranda, reports, attorney work product, and other confidential or privileged information) and confidence for the purpose of formulating and implementing a joint and/or common defense effort and/or legal strategy in the Action. Such information, when shared between the Parties under this Agreement, and whether oral or in writing, is referred to herein as "Defense Materials". I 61147.80004\29325933. 7 ATTACHMENT 1 WHEREAS, City and Stratus believe it is appropriate that the undersigned law firms communicate and exchange information, which may include confidential attorney-client communications, work product, and other information that is protected from disclosure to third parties by applicable privileges, doctrines and/or immunities. WHEREAS, City, on the one hand, and Stratus, on the other hand, wish to continue to pursue their separate, but common, interests with respect to the Action and to preserve to the maximum extent possible the attorney-client, work product or other applicable privileges, doctrines, and immunities that they may have, and to participate in this Agreement without diminishing such privileges, doctrines or immunities in any way. WHEREAS, the City and Stratus have considered both the advantages and disadvantages of this Agreement, and acknowledge that the provisions of this Agreement do not override the obligation of their respective attorneys to represent them zealously and to preserve and protect client confidences and secrets. AGREEMENT Based upon the foregoing recitals, which are true and correct and incorporated herein by reference, and in consideration of the mutual promises of the Parties, it is hereby agreed as follows: 1. Confidentiality of Defense Materials. A. In defense of the Action, the Parties may exchange or disclose Defense Materials in furtherance of the City's and Stratus's common interests. Defense Materials, and all work performed under this Agreement, and communications amongst the Parties or amongst counsel in connection with the representations of their respective clients, shall be conducted and protected pursuant to the attorney-client, work product, joint defense and/or common interest doctrine recognized by the laws of the State of California and the United States of America. Defense Materials shall be used by the Parties solely for the preparation of the City's and Stratus's respective defenses. Neither the Defense Materials nor the information contained therein may be used for any other purpose. Defense Materials may be provided to consultants, investigators, experts, stenographic and clerical personnel, and other persons solely for the purpose of furthering the City's and Stratus's mutual interests in the Action. All such persons shall be specifically notified by the Party disclosing the Defense Materials that the Defense Materials and the information contained therein are confidential, subject to the terms of this Agreement and, as applicable, privileged. B. Unless expressly stated in writing to the contrary, all communications between the Parties concerning the Action are confidential and are protected from disclosure to any entity or individual who is not a party to this Agreement ("Third Party") by the joint-defense and/or common interest privilege, the attorney-client privilege, and the work product doctrine. The Party in receipt of any Defense Materials shall not disclose the Defense Materials or any of the information therein to any Third Party without the prior written consent of the Party who disclosed the Defense Materials in the first instance. Such consent may be obtained in writing from that Party's attorney. 61147.80004\29325933. 7 ~ 2 C. Any unauthorized disclosure of Defense Materials to any Third Party shall be subject to a joint defense privilege by the other Parties to this Agreement and shall not constitute a waiver of any otherwise available privilege. Any Party shall have the right to seek injunctive relief to prevent a threatened disclosure of confidential materials produced pursuant to this Agreement, if such disclosure would violate the terms of this Agreement. All Parties agree that there is no adequate remedy at law for a disclosure in violation of this Agreement. D. If another person or entity requests or demands, by subpoena or otherwise, any Defense Materials, the Party from whom such material is requested or demanded shall immediately notify the other Parties. In addition, the Party from whom Defense Materials are requested or demanded shall, prior to production of the Defense Materials, assert all applicable rights and privileges and shall take all reasonable steps to assure that all other Parties have an opportunity to assert all applicable rights and privileges, prior to production. E. The City and Stratus acknowledge that information known to one of them need not be shared with the other, and that each is entitled to communicate and share information with the other as that Party sees fit. F. To the extent that any of the Parties communicated with each other concerning the defense of the Action prior to the Effective Date, such communication and any other correspondence, exchanges or disclosures among the Parties have been made to further the common defense of the Action and in full expectation that all such communications would remain confidential and protected from unauthorized disclosure, and such communications now constitute Defense Materials subject to the terms of this Agreement. G. This Agreement shall not restrict any Party from using in any manner or disclosing information which (a) was or becomes publicly available without breach of the obligation of confidentiality provided in this Agreement, or (b) was or is discovered independently by the receiving Party. However, the fact of communication by one Party to another Party of such documents or information shall be privileged pursuant to the joint defense and/or common interest privilege, and any attorney-client privilege, work product doctrine or immunity shall not be lost, but shall be protected by the joint defense and/or common interest privilege. H. Defense Materials made under this Agreement shall continue to be confidential and subject to the privileges described herein even if adversity of interest may subsequently be discerned or arise between or amongst any of the Parties to this Agreement. I. In the event that a Party to this Agreement is dismissed from the Action by reasons of settlement, decision, judgment or otherwise, such Party and its counsel shall not be relieved of its obligations under this Agreement with regard to the treatment of the Defense Materials. At all times after a Party has been dismissed from the Action, the Agreement shall be applicable to all Defense Materials. I 61147.80004\29325933. 7 3 2. Defense of City in Action A. Stratus shall indemnify and pay for the reasonable cost of defense (with counsel as provided herein) the City, its officials (appointed or elected), officers, employees, agents, departments, agencies, and instrumentalities thereof in the Action. B. Counsel for the City shall be JeffreyS. Ballinger, James Gilpin and Alisha M. Winterswyk of Best Best & Krieger LLP (the "City Attorney"). The City's reasonable attorneys' fees and costs in defending the Action shall be reimbursed by Stratus as follows: (i) defense obligation to start as of October 1, 2016; (ii) a separate billing file for litigation shall be opened by the City Attorney; (iii) the time shall be billed in 0.1 hour increments; (iv) City's attorneys' fees and costs shall be invoiced monthly with a statement to Stratus redacted to preserve confidential information; and, (v) no cost in excess of $500 shall be incurred without Stratus's prior written approval. l'I9J~Yithst!!lditl&. thi! foregoing, tralu s's (cimbursem~llL hall be conditioned upon the Ci~'s _c;oopera tiqn_~Uh_S ll" tus jJ1Jb~ActiQil and joint defense of t h~ eiPJ~~<:t C. Counsel for Stratus and the City Attorney for the City shall reasonably cooperate with each other in connection with their respective investigations and the Action. City and City Attorney shall provide Stratus, its consultants, investigators, experts, and counsel, access to the City's public files and documents upon request during normal business hours. D. Each Party shall communicate promptly to the other Party any offers received for the settlement of the Action. City shall secure Stratus's consent to any settlement. Stratus shall secure the City's consent to any settlement. Such consent shall not be unreasonably withheld by either Party. 3. Cost~ Recovery Account; ~The City has established a cost~ recovery account against wh~ic-!1~staft~-C'ity censuhant,~and ~City~/\Homey time were charged foF entitlement wmk l:ll'Kter-tal<en-BR-t-he-PfojeeL-As-ef-t-ht7-E#eeti-ve-Oate-of-th-is-,gr·eemeRt;-theeost ~reeo ery--a£cffilnt f1as--a n--e utstun di ng~-negu ~i ve-b a-!aneeo---W~-Htitr--H-ve-E§1--Bustness~flays---ef-~t11e-exeeuti-en-4-tllis t\g-Feement,-&fa4l:ls--sha+l-femit -payment~--t& -the~-Gity--s-ufficient-te---B-r~R-g-the~-buffinee---m1--the P-F-eject's-costrecovery aecmmt te-zer'Oc-\Rl<~SER VED!. 4. [RESERVED]. 5. No Admission of Liability or Waiver. This Agreement is not an admission of liability or fault of any Party in reference to any alleged or asserted facts, legal contentions and occurrences that are now or might be alleged with respect to any threatened or asserted claims associated with or in any way related to the Action. Neither this Agreement, nor any information contained in or submitted under this Agreement, nor any action taken by any Party pursuant to this Agreement, shall constitute, be interpreted, construed, or used as evidence of any admission of liability, law, or fact, waiver of any right or defense, nor as an estoppel, against any Party by any other Party or by any Third Party. The Parties further acknowledge that all future discussions between the Parties concerning the resolution of the Action shall be considered settlement discussions protected under California Evidence Code section 1152, except for public hearings and/or public documents regarding the Action. 61147.80004\29325933. 7 4 Formatted: Font: Not Bold 6. No Third Party Beneficiary. Except as specifically provided herein, nothing in this Agreement shall waive, release, or otherwise affect any right, claim, defense, interest, or cause of action that any Party may have with respect to any Third Party. This Agreement is not intended for the benefit of any Third Party and shall not be enforceable by any party who is not a Party. 7. No Creation of Attorney-Client Relationship. Nothing in this Agreement is intended to create an attorney-client relationship between any attorney and anyone other than the Party who is a client of that attorney. The fact that an attorney has entered into or agreed to be bound by this Agreement shall not in any way preclude that attorney from advocating any interest of the Party who is his or her client that may be adverse to any other Party, and shall not be used as a basis for seeking to disqualify any counsel from representing the Party who is a client of that attorney in any proceeding. It is further understood that the obligations of this Agreement might, in the future, create a potential or actual conflict of interest such that one Party shall not be able to cross-examine another Party in this Action or in other proceedings through the use of Defense Materials, unless such materials were also obtained from independent sources not subject to this Agreement, and even though cross-examination through the use of such Defense Materials may be in the Party's interest. The rights and obligations under this paragraph shall survive the termination of this Agreement and shall continue to bind each Party after that Party's withdrawal from this Agreement or dismissal from the Action or other proceedings, and after termination of this Agreement. 8. No Joint Venture. This Agreement does not form a joint venture or partnership by or among the Parties. 9. Amendment. No part of this Agreement may be modified, altered, amended, waived, or changed without the express written consent ofthe Parties hereto. 10. Notice. All notices under this Agreement must be in writing. Notice is given either (i) when delivered in person to the person or company intended named below, or (ii) when sent via reputable overnight courier (such as Federal Express), addressed by name and addressed to the party or persons intended, as follows, until such time as a party gives notice of a change of address in accordance with the terms of this section: Stratus Attn: David Wood Stratus Development Partners 17 Corporate Plaza Drive, Suite 200 Newport Beach, CA 92660 Phone: (949) 294-6990 FaK~ ---------------- Attn: Steve Oedekerk 0 Properties 26162 Calle Roberto San Juan Capistrano, CA 92675 61147.80004\29325933 . 7 5 City Attn: Ben Siegel, City Manager San Juan Capistrano City Hall 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Phone: (949) 493-1171 Fa,'\c~-949}-488~~874 Phone: (949) 441-0741 Fa*~--~-------~-----~ Stratus's Attornevs Attn: Michael L. Tidus, Esq .. Jackson Tidus 2030 Main Street, Suite 1200 Irvine, CA 92614 Phone: (949) 752-8585 Fll*;-{-949) 752-0597 Citv Attorney Attn: JeffreyS .. Ballinger, Esq. Best Best & Krieger 655 West Broadway 15th Floor San Diego, CA 92101 Phone: (619) 525-1343 Fa-JE--fB-1-~(}+!-& -{ Formatted: Keep with next I Formatted: Font: Not Bold )JLthc _e\LCilL thauh_~:t~'L!s_<l__dcjau!1_b_y_clth.eJ" pj!rty __ tQJh!LAgrecmcnt (I he ·'_Dcfa_uhi n£---· Formatted: Indent: Left: os, No bullets or P_'!t:!i') with CSJlCCl lo any _Qf_ the~provision· of this _1\__gt_'(:_emcnt_. tht: __ Qthcr P.8f!J' l~ numbering, Tab stops: 0.5", Left j_~Qn-D£!au_l!_i_ng ()art _:bb!lJl.gi_v<;__the Qef'!\,!lt_i_ng _e~':!Y _\Yritten notice of such default in accq_nJ~nc_e wi_th the <tb_ove_provisio1JS~ A(ter receipl._ of such .JYritten notice,_ th_y I Formatted: Font: Not Bold Dcfaulun Par.ty ~hill ha~ fifteen illl~s in whiflUQ.fyre _ _<\!IY monetm:y defaul!.Jlnt! thirty (30) days itl which to cure any non-moneta£Y default. The Defaulting Patiy shall b<:Jo\fS: ~Jtc;he_xtende~period <1~ may !Je reqLtire_Q ]Je_ygnd tlleJbirjyQ())_cl_C\y <;Llt·eperiocit9 cure_aQv_l10f!:_JT.IOI1t:tarycl_efaplt if_ tll~nll_~!,!re _QfJhe ems: i§ SLlch that it re(lson£~bly_r<:_ql1iLes_ m_Qre than Ulit1y_(JQl_cim.W_cure <md Dcfaulting.Par y <;91)1tnenccHht:sur_c within_lh third .(30l day period a_nd thereafter continuous~ and diligently pursues the cure to completion. fhe 1 an-Defaulting Parly may not mftintain al}y action or effect any rcr.D$!dic!\ for default a&1in ·t thc:;J)eHwhiiJ&.flirt unless and unri!Jhe Defaultill.B .. J'<t!1Y_h_a.2 failed to em~ th~_s_am~ithinJ:be_limt:JJ~IiQcl~P.tO'{..id<:_cl_jD_Jbi2~.S.<:g!.iQ!1~ 11. Assignment.. This Agreement shall not be assigned by either Party, either in whole or in part, without the prior written consent of the non-assigning Party. Any assignment or pu[ported assignment of this Agreement without the prior written consent of the non-assigning Party will be deemed void and of no force or effect. 12. Interpretation. The Parties hereto have negotiated this Agreement at arm's length and have been advised by their respective attorneys, and no provision contained herein shall be construed against any Party. 13. Authority to Execute, The individuals executing this Agreement each represent and warrant that they have the legal power, right and actual authority to bind their respective Parties to the terms and conditions hereof. 14. Counterparts. The Parties may execute duplicate originals (counte[parts) of the Agreement or any other documents that they are required to sign or furnish pursuant to the Agreement. 15. Severability. If any provision of this Agreement is found invalid or unenforceable, the balance of this Agreement shall remain in full force and effect. I 61147.80004\29325933. 7 6 16. Term. This Agreement shall terminate as to all Parties on the date on which the earlier of the following events occurs: entry of fmal judgment in the Action; dismissal of all causes of action as to all Parties in the Action; settlement of the Action as to each and every Party (the "Termination Date"). Any Party may terminate this Agreement effective upon written notice of termination to all other Parties. After termination, the Parties shall continue to preserve the confidentiality of all Defense Materials and this Agreement, in the manner set forth herein. 17. Entire Agreement. As of the Effective Date, no other agreements, express or implied, have been made by the parties to this Agreement concerning the subject matter herein. All prior and contemporaneous conversations, negotiations and possible or alleged agreements concerning the subject matter herein are merged and integrated in this Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date. CITY OF SAN JUAN CAPISTRANO By: Ben Siegel City Manager ATTEST: By: Maria Morris, CMC City Clerk STRATUSDEVELOPMENTPARTNERS LLC, a California limited liability company By: David Wood Manager 0 PROPERTIES, INC., a California corporation By: Steve Oedekerk 61147.80004\29325933. 7 7 BEST BEST & KRIEGER LLP By: Jeffrey S. Ballinger JACKSON TIDUS, a law corporation By: Michael L. Tidus