Judge reverses tentative ruling and says resident who sued 2 Newport council members doesn’t have to pay their attorney fees

An Orange County Superior Court judge did an about-face Thursday and reversed a tentative decision from the day before, this time saying a Newport Beach resident who sued the city and Councilman Scott Peotter and Mayor Marshall “Duffy” Duffield over allegations of campaign finance violations would not have to pay their attorney fees.

Judge James Crandall had tentatively ruled Wednesday that plaintiff Martha Peyton would be on the hook for $15,725 to cover the council members’ attorney fees, plus about $1,000 in court costs.

In the tentative ruling, Crandall also said Peotter and Duffield would have prevailed in the lawsuit, even had Peyton not dropped her case in July, a few days after Crandall ruled separately that the city was not shirking any duty to investigate the allegations.

Peotter and Duffield filed a motion against Peyton characterizing her suit as a strategic lawsuit against public participation, or SLAPP, which is defined as one intended to censor, intimidate and silence critics by burdening them with legal costs until they abandon their opposition. California has a law against such suits on the grounds that they may impede freedom of speech.

“The court looked at filings, case law we cited, listened intently to arguments and concluded the action that was filed wasn’t filed to bridge or deny anyone First Amendment rights but were to further an investigation to improve campaign finance filings,” Phil Greer, the attorney representing Peyton, said Thursday. He added that he was pleased with the judge’s final decision.

A copy of the final ruling was not available Thursday.

Chad Morgan, an attorney representing Peotter and Duffield, said he was “disappointed in the outcome and the judge’s change of opinion.”

Morgan said they are evaluating their options and considering appealing the ruling.

Peyton’s complaint claimed Peotter broke several state and local campaign finance rules by accepting non-cash donations from Duffield and others that either pushed the donors over the contribution limit or were misreported — if they were reported at all. She asked that the court appoint a special prosecutor to investigate the claims because, she alleged, City Attorney Aaron Harp did not act because he was beholden to the City Council majority that ensures his continued employment. Peotter and Duffield are considered part of that majority.

Harp referred questions about the case to Morgan on Thursday.

Peyton filed a similar campaign finance complaint with the California Fair Political Practices Commission. That case remains an open investigation.

Priscella.Vega@latimes.com

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UPDATES:

5:30 p.m.: This article was updated with the judge’s final ruling and the attorneys’ comments.

This article was originally published at 11:45 a.m.