The insolvent city of San Bernardino warned of dire consequences if it's forced to pay the millions it owes CalPERS.
In a filing late Monday in U.S. Bankruptcy Court in Riverside, the city said CalPERS shouldn't be allowed to carry out its threat to sue San Bernardino for the payments.
"Simply put, if the city is forced to pay CalPERS, the city's ability to continue to function would be seriously threatened," San Bernardino lawyers wrote in their filing.
The two bankruptcy cases in San Bernardino and Stockton loom as important tests of CalPERS' power as the pension fund competes with other creditors for the cities' meager cash supplies.
San Bernardino halted payments to CalPERS since filing for bankruptcy protection in August; it's now $6.9 million in arrears. The city has said it doesn't plan to resume paying CalPERS until the new fiscal year begins next July.
The bankruptcy law generally shields the debtor from being sued, but CalPERS has filed legal papers demanding the right to pursue a lawsuit against the city.
Earlier Monday, the city's bondholders filed their own protest against CalPERS, saying the pension fund is trying to get preferential treatment.