Chapter 2.80
INDEMNIFICATION OF OFFICIALS AND EMPLOYEES
Sections:
2.80.010 Procedure for indemnification of officials and employees created.
2.80.030 Legal representation.
2.80.050 Determination of exclusion.
2.80.060 Representation and payment of claims – Conditions.
2.80.070 Effect of compliance with conditions.
2.80.080 Failure to comply with conditions.
2.80.090 Reimbursement of incurred expenses.
2.80.100 Conflict with provisions of insurance policies.
2.80.120 Modification of chapter.
2.80.130 Bargaining unit contracts.
2.80.010 Procedure for indemnification of officials and employees created.
There is hereby created a procedure to provide for indemnification and defense of claims of liability arising from acts or omissions of officials and employees of the City, including volunteers, while performed or in good faith purported to have been performed in the scope of their official duties. (Ord. O-10-410 § 1).
2.80.020 Definitions.
Unless the context indicates otherwise, the words and phrases used in this chapter shall have the following meaning:
A. “Employee” means any person who is or has been employed by the City, including volunteers and appointed members of advisory boards and commissions.
B. “Official” means any person who is serving or has served as an elected City official, and any person who is serving or who has served as an appointed officer of the City as defined by RCW 42.23.020(2), as written or hereafter amended. (Ord. O-10-410 § 1).
2.80.030 Legal representation.
A. The City shall provide to an official or employee, subject to the conditions and requirements of this chapter, and notwithstanding the fact that such official or employee may have concluded service or employment with the City, such legal representation as may be reasonably necessary to defend a claim or lawsuit filed against such official or employee resulting from any conduct, act or omission of such official or employee performed or omitted on behalf of the City in his/her capacity as a City official or employee, which act or omission is within the scope of his/her service or employment with the City. The provisions of this Chapter shall not operate to the benefit of an employee terminated for cause.
B. The legal representation shall be provided by the office of the City Attorney, and may include the City Attorney engaging the services of outside legal counsel. If any provision of an applicable policy of insurance provides legal counsel for the employee or official, the City Attorney will work with the policy holder for purposes of obtaining legal representation under the existing insurance policy. If a conflict of interest or ethical bar exists with respect to said representation by the City Attorney, then the services of outside legal counsel will be engaged for the benefit of the employee or official.
C. In the event that outside counsel is retained under subsection (B) of this section, the City shall indemnify the employee from the reasonable costs of defense; provided, that in no event shall the official or employee be indemnified for attorney’s fees in excess of the hourly rates established by the City’s contract with an attorney selected by the City. The official or employee shall be liable for all hourly rates charged in excess of said rate.
D. The determination whether an official or employee was acting within the scope of his or her duties shall be based on an investigation of the acts and circumstances surrounding the incident and shall be made as early in the proceedings as is reasonably possible. The determination of whether an employee was acting within the scope and course of his or her employment shall be made by the employee’s department head, following an investigation by the City Attorney and/or outside counsel. The determination of whether a department head was acting within the scope of his or her duties shall be made by the City Manager, following an investigation by the City Attorney and/or outside counsel. The determination whether the City Manager or an elected official was acting within the scope of his or her duties shall be made by the City Council, following an investigation by the City Attorney and/or outside counsel. In the event the determination cannot be made with reasonable certainty, the employee or official shall have the option to refer the matter to Superior Court for determination.
If the investigation reveals that the claim or action arose from any dishonest, fraudulent, intentional, criminal or malicious acts or omissions of the employee or official, such acts or omissions shall in no event be deemed within the scope of his or her official duties for purposes of this chapter. If the investigation is inconclusive as to whether the employee or official acted within the scope of his/her service or duties; or is inconclusive as to whether the claim or action arose from any dishonest, fraudulent, criminal, or malicious acts or omissions of the employee or official, the City Council may delay a determination as to indemnification and defense until after a judicial determination has been rendered. If a judicial determination of fault or guilt is appealed, the City may further delay its determination until the appeal and any remands therefrom are exhausted. In any claim involving an allegation of criminal conduct, no investigation by the City will occur prior to a determination of guilt, or prior to a dismissal of the criminal charge with prejudice, so as not to compromise the official’s or employee’s Fifth Amendment right against self-incrimination. (Ord. O-10-410 § 1).
2.80.040 Exclusions.
A. Except as otherwise determined pursuant to MVMC 2.06.050, in no event shall protection be offered under this chapter by the City to:
1. Any dishonest, fraudulent, criminal, willful, intentional or malicious act or course of conduct of an official or an employee;
2. Any act or course of conduct of an official or employee which is not performed on behalf of the City;
3. Any act or course of conduct which is outside the scope of an official’s or employee’s service or employment with the City;
4. Any lawsuit brought against an official or employee by or on behalf of the City; and/or
5. Any action or omission contrary to or not in furtherance of any adopted City policy.
B. Nothing herein shall be construed to waive or impair the right of the City to institute suit or counterclaim against any official or employee nor to limit its ability to discipline or terminate an employee.
C. The provisions of this chapter shall have no force or effect with respect to any accident, occurrence or circumstance for which the City or the official or employee is insured from whatever source against loss or damage; provided, that the provisions of this chapter shall apply in the event the loss or damages fall within the deductible or exclusion(s) of the City’s applicable insurance policy. The provisions of this chapter are intended to be secondary to any contract or policy of insurance whether owned by or otherwise applicable to any official or employee. The City shall have the right to require an employee to fully utilize any such policy protection prior to requesting the protection afforded by this chapter. (Ord. O-10-410 § 1).
2.80.050 Determination of exclusion.
The determination of whether an employee shall be afforded a defense by the City under the terms of this chapter shall be made by the City Manager. The determination of whether the City Manager shall be afforded a defense by the City shall be made by the City Council following a recommendation by the City Attorney and/or outside counsel. The determination as to whether to furnish a defense as provided under this chapter to a member or members of the City Council shall be made by the City Council without the vote of such member or members of the City Council unless the inclusion of such member or members is required for a quorum; provided, that if a claim or lawsuit affects a quorum or greater number of the members of the City Council, all such affected members shall retain their voting privileges under this section. The official or employee requesting defense and indemnification shall be informed in writing whether the request is granted or denied. The notice shall be sent to the official’s or employee’s last known residential address by certified mail, return receipt requested. There shall be no appeal from the decision made under this section, except for an action in the King County Superior Court filed within 30 days of the mailing of a notice of denial. Nothing herein shall preclude the City from undertaking an official’s or employee’s defense under a reservation of rights. (Ord. O-10-410 § 1).
2.80.060 Representation and payment of claims – Conditions.
The provisions of this chapter shall apply only when all the following conditions are met:
A. In the event of any incident or course of conduct potentially giving rise to a claim for damages, or for the commencement of a lawsuit, the official or employee involved shall, as soon as practicable, give the employee’s department head, if applicable, the City Attorney and the City Manager written notice thereof; identifying the official or employee involved, all information known to the official or employee involved with respect to the date, time, place and circumstances surrounding the incident or conduct giving rise to the potential claim or lawsuit, as well as the names and addresses of all persons allegedly injured or otherwise damaged thereby, and the names and addresses of all witnesses.
B. Upon receipt thereof, the official or employee shall, as soon as possible, deliver any claim, demand, notice or summons or other process relating to any such incident or conduct to the City Attorney, and shall cooperate with the City Attorney, or, if the City Attorney authorizes or designates another attorney to handle the matter, shall cooperate with that attorney, and, upon request, shall assist in making settlement of any suit and enforcing any claim for any right of subrogation against any persons or organizations that may be liable to the City because of any damage or claim of loss arising from said incident or course of conduct, including, but not limited to, rights of recovery for costs and attorney’s fees arising out of State or Federal statute upon a determination that the lawsuit brought was frivolous in nature. The failure of an official or employee to timely deliver any claim, demand, notice or summons to the City Attorney may result in adverse consequences to the City. In the event that an official or employee fails to timely deliver any claim, demand, notice or summons to the City Attorney, and such failure has resulted in adverse consequences to the City, the City shall have no obligation to offer indemnification and defense to the named official or employee, and such indemnification and defense shall be solely at the option of the City Council.
C. Such official or employee shall attend interviews, depositions, hearings and trials and shall assist in securing and giving evidence and obtaining assistance of witnesses all without any additional compensation to the official or employee, and, in the event that an employee has left the employ of the City, no fee or compensation shall be provided.
D. Such official or employee shall not accept nor voluntarily make any payment, assume any obligation, or incur any expense related to said claim or lawsuit, other than for first aid to others at the time of any incident or course of conduct giving rise to any such claim, loss or damage. Nothing herein shall be deemed to preclude any official or employee from retaining an attorney to represent his/her interests relating to such claim or lawsuit; however, all costs and expenses incurred thereby shall be paid by the official or the employee.
E. Nothing herein shall modify existing procedures or requirements of law for processing and payment of claims against the City. (Ord. O-10-410 § 1).
2.80.070 Effect of compliance with conditions.
If legal representation of an official or employee is undertaken by the City, whether by the City Attorney or by an attorney obtained by the City, and all of the conditions of representation are met, and a judgment is entered against the official or employee or a settlement is made, the City shall pay such judgment or settlement according to the provisions herein; provided, that the City may at its discretion appeal as necessary any such judgment. In no event shall this section be interpreted to provide for payment of an award of punitive damages. The process for payment of punitive damages is discretionary under this chapter, and is set forth in MVMC 2.80.140. The decision to appeal an award of damages will be made by the City Council upon the recommendation of the City Manager and the City Attorney and/or outside legal counsel. (Ord. O-10-410 § 1).
2.80.080 Failure to comply with conditions.
In the event that any official or employee fails or refuses to comply with any of the conditions set forth in MVMC 2.80.060, or elects to provide his/her own representation with respect to any such claim or litigation, then all of the provisions of this chapter shall be inapplicable, and shall have no force or effect with respect to any claim or litigation. (Ord. O-10-410 § 1).
2.80.090 Reimbursement of incurred expenses.
A. If the City’s investigation under MVMC 2.80.030 determines that an official or employee does not come within the provisions of this chapter, and a court of competent jurisdiction later determines that such claim does come within the provisions of this chapter, then the City shall pay any judgment, excepting punitive damages, rendered against the official or employee and reasonable attorney’s fees incurred in defending against the claim if said judgment is not covered by the City’s insurance provisions or by the official’s or employee’s insurance. The City shall pay any costs and reasonable attorney’s fees incurred by the employee or official in obtaining the determination that such claim is covered by the provisions of this chapter; provided, that if a court of competent jurisdiction determines that such claim does not come within the provisions of this chapter, then the official or employee shall pay the City’s costs and reasonable attorney’s fees incurred in obtaining the determination that such claim is not covered under the provisions of this chapter.
B. If the City determines that a claim against a City official or employee does come within the provisions of this chapter, and a court of competent jurisdiction later finds that such claim does not come within the provisions of this chapter, then the City Council shall have the option of requiring reimbursement by the official or employee for costs or expenses incurred in obtaining the determination that such claim is not covered by the provisions of this chapter. (Ord. O-10-410 § 1).
2.80.100 Conflict with provisions of insurance policies.
The indemnification provisions of this chapter do not constitute a policy of insurance, and nothing contained in this chapter shall be construed to modify or amend any provisions of any policy of insurance where the City or any of its current or former officials or employees thereof is the named insured. In the event of any conflict between this chapter and the provisions of any such policy of insurance, the policy provisions shall be controlling; provided, however, that nothing contained in this chapter shall be deemed to limit or restrict any employee’s or official’s right to full coverage pursuant to this chapter, it being the intent of this chapter to provide the coverage detailed in this chapter only above and beyond insurance policies which may be in effect while not compromising the terms and conditions of such policies by any conflicting provisions contained in this chapter. (Ord. O-10-410 § 1).
2.80.110 Pending claims.
The provisions of this chapter shall apply retroactively to any pending claims or lawsuits against any official or employee at the time of adoption of the ordinance codified in this chapter, and to any such claims or lawsuits hereinafter filed within an applicable statute of limitations, irrespective of the date of the events or circumstances which are the basis of such claim or lawsuit. (Ord. O-10-410 § 1).
2.80.120 Modification of chapter.
The provisions of this chapter shall be subject to amendment, modification and repeal, at the sole discretion of the City Council; provided, that unless explicitly set forth, any such amendment, modification or repeal shall apply prospectively only, and shall have no effect on the obligation of the City to indemnify and/or defend against any claim which is based, in whole or in part, upon any action or omission of an employee or official occurring prior to the effective date of the amendment, modification or repeal. (Ord. O-10-410 § 1).
2.80.130 Bargaining unit contracts.
If a bargaining unit contract covers any of the provisions of this chapter, all employees under such contract shall be governed by the provisions thereof, rather than by the provisions of this chapter, and where any conflict exists between the provisions of any such contract and this chapter, such contract shall control. (Ord. O-10-410 § 1).
2.80.140 Punitive damages.
When an employee or official of the City has been represented in a claim and/or litigation by the City pursuant to this chapter and any judgment is rendered against such employee or official for punitive damages, the employee or official may make a request to the City Council that the City pay the award of punitive damages on behalf of the official or employee. Upon receiving a request made by or on behalf of a City employee or official to pay punitive damages, the City Council shall receive a report and recommendation from the City Manager and the City Attorney. If the official or employee is the City Manager or a City Councilmember, the City Council may request a report and recommendation from the City Attorney or may retain the services of another person or agency to provide a recommendation. Following receipt of the report and any recommendation, the City Council shall determine whether the best interests of the City and justice will be served by payment by the City of the award for punitive damages. There shall be no appeal from such determination. The City Manager shall communicate the Council’s determination with respect to the employee’s or official’s request for payment of punitive damages to said employee or official. Thereafter, the Finance Director shall prepare the payment of punitive damages if the Council authorized such payment. (Ord. O-10-410 § 1).