Legal Review Committee Agenda and Packet 2014 08 20

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City of Louisville City Council Legal Review Committee August 15, 2014 Page 3 of 4 exclusion will not apply and the insurer will have the duty to indemnify. The insurer will have presumably carried out much of its duty to defend getting to that point. 4. City Determinations Independent of Insurance and Uncovered Claims: At least two related issues for the City follow from this, independent of insurance. First, there is the question of how and when the City makes its determinations of whether conduct is "within the course and scope" or "willful and wanton." Second, there is the question of the City providing defense or indemnity for uncovered claims. On the first point, the Act does not prohibit a public entity from conclusively determining its defense and indemnity obligations at an earlier point in the handling of a claim. This can be done in individual circumstances and before legal proceeding determinations by governing body adoption of a resolution. See, ems., Attachment 2, Sample Resolution 2006 -36. Alternatively, this happens at some later point in the handling of the claim —for example, after some claims investigation, discovery, defense counsel review, or other assessment. Yet another approach is that the public entity makes its determinations concurrent with those made though the legal proceeding and/or by the insurer in event of a covered claim. Whatever timing is used, it should be noted that (1) the public entity cannot be liable directly or by indemnity for punitive damages unless it agrees to pay the same by adoption by City Council of a resolution (C.R.S. 24-10 - 114(4)(a) & - 118(5); and (2) the public entity has the right to request reimbursement of defense costs where a court finds the conduct is willful and wanton (C.R.S. 24- 10- 110(1.5)(a)). Public entity insurance policies contain similar provisions. Regarding the second point, proceedings under the City's Code of Ethics are an example of a typically uncovered claim that raises potential defense and, to a lesser extent, indemnity issues. Since complaints under the Code are essentially criminal complaints, insurers typically will deny coverage. However, because of the breadth and complexity of the Code and the nature of the complaint process, officials and employees can be exposed to allegations of violations where the alleged misconduct may in fact be within the course and scope. In these types of situations, it is possible for the City Attorney's office to assist with defense, but only with respect to the person's official capacity and only consistent with the City's interests. Further, depending on the circumstances, this can raise its own issues of apparent or perceived conflicts which should be avoided. Therefore, in such cases, the City could discharge any defense obligations by providing or paying for separate legal counsel for defense, which it could agree to do on a case -by -case basis. Alternatively, the City could adopt a policy or provision for reimbursement of defense costs included under specified circumstances. As an example, the Town of Erie's Code of Ethics includes a limited provision of reimbursement of defense costs, which reads as follows: Reimbursement Of Attorney Fees: If the final outcome of any written complaint filed pursuant to this section is dismissal without prosecution by the town prosecutor or dismissal by the court, or in the event the officer, commission member or employee is found by the court not to be in violation of the provisions of this chapter, then, in that event, the officer, commission member or employee Light 1 Kelly, P.C. 101 University Boulevard, Suite 210, Denver, CO 80206