Defense and Indemnification of Land Use Board Members

Land Use Training Program for Municipal Planning and Zoning Officials

Defense and Indemnification of Land Use Board Members Monday, October 29, 2018 8:30 - 9:30 p.m. Multipurpose Room, Sandra and David S. Mack Student Center North Campus

presented by

Peter Bee, Esq., Partner, Bee, Ready, Fishbein, Hatter & Donovan, LLP Michael H. Sahn, Esq., Managing Partner, Sahn Ward Coschignano, PLLC

Defense and Indemnification of Land Use Board Members I.

Introduction 1. Your position as a planning board or zoning board member, opens you up to potential liability and legal action resulting from decisions made in your official capacity. But what are your legal rights? Can you be sued? Are you protected by the municipality you serve? What if a legal judgment is entered against you? Will you be personally responsible for the payment of that monetary award? These are crucial questions that require analysis. And, unfortunately, and as is often typical, the answer is it depends! It depends on a multitude of factors including-but certainly not limited to-your title, the capacity you were acting under, your municipality's local laws, and the nature of the complaint filed against you. Some officials may be entitled to "indemnity" from their municipality while others, by virtue of their position, may be given "immunity". By their very definitions, these terms entitle the possessor to very different protections. In fact, in certain situations there may be no legal assistance forthcoming from the municipality. In understanding your own position as a zoning or planning official, it is imperative that you understand what rights and privileges you are entitled to. Tonight, we'll walk you through the very basics.

II.

What is Indemnification? 1. Indemnification - The act of compensating for loss or damage sustained. 2. New York State Public Officers Law §18 provides for a scheme of defense and indemnification for public officials for local municipalities. For this scheme to take effect in any municipality, it must be enacted by local law. 3. Municipalities have either: (1) enacted Public Officers Law §18 verbatim; or (2) supplemented Public Officers Law §18; or (3) adopted their own policy. i.

Example: Enacting §18 Village of Northport §24-1: “The purpose of this chapter is to provide for the defense and indemnification of village employees pursuant to §18 of the Public Officers Law.”

ii.

Example: Supplementing §18 Village of Garden City §9-6: “In the event that the act or omission upon which the court action or proceeding against the employee is based was or is also the basis of a disciplinary proceeding by the Village against the employee, representation by the Village and indemnification by the Village may be withheld: A. Until such disciplinary proceeding has been resolved; and B. Unless the resolution of the disciplinary proceeding completely exonerated the employee as to such act or omission.”

III.

iii.

Example: Supplementing §18 Village of Rockville Centre §16-1: “The purpose of this chapter is to confer the benefits of §18 of Article 2 of the Public Officers Law of New York State upon covered persons, as defined in §16-2 of Chapter 16 of the Code of the Village of Rockville Centre. The intent of this legislation is to defend and indemnify covered persons, who have been named in administrative or judicial proceedings. The further intent is to provide supplemental defense and indemnification for punitive and exemplary damages, as well as compensatory damages. The duty shall not arise where the injury or damage resulted from the intentional wrongdoing or maliciousness on the part of a covered person.”

iv.

Example: Adopting own policy Village of Hewlett Harbor §85-1: “The Village of Hewlett Harbor indemnifies and holds harmless each and every elected and appointed official, officer and employee of the Village and shall pay or cause to be paid all reasonable and necessary expenses, including attorney's fees, to defend any such person in any action or proceeding arising out of any act or omission to act in behalf of the Village; provided, however, that this chapter shall not apply with respect to any claim for malpractice and further that the Village shall have no obligation to pay for the defense of any such person charged with a crime or offense or to pay any penalty or fine in connection therewith.”

HIGHLIGHTS OF THE STATUTE (HOW IT WORKS) 1.

The duty to defend or indemnify and save harmless local officials is conditioned upon several pre-requisite factors. These are:

i.

delivery by the employee to the chief legal officer of the municipality or to its chief administrative officer of a written request to provide for defense together with the original or a copy of any summons, complaint, process, notice, demand or pleading within ten days after he is served with such document, and

ii.

the full cooperation of the employee in the defense of such action or proceeding and in defense of any action or proceeding against the municipality based upon the same act or omission, and in the prosecution of any appeal. A. “[A] municipality, consistent with its obligations under Public Officers Law § 18, may withdraw its defense and indemnification of current and former municipal officials and officers in a civil action for their failure to accept a reasonable settlement offer.” Matter of Lancaster v. Inc. Vil. of Freeport, 22 N.Y.3d 30 (2013).

2.

Upon compliance, the municipality shall provide for the defense of the employee in any civil action or proceeding, state or federal, arising out of any alleged act or omission which occurred or allegedly occurred while the employee was acting within the scope of his public employment or duties. This duty to provide for a defense shall not arise where such civil action or proceeding is brought by or at the behest of the municipality employing such employee.

3.

The employee shall be entitled to be represented by private counsel of his choice in any civil action or proceeding whenever the chief legal officer of the municipality or other counsel designated by the municipality determines that a conflict of interest exists, or whenever a court, upon appropriate motion or otherwise by a special proceeding, determines that a conflict of interest exists and that the employee is entitled to be represented by counsel of his choice, provided, however, that the chief legal officer or other counsel designated by the municipality may require, as a condition to payment of the fees and expenses of such representation, that appropriate groups of such employees be represented by the same counsel. Reasonable attorneys' fees and litigation expenses shall be paid by the municipality to such private counsel from time to time during the pendency of the civil action or proceeding with the approval of the governing body of the municipality.

4.

Any dispute with respect to representation of multiple employees by a single counsel or the amount of litigation expenses or the reasonableness of attorneys' fees shall be resolved by the court upon motion or by way of a special proceeding.

5.

Where the employee delivers process and a written request for a defense to the municipality under subdivision five of this action, the municipality shall take the necessary steps on behalf of the employee to avoid entry of a default judgment pending resolution of any question pertaining to the obligation to provide for a defense.

6.

The municipality shall indemnify and save harmless its employees in the amount of any judgment obtained against such employees in a state or federal court, or in the amount of any settlement of a claim, provided that the act or omission from which such judgment or claim arose occurred while the employee was acting within the scope of his public employment or duties; provided further that in the case of a settlement the duty to indemnify and save harmless shall be conditioned upon the approval of the amount of settlement by the governing body of the municipality.

7.

Except as otherwise provided by law, the duty to indemnify and save harmless prescribed by this subdivision shall not arise where the injury or damage resulted from intentional wrongdoing or recklessness on the part of the employee.

8.

Nothing in this subdivision shall authorize a municipality to indemnify or save

harmless an employee with respect to punitive or exemplary damages, fines or penalties, or money recovered from an employee; provided, however, that the municipality shall indemnify and save harmless its employees in the amount of any costs, attorneys' fees, damages, fines or penalties which may be imposed by reason of an adjudication that an employee, acting within the scope of his public employment or duties, has, without willfulness or intent on his part, violated a prior order, judgment, consent decree or stipulation of settlement entered in any court of this state or of the United States. 9.

IV.

Upon entry of a final judgment against the employee, or upon the settlement of the claim, the employee shall serve a copy of such judgment or settlement, personally or by certified or registered mail within thirty days of the date of entry or settlement, upon the chief administrative officer of the municipality; and if not inconsistent with the provisions of this section, the amount of such judgment or settlement shall be paid by the Municipality.

Exemption For Criminal Proceedings i.

It is of note that the NYS scheme enacted in most municipalities DOES NOT provide indemnity for any alleged criminal actions.

ii.

Zimmer v. Town of Brookhaven (247 A.D.2d 109 (2nd Dep’t, 1998)) found that plaintiff was "not entitled to reimbursement from defendant Town for legal expenses he incurred in successfully defending a Federal criminal prosecution in connection with his duties as a Town Councilman, since in the absence of any statute authorizing it, there is no obligation on the part of a public employer to reimburse an employee for expenses incurred in a criminal case.

iii.

While NYS Public Officers Law §19(2)(a) provides for certain criminal indemnity for State officials, it is not applicable to a local municipality unless specifically adopted.

THEREFORE, you can logically conclude that without a specific legislative provision granting such criminal indemnity--you have none (for these types of legal matters). V.

Public Officers Law §18 1. Permits Towns and Villages to indemnify municipal employees. Zimmer v. Town of Brookhaven 247 A.D.2d 109, 113 (2d Dep’t 1998). However, indemnification and defense is limited to civil cases and actions taken within the employee’s scope of employment or duties. Public Officers Law §18(3)(a). It does not cover criminal proceedings. Zimmer 247 A.D.2d 109, 113, see fact pattern on last page, problem 1; Attorney General Opinion 2003-16. i.

Payment of legal fees when an employee is found guilty of criminal charges would constitute an unconstitutional gift of public funds because an employee

acting criminally is not acting within the scope of his public employment. See N.Y. Const., art. VIII, § 1. ii.

NOTE: Public Officers Law §19.2(a) does allow municipality to indemnify when the criminal acts were done while employee was acting within the scope of employment and employee was either acquitted or the charges were dismissed. This is in line with Zimmer, because the court made clear “in the absence of any statute authorizing it, there is no obligation on the part of a public employer to reimburse an employee for expenses incurred in a criminal case.” §19.2(a), however, must be specifically adopted by the municipality.

iii.

There is no duty to indemnify where the injury or damage resulted from “intentional wrongdoing or recklessness on the part of the employee in excess of the scope of his official duties.” Rosen & Bardunias v. County of Westchester, 158 A.D.2d 679, 680 (2d Dep’t 1990); Public Officers Law §18(4)(c).

iv.

Punitive damages are not recoverable if municipality just adopted §18 without supplementing its language. a. Legislative intent: “Punitive damages, fines and like assessments levied by the courts against defendants are intended to penalize defendants for aggravating behavior evidencing a high degree of misconduct causing damage to others, and to deter future misconduct. If these amounts are indemnified by public employers from public funds, the entire purpose of their imposition would be thwarted.” 1981 Recommendations of the Law Revision Commission. b. Rosen & Bardunias v. County of Westchester, 158 A.D.2d 679, 681 (2d Dep’t 1990)  “Although punitive damages are not available against a municipal corporation because the imposition of such damages would punish the taxpayer rather than the wrongdoer, punitive damages may be assessed against a municipal employee who engages in intentional wrongdoing in excess of the scope of his official duties. Under such circumstances, the employee will not be entitled to indemnification but, rather, will be personally liable for any punitive damages assessed against him.” c. NOTE: A village can indemnify an employee for punitive damages so long as the employee acts within the scope of his employment and is performing a duty which is otherwise legal. It is irrelevant if the employee’s motives are malicious. Miller v. Rensselaer, 94 A.D.2d 862, 863 (3d Dep’t 1983).

v.

While each municipality can differ as to what requirements the employee must meet in order to get indemnified, most municipalities require:

a. Delivery by the employee to the chief legal officer of the municipality or to its chief administrative officer of a written request to provide for defense together with the original or a copy of any summons, complaint, process, notice, demand or pleading within ten days after he is served with such document, and b. The full cooperation of the employee in the defense of such action or proceeding and in defense of any action or proceeding against the municipality based upon the same act or omission, and in the prosecution of any appeal.

VI.

vi.

An employee is entitled to be represented by private counsel of his choosing whenever the chief legal officer of the municipality or other counsel designated by the municipality determines that a conflict of interest exists.

vii.

It is also of note that per the NYS Office of the Comptroller, should a municipality desire to provide criminal indemnity for its officials, it would have to do so prospectively only. (Opinion 2000-1).

viii.

Villages are not required to indemnify an employee when it is the village that brings the action against the employee.

What is Immunity? 1. Immunity defined: Any exemption from a duty, liability, or service of process. "An immunity is a defense to tort liability which is conferred upon an entire group or class of persons or entities under circumstances where considerations of public policy are thought to require special protection for the person, activity or entity in question at the expense of those injured by its tortious act. Historically, tort litigation against units of government, public officers, and charities, and between spouses, parents and children, has been limited or prohibited on this basis." Edward J. Kionka, Torts in a Nutshell 341 (2d ed. 1992). 2. Public officials can qualify for one of two possible immunities: absolute and qualified. i.

Absolute immunity a. Is the right to be free not only from the consequences of the litigation's results but also from the burden of defending oneself altogether. b. It is granted to quasi-judicial agency officials whose duties are comparable to those of judges or prosecutors when adequate procedural safeguards exist. Butz v. Economou, 438 U.S. 478, 511-17 (1978); Ostrzenski v. Seigel, 177 F.3d 245, 249 (4th Cir. 1999).

c. Quasi-judicial – proceedings of administrative agencies where such proceedings are adversarial, result in a determination based upon the application of appropriate provisions in the law to the facts and which are susceptible to judicial review.” Allan and Allan Arts Ltd. V. Rosenblum, 201 A.D.2d 136, 141 (2d Dep’t 1994). See fact pattern on last page, problem 4. d. Zoning Boards are regarded as quasi-judicial bodies and thus the members are entitled to judicial-type immunity from suit in their official capacity. Matter of Knight v. Amelkin, 68 N.Y.2d 975, 977 (1986); Hi Pickets, Inc. v. Music Conservatory of Westchester, Inc. 192 F.Supp.2d 143, 157 (S.D.N.Y. 2002); Allan and Allan Arts Ltd. V. Rosenblum, 201 A.D.2d 136, 141 (2d Dep’t 1994). e. Granted to Town Board members whose duties are within the “sphere of legitimate legislative activities.” 24 Franklin Ave. R.E. Corp. v. Cannella, 139 A.D.3d 717, 717 (2d Dep’t 2016). This includes adoption of zoning ordinances. Matter of Nocro, Ltd. V. Russell, 94 A.D.3d 894, 895 (2d Dep’t 2012). f. NOTE: Attorneys serving at the pleasure of the zoning board also have immunity-- Alfano v. Village of Farmingdale 693 F. Supp.2d 231, 233 (E.D.N.Y. 2010) (finding that attorneys to zoning boards are akin to a Judge's Law Secretary and thus also immune from suit). ii.

Qualified Immunity a. Qualified immunity permits government officials to avoid the expense and disruption of going to trial. This immunity applies so long as the official’s “conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Messerschmidt v. Millender, 132 S.Ct. 1235, 1244 (2012); see also, Natale v. Town of Ridgefield, 927 F.2d 101, 104-05 (2d Cir. 1991). b. A knowing violation of law or actions done maliciously, in bad faith, or for an improper purpose eliminates the immunity. See Sonne v. Board of Trustees of Village of Suffern, 67 A.D.3d 192, 206 (2d Dep’t 2009) (finding that a town employee was entitled to qualified immunity even though the employee did violate established statutory or constitutional rights. The court noted that the employee acted in good faith when he attempted to apply the code and that a reasonable person would not have known it in violation). c. The initial inquiry as to whether qualified immunity applies is to determine if a plaintiff can show the accused official violated a statutory or constitutional right. Davila v. City of New York, 139 A.D.3d 890, 893 (2d Dep’t. 2016); see also Demorat v. Zegarelli, 451 F.3d 140, 148 (2d Cir. 2006). If there was no violation,

then the inquiry ends. Demorat, 451 F.3d at 148. On the other hand, if a violation can be made out, the next step is to determine if the right was clearly established. Id. d. An official is entitled to qualified immunity so long as no reasonable jury could conclude that the official acted unreasonably in light of established law. Id. “In other words, government officials will be immune from liability if they can establish that is was objectively reasonable for them to believe their actions were lawful at the time.” Id. Similarly, an official sued in his individual capacity is entitled to qualified immunity for damages if the conduct attributed to him was not prohibited by federal law or, if the action was prohibited, the plaintiff’s right to not be subjected to such action was not clearly established at the time it was taken. Vincent v. Yelich, 718 F.3d 157, 166 (2d Cir. 2013). VII. i.

VIII.

INSURANCE General Municipal Law § 52: Each municipality is authorized to purchase liability insurance with reasonable limits to protect its officers and employees against liability arising from their acts while exercising or performing or in good faith purporting to exercise or perform their powers or duties within scope of their employment. Public Official Immunity From Suit Under 42 USCA 1983

i.

The doctrine of qualified immunity extends to federal litigation as well. This is particularly true in cases of §1983 Civil Rights actions against government officials. “The doctrine of official immunity against personal liability in suits brought by public employees against public officials pursuant to 42 USCA §1983 is a defense based upon the longstanding notions of public policy established by the courts to protect public officials in the proper exercise of their duties."

ii.

To qualify you must be acting in good faith. This is an objective standard that measures reasonableness without regard to the official's subjective state of mind.

iii.

It is noteworthy that in §1983 claims, the immunity may have an effect upon an officials personal liability for money damages. HOWEVER, the scope of the immunity may be limited with regard to any equitable relief sought. a. Apparent theory is that officials, while immune from the money damages, must nevertheless conform their conduct under the Constitution.

IX. i.

RLUIPA In a claim involving RLUIPA and a plaintiff’s attempt to bring an action against trustees in

their individual capacity, the Second Circuit in Washington noted, “[w]hile Sossamon did not decide whether RLUIPA allows individual-capacity suits against state officials, every circuit to have addressed the issue has held that it does not [citation omitted] . . . [W]e adopt the reasoning of our sister circuits in concluding that RLUIPA does not provide a cause of action against state officials in their individual capacity . . . .” Washington v. Gonyea, 731 F.3d 143, 145 (2d Cir 2013) (affirming district court’s dismissal of plaintiff’s RLUIPA money damages claim against individual defendants). ii.

“In other words, government officials will be immune from liability if they can establish that it was objectively reasonable for them to believe their actions were lawful at the time.” Demorat v. Zegarelli, 451 F.3d 140, 148 (2d Cir. 2006).

iii.

Similarly, a public official, sued in their individual capacity, is also immune from liability if the action was not prohibited from federal law or, if the action was prohibited, the plaintiff’s right was not clearly established at the time the action occurred. Vincent v. Yelich, 718 F.3d 157, 166 (2d Cir. 2013).

X.

CONCLUSION 1. The liability of public officials, whether it be zoning board or planning board or otherwise, for acts committed (or omitted) in the course of their public service are afforded various legal protections. 2. These range from indemnity to qualified immunity to absolute immunity. As we saw here tonight, the implementation of these protections is largely fact specific. 3. I hope that with the basic understanding we discussed tonight, you will each go back to your Municipality and review its local laws-so that in the event legal action is taken against you in your official capacity you can take advantage of the full protections afforded to you by the laws of your Municipality.

QUESTIONS