Township of Independence, NJ Chapter 18 Defense and Indemnification

[HISTORY: Adopted by the Township Committee of the Township of Independence 2-9-2016 by Ord. No. 2016-02.[1] Amendments noted where applicable.]

[1] Editor's Note: This ordinance superseded former Ch. 18, Defense and Indemnification, adopted 10-13-1989 by Ord. No. 89-17 (Ch. 38, Art. I of the 1984 Code).

§ 18-1 Statutory authority; purpose; construal of provisions.

A. Pursuant to law, including N.J.S.A. 59:10-1 et seq., indemnification is provided for defense costs and payment of a judgment rendered against a municipal/state employee for actions or failures to act while in the scope of his or her employment. Pursuant to law, including N.J.S.A. 59:10-4, local public entities are empowered to indemnify local public employees and officials consistent with the provisions of the New Jersey Tort Claims Act. The Township of Independence deems it in the best interest of the Township to indemnify its officials, officers and employees consistent with the New Jersey Tort Claims Act.

B. It is the intent and purpose of this chapter to provide for the defense of actions against and the indemnification of public officials, officers and employees for civil actions as permitted by law and as permitted by this chapter. This chapter should be liberally construed to provide the fullest defense and indemnification allowed by law.

§ 18-2 Definitions.

For the purpose of this chapter, unless the context clearly indicates a different meaning, the following words and phrases shall have the meanings set forth:

INSURANCE

Coverage afforded by insurance policies of every kind, whether the premiums are paid by the Township, the municipal official or someone on his or her behalf, including, without limitation, coverage provided by and through any policy of insurance, insurance fund or joint insurance fund and/or any excess liability policies.

MUNICIPAL OFFICIAL, OFFICER OR EMPLOYEE

Any person, presently or in the future, elected or appointed to any public office, board, commission or authority of the Township of Independence, whether full- or part-time, whether or not compensated for the appointed or elected position. It shall not include officials, officers and employees who are appointed, elected or employed by the Great Meadows Regional Board of Education. It shall include all other boards, commissions and authorities, and individual members thereof, which are subdivisions of municipal government. It shall also mean any person employed or retained by the Township for any office, commission, board or authority thereof, whether or not said person serves in a paid or unpaid capacity; provided, however, that these terms do not include independent contractors employed by the Township.

§ 18-3 Indemnification.

Subject to the provisions of this chapter, whenever an official, officer, or employee of the Township is named as a defendant in any civil action or civil legal proceeding arising out of or incidental to the performance of the duties of the position or the office held by such municipal official, the Township shall provide the official, officer, or employee with the necessary and reasonable defense and shall hold each official, officer or employee harmless and indemnify him or her from the payment of any settlement and/or all monetary judgments imposed upon him or her. The Township shall indemnify officials, officers or employees from all civil suits, including defense costs, if, and only if, the person establishes that the act or omission upon which the claim or judgment was based occurred within the scope of his or her employment or appointment as an official, officer or employee of the Township and the person establishes that he or she did not act or fail to act because of actual fraud, actual malice or willful conduct. The Township may indemnify a municipal official for exemplary or punitive damages resulting from the municipal official's civil violation of state or federal law if, in the opinion of the Township Committee, the acts committed by the municipal official upon which the damages are based did not constitute actual fraud, actual malice, willful misconduct or an intentional wrong.

§ 18-4 Exceptions to reimbursement.

The Township shall not be obligated to provide reimbursement in the following instances:

A. Where the legal proceeding is instigated or brought by the municipal official.

B. Where the legal proceeding involves a claim of misfeasance or malfeasance in office or a claim of fraud, theft or misappropriation of public funds and the municipal official is found liable for the charge.

C. Where the legal proceeding is instigated or brought by the municipality itself or any board, commission or authority established as a subdivision of municipal government against said municipal official, officer or employee and the municipality, board, commission or authority is determined to be the prevailing party by a court of competent jurisdiction.

D. Where the legal proceeding involves a question concerning the election laws.

E. Where it is not deemed appropriate by the Township pursuant to law, including N.J.S.A. 59:10-1 et seq.

F. Where the public official, officer or employee has failed to cooperate fully with the defense provided by the municipality.

G. Where the act or failure to act alleged was clearly because of actual fraud, willful misconduct or actual malice.

H. Where there exist polices of insurance, whether obtained by the Township or by any other, by virtue of which the official, officer or employee is entitled to a defense of the action in question from any insurer, including coverage pursuant to that referenced herein, and the insuring entity is actually providing a defense and there exists coverage for damages, awards, judgements or settlements. Notwithstanding anything in this § 18-4H to the contrary, in the event that any defense costs (including attorneys' fees and costs), awards, judgments, settlements or other resolution of the matter exceeds the available coverage, the Township agrees that it shall be responsible for any amounts in that regard.

I. Where the official, officer or employee fails to notify the Township in a prompt manner and as soon as possible as to any action threatened against him or her.

J. Where the lawsuit or claims assert a right for punitive damages.

§ 18-5 Procedure for claims; method of providing defense; failure to cooperate.

A. The Township may provide any defense required of it pursuant to the within chapter through an attorney from its own staff or by employing other counsel selected by the Township. It shall be the Township's sole option to select counsel; and wherever permissible by law and/or canons of professional ethics controlling attorneys' practice of law, the Township may assume exclusive control of the representation of said official, officer or employee.

B. A municipal official, officer or employee shall not be entitled to indemnification or reimbursement pursuant to this chapter unless, within 15 calendar days of the time he or she is personally served with a summons, complaint, process notice, demand or other pleading, he or she delivered the original or a copy thereof to the Township Clerk with a request to defend and indemnify. As determined by the Clerk/Administrator, the foregoing can be overcome upon a showing of exceptional circumstances resulting in the inability of the municipal official, officer or employee to provide said notice to the Township Clerk. The municipal official, officer or employee shall be obligated to cooperate to the fullest extent possible with the Township in the conduct of the defense. Wherever competent and disinterested legal counsel is available to the Township through any insurance coverage, the municipal official, officer or employee shall be obligated to be represented by such counsel. If the Township wishes to use the Township Attorneys or the attorney for any board or committee of the Township to defend the claim, the municipal official, officer or employee shall be obligated to be represented by that attorney unless there is a conflict of interest. The refusal of the municipal official, officer or employee to cooperate with the Township shall terminate the Township's obligation to provide a defense and/or indemnify or to otherwise reimburse any municipal official, officer or employee.

§ 18-6 Approval of settlements.

If the legal proceeding is terminated by an agreement among the parties, then the Township shall not be obligated to reimburse the municipal official, officer or employee unless the Township, by and through the governing body and/or by court order, approves the settlement agreement. Approval of any settlement agreement shall not be unreasonably withheld, conditioned or delayed.

§ 18-7 Counsel fees and costs of litigation.

Counsel fees to be paid to outside counsel, other than the Township Municipal Attorney or the attorney for any board or commission, for services rendered in connection with a claim subject to this chapter shall be reasonable and shall be established by the governing body through resolution prior to the retention of such counsel. For any fees owed which are not covered by the insuring entity, the Township may pay said fees when billed, or reimburse the municipal official, officer or employee for all or any portion of any expense(s) incurred prior to the final decision in the legal proceeding, at the Township's sole discretion. The Township shall be entitled to wait for a final determination before making a determination to reimburse defense costs and/or honor indemnity.

§ 18-8 Costs attributable to counteraction.

If the municipal official files a counteraction in the legal proceedings, the municipality shall not be obligated to reimburse him for any attorneys' fees or court costs attributable to such counteraction.

§ 18-9 Precedence of statute applying to police.

To the extent N.J.S.A. 40A:14-155 provides broader indemnification to members of the Municipal Police Department, that statute shall supersede this chapter.

§ 18-10 When effective; prior actions.

A. This chapter shall take effect upon final passage and publication according to law.

B. Any legal action which may be covered by this chapter which has not been reduced to final judgment as of the date of passage shall be covered by the tenets of the chapter.