[HISTORY: Adopted by the Mayor and Council of the Borough of Closter
12-11-2002 by Ord. No. 2002:885. Amendments noted where applicable.]
This chapter shall hereafter be known and cited as "Defense and Indemnification
of Municipal Officials."
It is the intent and purpose of this chapter to provide for the defense
of civil actions against and the indemnification of the Borough's municipal
officials, as permitted by this chapter and N.J.S.A. 59:10-1 et seq.
For the purpose of this chapter, the following words and phrases shall
have the meaning set forth:
Any report, formal or informal, of a demand for compensation for
damages for injuries allegedly caused by the civil wrong(s) of a municipal
official of the Borough of Closter as defined herein. The term shall include,
but shall not be limited to, all demands for damages before any court or agency
for bodily injury, property damage and violation of civil or constitutional
rights, including inverse condemnation and causes of action arising out of
alleged violation of any state or federal statute.
The reasonable and customary costs incurred in legal defense of actions
covered under this chapter and all sums which the municipal official would
be legally obligated to pay as damages or in settlement of any claims against
the municipal official for matters arising from or related to such actions,
whether the claim is presented during the period of the municipal official's
period of official service with the Borough or thereafter, and shall include
the payment of salary or wages for any municipal official who, by reason of
an indemnified claim, is absent from his or her Borough work station for the
purpose of attending legal proceedings or other business in connection therewith
and the Borough of Closter would otherwise be responsible for payment of the
municipal official's salary or wages. The term shall not include sums which
the municipal official would be legally obligated to pay in the nature of
exemplary or punitive damages. In the event the municipal official is being
sued for such damages, the Borough shall not indemnify said official with
respect to same but shall, to the extent allowed by law, defend said official
in said action and defray the costs of said defense.
Coverage afforded by insurance policies of any and every kind, whether
the premium paid by the Borough, the municipal official or someone on his
behalf, including, without limitation, coverage provided by and through the
Joint Insurance Fund (JIF) and/or the municipal excess liabilities (MEL) policies.
Any person employed by the Borough of Closter, including elected
officials, constitutional officers and their employees, and volunteers performing
services on behalf of the Borough while actually performing those services;
the term does not include persons or entities performing services under a
nonemployment contract with the Borough.
The prevailing fees as charged in the County of Bergen at the time
they are incurred. The Borough shall only be responsible to the extent fees
are reasonable as defined herein.
The municipal official shall not be entitled to indemnification or reimbursement
pursuant to this chapter unless, within 14 days of the time such official
is served with any summons, complaint, process, notice, demand or pleading,
this official delivers the original or a copy thereof to the Borough Attorney.
A.
The Borough of Closter is hereby authorized to provide for the defense of civil actions brought against its municipal officials and to indemnify such officials to the extent hereinafter set forth, and shall save harmless and protect such persons from any financial loss resulting from litigation which arises as described in Subsection B, below.
B.
The obligation of the Borough of Closter to defend and
indemnify its officials for acts or omissions arising out of or in the course
of the performance of the duties of that person shall be limited to:
(1)
Those circumstances where the acts complained of took
place during a time when the municipal official was actually performing services
on behalf of the Borough of Closter, whether or not during formal working
hours; and
(2)
Those circumstances where it reasonably appears that
the municipal official was acting within the scope of his or her duties for
the Borough.
C.
In the event a municipal official is required to defend
an action relating to his or her position subsequent to leaving office, the
terms, conditions and provisions of this section shall apply.
The Mayor and Council shall not approve indemnification of the defense
of any action if:
A.
The act or omission complained of was not within the
scope of employment or authority.
B.
The act or omission complained of was because of actual
fraud, willful misconduct or actual malice.
C.
The defense of the action or proceeding would create
a conflict of interest between the Borough and the municipal official involved.
D.
There exist policies of insurance, either obtained by
the Borough or by another, by virtue of which the municipal official is entitled
to a defense of the action in question from the insurer. In the event that
the aforesaid insurance covers less than an entire defense to the particular
action, indemnification shall be approved for that part of the defense not
covered by insurance.
E.
The municipal official has failed to deliver the appropriate
notice of claim as required herein.
F.
The municipal official fails to cooperate fully with
the defense.
G.
The municipal official fails to request the defense of
any action.
H.
Defense of the act or omission complained of is not deemed
appropriate by the Mayor and Council pursuant to N.J.S.A. 59:10-1 et seq.
I.
The action was brought by the Borough.
J.
The legal proceeding involves a question concerning New
Jersey election laws.
K.
Nothing in this chapter shall authorize or require the
Borough to pay for punitive or exemplary damages or damages resulting from
the commission of a crime.
The decision to indemnify based upon preliminary investigation is not
final and binding upon the Borough of Closter. Should facts be revealed during
the course of handling the claim, whether or not they could have been discovered
at an earlier time, that show that the municipal official was acting in a
manner which does not entitle him or her to indemnification for the reasons
stated herein, the Mayor and Council may revoke the indemnification. Further,
should the municipal official unjustifiably fail or refuse to cooperate in
defending the claim, indemnification may be revoked.
A.
If the Mayor and Council determines to provide a defense
as authorized by this chapter, it may do so by:
(1)
Hiring an attorney of its choice; or
(2)
Reimbursing the municipal official for reasonable attorney's
fees and costs incurred in connection with the defense of the legal proceeding.
The obligation to reimburse a municipal official for expenses shall arise
upon final determination of the legal proceedings. However, the Borough may
reimburse a municipal official for a portion of expenses incurred prior to
a final decision.
B.
A resolution shall be adopted appointing counsel for
the defense and determining counsel fees. The hourly rate shall not exceed
the rate paid to the Borough Attorney without a written resolution of the
Council.
C.
Nothing in this section shall preclude the Mayor and
Council from demanding and reviewing periodically any costs and attorney's
fees in connection with the defense of the municipal official. In the event
a dispute over attorney's fees arises, the Borough reserves the right to submit
the dispute to the Fee Arbitration Committee of the district or pursue any
other course of legal action.
If the municipal official files a counterclaim, counteraction or asserts
any affirmative cause of action in the legal proceeding, the Borough shall
not be obligated to reimburse for any attorney fees or court costs attributable
to such counterclaim, counteraction or affirmative cause of action.
By accepting indemnification from the Borough in accordance with this
chapter, the municipal official agrees that the Borough may perform such investigations
and enter into such negotiations on the municipal official's behalf as the
Borough shall deem necessary and may settle any claims, regardless of whether
the Borough actually feels the allegations are groundless or false. In the
event that the municipal official refuses to consent to any settlement, the
Borough shall be liable only for that amount for which the Borough could have
settled the claim for, had the municipal official consented.
This chapter shall not create, nor shall be construed as, a contract
of insurance between the Borough and any municipal official. The Borough shall
not be considered an insurer or primary insurer for any purpose and shall
not by this chapter be obligated to settle any claim on a municipal official's
behalf or to tender its limits of coverage in order to avoid excess liability
on the municipal official's part.
This chapter shall apply to all matters which have not been finally
resolved at the date of enactment hereof, regardless of whether
or not the acts for which damages are sought occurred before passage of this
chapter.
