Providing for the defense and indemnification of public officers and employees named as defendants in certain litigation

Providing for the defense and indemnification of public officers and employees named as defendants in certain litigation

Scimeca v Brentwood Union Free Sch. Dist., 2016 NY Slip Op 05157, Appellate Division, Second Department

The Brentwood Union Free School District [Brentwood] and a number of Brentwood employees* [Employees] were named as respondents in complaint filed with the New York State Division of Human Rights [SDHR] by another Brentwood employee [Complainant].

Employees sought “defense and indemnification” by Brentwood and a law firm other than the law firm representing Brentwood in the SDHR action was designated by Brentwood’s insurance carrier to represent Employees in the SDHR proceeding. Employees, however, perceiving conflict of interest between themselves and Brentwood, employed a different attorney to represent them in the SDHR action. Employees then sought reimbursement for the fees and litigation expenses they had incurred in defending themselves in the SDHR action from Brentwood, citing Public Officers Law §18 as authority for such payments.

Brentwood declined to  pay the fees and litigation expenses incurred by Employees as a result of their having employed their own attorney for this purpose. Employees filed an Article 78 petition seeking a court order to compel Brentwood to indemnify them for the legal expenses they had incurred in defending themselves in the SDHR action.

The Supreme Court denied the employees’ petition and dismissed the proceeding; the Appellate Division affirmed the Supreme Court’s ruling.

Both Public Officers Law §18** and Education Law §3811 provide for a political subdivision of the State to provide for the defense and indemnification of its employees in certain actions or proceedings. 

The provisions of Public Officers Law §18, however, only become available to the employees of the political subdivision as the result of  the governing body of the political subdivision adopting a law, rule, regulation or resolution [1] providing for such representation and indemnification of its employees at the entities expense and [2] providing for the reimburse employees of any the costs and damages for which the employees are liable, exclusive of punitive or exemplary damages, fines or penalties.

Education Law §3811applies to officers, the teaching or supervisory staff, and non-instructional employee of any school district, other than the city school district of the city of New York or any board of cooperative educational services. §3811 provides for the defense of such personnel in any action or proceeding and all of his or her reasonable costs and expenses, as well as all costs and damages adjudged against him or her other than those incurred [1] in a criminal prosecution or [2] an action or a proceeding brought against him or her by a school district, including proceedings before the Commissioner of Education, arising out of the exercise of his or her powers or the performance of his or her duties under the Education Law.

According to the decision by the Appellate Division, Brentwood extended the benefits of Public Officers Law §18 to its employees, but, as that statute specifically authorizes, specified that "[t]he benefits accorded to Brentwood employees under Section 18 of the Public Officers Law shall supplement and be available in addition to defense and indemnification protection conferred by other enactments or provisions of law," such as Education Law §3811.

Insofar as relevant in this proceeding, the Appellate Division said:

1. Education Law §3811 does not exclusively govern the retention of counsel for a school district employee entitled to a defense under that statute and Public Officers Law §18;

2. Public Officers Law §18(3)(b), applies in the event that either the employer or a court determines that a conflict of interest exists and permits an employee to obtain an attorney of his or her choice and that this provision is consistent with Education Law §3811;

3. Education Law §3811 provides that the trustees or board of education have the right to designate and appoint legal counsel for an eligible employee as long as it does so within 10 days of receiving notice of the relevant action or proceeding; otherwise the employee may select his or her own legal counsel; and

4. The provisions of Public Officers Law §18 and Education Law §3811 can be read together to provide that the trustees or the board have the right to designate and appoint counsel within 10 days of receiving notice of an action or proceeding, unless the School District and the employee have conflicting interests, in which case the employee is permitted to select his or her own counsel. Under this reading, Public Officers Law §18 supplements Education Law §3811 by addressing and making provision for a specific set of circumstances not addressed in Education Law §3811.

That said, the Appellate Division noted that Brentwoodcorrectly contended that no conflict of interest existed between Brentwood and Employees with respect to defending the subject SDHR complaint that would otherwise entitle Employees to select private counsel, payable by the School District

The court explained that the SDHR complaint, which was asserted against Brentwood and Employees jointly, did not allege that Employees committed any acts outside the scope of their employment and, significantly, Brentwood, in its response to the complaint, did not assert that Employees were acting outside the scope of their employment, or that they acted improperly in any way.

As Brentwood “categorically denied all of the allegations in the complaint, countered each of the allegations with detailed facts aimed at demonstrating their falsity, and asserted that it was the Complainant who had threatened and intimidated one of [the Employees], the court concluded that no conflict of interest existed between Brentwood and Employeeswith regard to the subject SDHR complaint that would otherwise have entitled Employees to employ private counsel, to be paid by Brentwood, under a theory that a "conflict of interest" between the parties existed.

Accordingly, said the Appellate Division, Supreme Court “properly denied, and the proceeding [was] properly dismissed.”

* Although all not all public employees of a public entity are public officers, all public officers of that entity are public employees.

** §17 of the Public Officers Law provides for the defense and indemnification of officers and employees of the State as the employer in the event such persons are defendants in a civil action arising out acts or omissions involving or performed within the scope of their official duties. §19 of the Public Officers Law addresses so reimbursing an officer or an employee of the State as the employer named as a defendant in a criminal action arising out of acting within the scope of his or her public employment or duties upon his or her acquittal or upon the dismissal of the criminal charges against such officer or employee. 

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2016/2016_05157.htm