ORDINANCE NO. 337

AN ORDINANCE OF THE TOWN OF SOUTH PRAIRIE, PIERCE COUNTY, WASHINGTON ESTABLISHING THE POLICY AND PROCEDURE FOR INDEMNIFICATION AND DEFENSE OF TOWN OFFICIALS AND EMPLOYEES.

Whereas, the continuing possibility of claims and litigations necessitate clarification of the circumstances, procedures and policies for the Town to indemnify its Town officials and employees, and

Whereas, in an effort to obtain and retain qualified officials and employees; policies and procedures of their defense and representation is necessary, and

Whereas, it is in the best interest of the citizens to retain the best possible officials and employees which benefits public health, safety and welfare, and

Whereas, this ordinance does not conflict with any Collective Bargaining Agreement, and

Whereas, this ordinance has been circulated to the Washington Cities Insurance for its review and approval.

Now, therefore, the Town Council of the Town of South Prairie,

Pierce County, Washington do ordain as follows:

Section 1: Definitions: Unless the context indicates otherwise, the words and phrases used in this chapter shall have the following meanings:

A. "Employee" means any person who is or has been employed by the town.

B. "Official" means any person who is serving or has served as an elected town official, and any person who is serving or has served as an appointed member of any town board, commission, committee or other appointed position with the town.

Section 2: Legal Representation:

A. As a condition of service or employment, the town shall provide to an official or employee, subject to the conditions and requirements of this chapter, and notwithstanding the fact that such official or employee may have concluded service or employment with the town, such legal representations as may be reasonably necessary to defend a claim or lawsuit filed against such official or employee resulting from any conduct, act or omission of such official or employee performed or omitted on behalf of the town in their capacity as a town official or employee, which act or omission is within the scope of their service or employment with the town. This chapter is subject to repeal or modification at the sole discretion of the town council.

B. The legal services shall be provided by the office of the town attorney unless:

1. Any provision of an applicable policy of insurance provides otherwise; or

2. A conflict of interest or ethical bar exists with respect to such representation.

C. In the event that outside counsel is retained under subsection (B) (2) of this section, the town shall indemnify the employee for the reasonable cost of defense; provided, that in no event shall the officer or employee be indemnified for attorney fees in excess of the hourly rates established by the town's contract with its town attorney. The hourly rate of the town attorney, who is on a retainer, shall be calculated by taking the average number of hours directed towards town work for the last complete fiscal year, dividing that into the total retainer amount to determine an hourly rate. The officer or employee shall be liable for all hourly rates in excess of the said rate for the town attorney. Before the town shall have any liability to indemnify the employee for a reasonable cost of defense as provided in this section, the employee or official must first obtain consent from the town council, by motion, approving the representation by the attorney, other than the town attorney.

Section 3: Exclusions:

A. In no event shall protection be offered under this chapter by the town to:

1. Any dishonest, fraudulent, criminal, willful, intentional or malicious act or course of conduct of an official or employee;

2. Any act or course of conduct by an official or employee which is not performed on behalf of the town;

3. Any act or course of conduct which is outside the scope of the official or employee's service or employment with the town; and/or

4. Any lawsuit brought against an official or employee by or on behalf of the town. Nothing herein shall be construed to waive or impair the right of the town council to institute suit or counterclaim against any official or employee nor to limit its ability to discipline or terminate an employee.

B. The provisions of this chapter shall have no force or effect with respect to any accident, occurrence or circumstance for which the town or the official or employee is insured against loss or damages under the terms of any valid insurance policy; provided, that this chapter shall provide protection, subject to its terms and limitations, above any loss limit of such policy. The provisions of this chapter are intended to be

Ordinance No.: 337

Draft No.: 1

Draft Date: February 17, 1997 Ordinance Requested by:

Page 4

secondary to any contract or policy of insurance owned or applicable to any official or employee. The town shall have the right to require an employee to utilize any such policy protection prior to requesting protection afforded by this chapter.

Section 4: Determination of Exclusion: The determination of whether an official or employee shall be afforded a defense for the town under the terms of this chapter shall be finally determined by the town council on recommendation of the mayor. The decision by the town council shall be final as a legislative determination of the council. Nothing in this chapter shall preclude the town from undertaking an officer or employee's defense under a reservation of rights.

Section 5: Representation and Payment of Claims - Conditions: The provisions of this chapter shall apply only when the following conditions are met:

A. In the event of any incident or course or conduct potentially giving rise to a claim for damage, or the commencement of a suit, the official or employee involved shall, as soon as practical, give the town attorney written notice thereof, identifying the official or employee involved, all information known to the official or employee with respect to the date, time, place and circumstances surrounding the incident or conduct giving rise to the claim or lawsuit, as well as the

names and addresses of all persons allegedly injured or otherwise damaged hereby and the names and addresses of all witnesses.

B. Upon receipt thereof, the official or employee shall forthwith deliver any claim, demand, notice or summons or other process relating to such incident or conduct to the town attorney, and shall cooperate with the town attorney or attorney designated by the town attorney, and, upon request, assist in making settlement of any suit and enforcing any claim for any right of subrogation against any person or organization that may be liable to the town because of any damage or claim of loss arising from said incident or course of conduct, including but not limited to rights of recovery for costs and attorney fees arising out of state or federal statute upon determination that the suit brought is frivolous in nature;

C. Such official or employee shall attend interviews, depositions, hearings and trials and shall assist in securing and giving evidence and obtaining attendance of witnesses all without any additional compensation to the official or employee and, in the event that an employee has left the employ of the town, no fee or compensation shall be provided; and

D. Such official or employee shall not accept nor voluntarily make any payment, assume any obligation, or incur any expense

related to such claim or suit; other than for first aid to others at the time of any incident or course of conduct giving rise to such claim, loss or damage.

Section 6: Effect of Compliance with Conditions: If legal representation of an official or employee is undertaken by the town attorney, all of the conditions of representation are met, and a judgment is entered against the official or employee, or a settlement is made; the town shall pay such judgment or settlement; provided, that the town may in its discretion appeal as necessary such judgment.

Section 7: Failure to Comply with Conditions: In the event that any official or employee fails or refuses to comply with any of the conditions of Section 5 of this ordinance, or elects to provide his/her own representation with respect to such claim or litigation, then all of the provisions of this chapter shall be inapplicable, and have no force or effect with respect to any such claim or litigation.

Section 8: Reimbursement of Incurred Expenses:

A. If the town determines that an official or employee does not come within the provisions of this chapter, and a court of competent jurisdiction later determines that such claim does come within the provisions of this chapter, then the town shall pay any judgment rendered against the official or employee and reasonable attorney fees incurred in defending

against the claim. The town shall pay any attorney fees incurred in obtaining the determination that such claim is covered by the provisions of this chapter.

B. If the town determines that a claim against a town official or an employee does come within the provisions of this chapter, and a court of competent jurisdiction later finds that such claim does not come within the provisions of this chapter, then the town shall be reimbursed for costs or expenses incurred in obtaining the determination that such claim is not covered by the provisions of this chapter.

Section 9: Conflict with Provisions of Insurance Policies: Nothing contained in this chapter shall be construed to modify or amend any provisions of any policy of insurance where any town official or employee thereof is named insured. In the event of any conflict between this chapter and provisions of any such policy of insurance, the policy provision shall be controlling; provided, however, that nothing contained in this section shall be deemed to limit or restrict any employee or official's right to full coverage pursuant to this chapter, it being the intent of this chapter and section to provide coverage detailed in this chapter outside and beyond insurance policies which may be in effect, while not compromising the terms and conditions of such policies by any conflicting provisions in this chapter.

Section 10: Pending Claims: The provisions of this chapter

shall apply to any pending claim or lawsuit against any official or employee, or such claim or lawsuit filed after the effective date of the ordinance codified in this chapter, irrespective of the date of the events or circumstances which are the basis of such claim or lawsuit.

Section 11: This ordinance shall be in effect five (5) days from and after its passage, approval and publication as required by law.

Section 12: If any provision of this ordinance is determined to be invalid or unenforceable for any reason, the remaining provisions shall remain in force and affect.

____________________

	Mayor Dale P. Stubbs INTRODUCED: 3/4/97 PASSED: 3/4/97 APPROVED: 3/4/97 PUBLISHED: 3/19/97
Attested: ________________________ Marla Nevill Acting Town Clerk/Treasurer Approved as to Form: _______________________ Michael J. Reynolds City Attorney