06-22-1994 Council Agenda - Laserfiche WebLink

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3490 Lexington Avenue North League of Minnesota Cities St. Paul, MN 55126 -8044 June 15, 1994 RECE11/173 MA 1 1094 Dear Fellow LMCIT member: Many of you recently received a letter from the City of Afton, asking you to urge the LMCIT Board of Trustees to drop a pending appeal and to reimburse three Afton council members for legal costs they incurred in defending themselves against the charges that they violated the open meeting law. A number of city officials have asked about this matter, so we thought it might be useful to outline how LMCIT has approached the issue and why. Three members of the Afton city council were charged with violating the open meeting law. The city submitted the claim under the city's LMCIT liability coverage, and LMCIT disclaimed coverage. The reason is that the LMCIT liability coverage provides that LMCIT will cover and provide a defense for claims seeking "damages ". The coverage document provides that "damages" does not include fines or penalties. This definition of "damages" was modeled after typical language found in commercial liability insurance policies. The open meeting law at the time provided for a $100 "civil penalty ", and for removal from office after three violations. Litigation under the open meeting law is therefor by definition an action seeking a penalty - not a claim for "damages." Since it is not a claim for damages, LMCIT's position is and has always been that these defense costs are not covered by the LMCIT liability coverage. The council members sued LMCIT, challenging LMCIT's disclaimer of coverage. The trial court ruled that there was no coverage. The city officials appealed this ruling to the Court of Appeals, which ruled that there was coverage. The Appeals Court first ruled that the city had the legal authority to reimburse the officials' legal costs; and then simply said that because the city was authorized to reimburse the city officials for these costs, LMCIT was required to do so. We believe that the Court of Appeals decision is incorrect and misreads what the LMCIT liability coverage document actually says. LMCIT therefor asked the Supreme Court to review the Appeals Court's decision. The Supreme Court agreed to do so, and the appeal is proceeding. The City of Afton's letter suggests that LMCIT should drop this appeal and reimburse the city officials for their legal costs. But because LMCIT is a cooperative organization of cities, the Page 106 AN EQUAL OPPORTUNITY /AFFIRMATIVE ACTION EMPLOYER (612)490-5600 1. 800.925- 1122plusyourcitycade TDD(612)490.9038 Fax(612)490 -0072