Schools and Education - Indemnification - School Board Attorneys

Sahli v. Woodbine Board of Education et al
New Jersey Law Journal
January 30, 2008

N.J. Supreme Court

SCHOOLS and EDUCATION - Indemnification - School Board Attorneys

Sahli v. Woodbine Board of Education et al,

A-92 September Term 2006; Supreme Court; opinion by Wallace, J.; partial dissents by Albin and Rivera-Soto, JJ.; decided January 30, 2008. On certification to the Appellate Division, 386 N.J. Super. 533 (App. Div. 2006). [Sat below: Judges Axelrad, Payne and Sabatino in the Appellate Division; Judge Todd in the Law Division.] DDS No. 16-1-9526

To the extent that he incurred legal fees in his capacity as school board solicitor, plaintiff is not entitled to indemnification under 18A:16-6 or under the board's insurance policy; both afford him protection in his capacity as secretary pro tem. [31 pp.]

Plaintiff Ronald W. Sahli was appointed solicitor of the Woodbine Board of Education. T. Maureen Toy was an employee of board. She served in various positions, including administrative assistant for special education.

Toy did not always agree with the district superintendent's handling of the special education department. In 2000, she met with the board in executive session to discuss her grievances. Plaintiff was appointed as secretary pro tem for that session. After Toy was excused, concerns were expressed regarding her medical and psychiatric condition. Plaintiff prepared the minutes, which described her behavior in detail.

Another executive session was held the next month. Plaintiff was again appointed secretary pro tem. After Toy was excused from the meeting, it was recommended that she be placed on leave pending physical and psychiatric evaluations of her ability to perform her job.

Toy then resigned and then filed suit against the board and the superintendent, alleging retaliatory action in violation of the Conscientious Employee Protection Act. During discovery, her attorney obtained copies of the minutes plaintiff had prepared. Toy filed an amended complaint naming plaintiff and alleging that the minutes were inaccurate and were calculated to denigrate her by making her appear to be mentally unstable.

Plaintiff demanded coverage under the Atlantic and Cape May Counties Association of School Business Officials Joint Insurance Fund Policy. He also requested that the board indemnify and defend him pursuant to N.J.S.A. 18A:16-6. Both requests were denied.

Plaintiff then instituted this action to compel the board and the joint fund to reimburse him for the amounts spent in defense of Toy's suit.

The trial court concluded that 18A:16-6 provided indemnification for Sahli, but that the insurance policy excluded coverage. The Appellate Division held that Sahli was not entitled to indemnification under 18A:16-6 and the insurance policy did not require the insurer to defend or reimburse him for his litigation expenses.

Held: N.J.S.A. 18A:16-6 does not mandate that the board indemnify its attorney for the defense of a civil action against him in his capacity as board solicitor. However, because he was also sued in his capacity as secretary pro tem to the board, he is entitled to indemnification for his conduct in that position. Similarly, he is not entitled to insurance coverage as the attorney to the board, but he is entitled to coverage as a volunteer when acting as secretary.

N.J.S.A. 18A:16-6 affords indemnity to any "person holding any office, position or employment under the jurisdiction of any board of education." The Court agrees with the Appellate Division's conclusion, reached after extensively recounting the statute's legislative and decisional history, that its focus was solely on school board members, school employees, and those preparing for teaching careers, and did not include a board solicitor. Thus, a solicitor of a school board is not entitled to indemnification under 18A:16-6.

However, a review of Toy's complaint shows that she sued plaintiff in his capacity as both secretary pro tem and as solicitor.

The Court says that if the regular board secretary had been sued because of the manner in which the minutes were drafted, she would be covered by 18A:16-6 as a person holding a "position" of the board. Plaintiff was appointed to temporarily take the place of and perform the role of secretary. There is no justification to avoid the application of the statute merely because the position was temporary. Thus, to the extent he was sued in his capacity as secretary pro tem, he is entitled to indemnification under 18A:16-6.

As to whether the joint fund is required to reimburse plaintiff for his counsel fees, the Court notes that the duty to defend is generally determined by the policy language.

The joint fund policy contains a general liability coverage section and an educator's legal liability insurance coverage section that contain substantially identical language defining who is an "insured": "all persons who were, now are, or shall be elected during the Coverage Period or appointed or employed members of the board of education" and "all employees and volunteers while acting within the scope of their duties for a member." The educator's coverage section also contains an exclusion for "any independent contractor, person(s) or entities who are on retainer, are a consultant or are under contract for services, for an Insured." The Court says the plain language of the policy excludes coverage for plaintiff in his capacity as board solicitor.

However, plaintiff also functioned as a volunteer when he served as secretary pro tem, which was not one of his normal responsibilities as solicitor. Thus, he is entitled to coverage under the joint fund for defense of Toy's complaint against him in his capacity as secretary pro tem.

Justice Albin agrees that Sahli, as secretary pro tem, is qualified for indemnification under 18A:16-6 and insurance coverage, and that he is not covered by the policy in his position as solicitor. He disagrees that Sahli as solicitor is not entitled to indemnification under the statute.

Justice Rivera-Soto disagrees that Sahli is entitled to indemnification and insurance coverage in his capacity as secretary pro tem.

Chief Justice Rabner and Justices LaVecchia and Hoens join in Justice Wallace's opinion. Justice Long joins in Justice Albin's partial dissent. Justice Rivera-Soto dissents in part.

- By Judith Nallin

For appellant - Timothy E. Burke (Garrity, Graham, Favetta & Flinn). For respondents - William S. Donio (Cooper Levenson April Niedelman & Wagenheim; Gerard W. Quinn on the brief).