PB: The Settlement Stakes

by SDM

SDM attempts to read the attachments to the agendas. The Clerk posted the September 9 regular council agenda on the village web page. The village attorney’s report contained a startling paragraph under the Palmer litigation section that SDM did not recall seeing before:

Please be advised that Insurance coverage by the Florida League of Cities ($5,000,000 policy) only covers liability as to certain claims – the federal claims alleged in the complaint. However, once one claim is acknowledged by the insurance, defense coverage is provided for all the claims. Should the covered claims be dismissed, the insurance defense as to the uncovered claims also goes away. The Council would be responsible for the litigation costs going forward as to those non-covered claims, as well as the liability costs associated with same. The Village does have liability protection as to state tort common law claims under 768.28, Florida Statutes, the “sovereign immunity” statute, provided liability limit of $200,000/$300,000 person/incident, unless a special bill is enacted by the State legislature for a greater amount.

(Emphasis added by SDM.)

Here is what we know: Palmer filed a complaint alleging a violation of the school’s constitutional right to due process, which would be a federal claim. It appears that the constitutional claim would be covered by the policy up to $5 million. SDM also understands that Palmer filed other claims. If the federal claim was dismissed, the insurance policy would not cover damages from the remaining claims. Furthermore, to the extent the village is shown to have tort liability (abuse of process or malicious prosecution?), then state law would cap the damages.

Given the above, SDM speculates:

  • The League of Cities may have made a determination that they prefer to negotiate a settlement rather than continue to burn legal fees on this matter.
  • Alternatively, Palmer may have decided its legal position on the federal claim is weak and it may take a quick deal with the League so as to focus its attention on the village with the League’s attorneys out of the way.
  • The village might conclude that if the League settles, then the village’s financial exposure jumps based on the viability of the non-federal, non-tort-liability claims. This exposure could be substantial enough that a majority of the council will elect to cut their losses and settle their way out of the suit.
  • CCOCI and the others involved could be left as remaining defendants with neither the village nor the League interested or allowed in their fiduciary capacities to continue assisting the other parties.

SDM Wonders: Wouldn’t it be tragically ironic if the Concerned Citizens of Old Cutler Inc. (CCOCI) and its leadership – the initiators and proponents of endless litigation – wound up stuck in the litigation trap while the village sails off into the sunset?

SDM Says: No wonder they are squealing for a “global settlement” all of a sudden.

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