Chapter 2.40


2.40.010    Persons covered.

2.40.020    Indemnification and protection of town officials brought by third parties.

2.40.030    Indemnification and protection of town officials brought by the town.

2.40.040    Payment of judgment.

2.40.050    Legal fees and court costs.

2.40.060    Nonapplication of indemnification.

2.40.070    Insurance coverage.

2.40.080    Notice of claims.

2.40.010 Persons covered.

All of the protections and benefits conferred by this chapter shall be enjoyed by any present and former members of the council, town officers, town magistrates, town employees, and all members of all town boards and commissions, subcommittees and advisory committees, which protected parties are hereinafter referred to individually as a “town official” and collectively or jointly as “town officials.” [Ord. 2016-111 § 2.]

2.40.020 Indemnification and protection of town officials brought by third parties.

Any town official and all town officials shall be exonerated, indemnified and held harmless by the town from and against any liability or loss in any manner arising out of, or occasioned by, his or her service as a town official and based upon any claim by any third party that the town or such town official, by any action or failure to act, damaged the property or infringed the rights of said third party, or of any other person on whose behalf said third party brings a claim or legal action, provided such official acted, or failed to act, in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the town. [Ord. 2016-111 § 2.]

2.40.030 Indemnification and protection of town officials brought by the town.

The right to indemnification provided for in STC 2.40.020 shall extend as well to any claim brought by, or on behalf of, the town to recover damages alleged to have been occasioned to it or any of its property by any act or failure to act of any town official, except that no indemnification or exoneration shall be made in respect of any claim, issue or matter as to which such town official shall have been adjudged to be liable to the town unless and only to the extent that the court in rendering such judgment shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, such official is fairly and reasonably entitled to indemnity for such expenses as such court may deem proper. The court in which any such action or suit was brought may determine upon application that, in view of all of the circumstances of the case, indemnity for amounts paid in settlement is proper and may order indemnity for the amount so paid in settlement. [Ord. 2016-111 § 2.]

2.40.040 Payment of judgment.

In any case where indemnification is required under the provisions of STC 2.40.020 or 2.40.030, the town shall pay, on behalf of such town officer or official, any money judgment and shall perform the onerous provisions of any court order which may be entered against him or her, when such judgment or order has become final and no longer appealable, or has not been stayed pending appeal. [Ord. 2016-111 § 2.]

2.40.050 Legal fees and court costs.

A. In any case where any town official is or may be entitled to be exonerated, indemnified and held harmless pursuant to the provisions of STC 2.40.020, the town shall protect and defend such official from and against any litigation commenced against him or her by engaging and compensating competent legal counsel to conduct his or her defense, and by paying all court costs, and any fees of opposing legal counsel, taxed or imposed by the court having jurisdiction.

B. In any case where any town official is or may be entitled to be exonerated, indemnified and held harmless pursuant to the provisions of STC 2.40.030, the town shall pay the expenses, including attorneys’ fees and the cost of a bond or other security pending appeal, incurred in defending the civil action, suit or proceeding by such official in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such town official to repay such amount if it is ultimately determined that he or she is not entitled to be indemnified by the town as authorized in STC 2.40.030. [Ord. 2016-111 § 2.]

2.40.060 Nonapplication of indemnification.

The coverage afforded by this chapter shall not apply in any case where indemnification is not permissible pursuant to any state statute or any determination that such indemnification would be contrary to public policy. [Ord. 2016-111 § 2.]

2.40.070 Insurance coverage.

The town shall at all times procure insurance policies providing the maximum coverage and limits procurable at reasonable rates to protect its interests and to indemnify and protect all town officials and any town official entitled to indemnification and protection pursuant to this chapter. This obligation may be satisfied through membership in the Arizona Municipal Risk Retention Pool. Acceptance of coverage and undertaking of protection by any such insurance carrier shall be deemed to satisfy the requirements of this chapter on the part of the town. However, in any case or instance where an insurance carrier does not in fact accept coverage and defend any town officials, or where the insurance policy limits are insufficient to cover any judgment entered against any town officials, the town shall be bound by the provisions of this chapter to protect and indemnify. [Ord. 2016-111 § 2.]

2.40.080 Notice of claims.

It shall be a precondition to the assertion of any claim for protection and indemnity under this chapter that any town officials, after having been served with process commencing litigation against him, her or them, or after having received written notice of a possible claim alleged to be covered under the provisions of STC 2.40.020 or 2.40.030, shall promptly give notice of the pendency of such action, or the presentation of any such claim, to the town clerk, who shall in turn present such actual or potential claim to the town attorney, together with such town official’s request for indemnity and protection hereunder. It shall further be a precondition to coverage hereunder that a town official claiming the protection and benefits conferred by this chapter shall at all times, and in every way, cooperate fully with legal counsel appointed by the town to defend against any threatened or pending litigation under the provisions of STC 2.40.050(A). [Ord. 2016-111 § 2.]