GIRMA defends paying Haddix legal bill under contract’s ‘duty to defend’

The agency that provides “risk management” coverage to Peachtree City contends that it was appropriate for it to pay $9,969 for the legal defense of Mayor Don Haddix in a libel lawsuit.

"A liability insurer has a duty to defend its insured against all claims covered under a policy, even those that are groundless, false, or fraudulent," the GIRMA letter said. "If there is even potential, or arguable, coverage, the insurer has a duty to defend." A pdf file of the actual letter is attached at the bottom of this story for download, and the text of the letter follows the story.

But there has been no talk, at least publicly, of the city council reversing its June 7 decision to dock Haddix’s pay by 90 percent to cover the legal fees incurred in the lawsuit filed by former Mayor Harold Logsdon.

Although the lawsuit was filed against Haddix personally and not in his official capacity, Haddix qualified for legal coverage because the statement at the heart of the lawsuit was contained in an email Haddix wrote to a city employee on an official business matter, according to a letter written by the Georgia Interlocal Risk Management Agency Manager George R. Van Leuven.

“Given the fact that the mayor was communicating with a city employee regarding a matter of official business (i.e. changing a city ordinance), it was at least arguable that the mayor was acting ‘for and behalf of’ the city at the time he sent the offending email communication,” the letter stated.

The lawsuit alleged that Haddix libeled Logsdon in the email by claiming that when Logsdon was mayor he was “part drunk” while attending council meetings.
GIRMA’s decision to fund the settled lawsuit forced the city to repay GIRMA for the $9,969 in legal fees because it was under the city’s $25,000 deductible.

The lawsuit was settled in December for $3,000 along with a written apology from Haddix. But the issue flared up again last month when the city council discovered the fact that GIRMA reimbursed Haddix after the mayor directed City Attorney Ted Meeker to write an appeal letter on the matter.

Haddix had not informed his fellow council members of the appeal, and they claimed that circumvented how legal matters are normally handled by the city and discussed in executive (closed) session. Council also contended that Haddix’s legal bills shouldn’t have been covered by the city because he was sued personally and not in his official capacity as mayor.

At its May 17 meeting, council asked staff to write a letter to GIRMA seeking to have the funding reversed.

At its June 7 meeting, council voted 4-1 to cut Haddix’s monthly pay from $750 a month to just under $75 to recoup the costs of the legal bill. Haddix has said he will consider filing a lawsuit in the matter, and he even raised the possibility that he would resign in the face of the pay cut.

While council met Thursday night, the latest GIRMA letter from Van Leuven was not discussed in open session, nor was the possibility of restoring Haddix’s pay raised.
In his letter, Van Leuven points out that the total cost of under $10,000 was more economical than had the matter gone to trial.

“The cost of a declaratory judgment action to have this question decided would have exceeded the amount reimbursed for defense and settlement of the claim,” Van Leuven wrote. “This claim was actually handled in the manner least costly to the city.”

In fact, had GIRMA been aware of the details of the email from the onset of the lawsuit, it would have agreed to have covered Haddix from the beginning, Van Leuven said. A request on May 19, 2011 for GIRMA to cover the lawsuit was filed by City Attorney Meeker, but it was denied by GIRMA’s third party administrator on the basis that “the complaint did not contain allegations the mayor was acting in his official capacity or using computer equipment,” Van Leuven wrote.

However, at that time GIRMA did not receive a copy of the offending email from Haddix to economic development coordinator Joey Grisham, even though there was language saying it was attached to the email request that was forwarded to GIRMA, Van Leuven wrote.

A second request on Sept. 6 from Haddix’s attorney John Mrosek was also denied, again without GIRMA receiving a copy of the email, Van Leuven noted.

It was following the Feb. 29 letter this year from Meeker, which included a copy of the email, that GIRMA decided to cover Haddix for the legal claim, even though the process had already come to a conclusion.

“Had all of the information been presented to GIRMA at the outset, GIRMA’s initial determination would have been to provide a defense under reservation of rights as to coverage, an approach GIRMA normally employs,” Van Leuven said in the letter.

==================================================

Following is the complete text of the GIRMA letter:

Via Email and Mail

Theodore P. Meeker, III, Esq.

SUMNER MEEKER, LLC

14 East Broad Street

Newnan, Georgia 30263

June 8, 2012

Re: Harold Logsdon v. Don Haddix, Superior Court of Fayette County (Civil Action File No. 2011V-0740).

Dear Mr. Meeker:

On behalf of the Georgia Interlocal Risk Management Agency (“GIRMA”), this letter is directed to you as City Attorney for the City of Peachtree City in response to your letter to me dated May 25, 2012 on behalf of City Council Member Eric Imker and the letter from Council Member Vanessa Fleisch to me dated May 23, 2012. In response to these letters, I will attempt to explain GIRMA’s decisions regarding defense and coverage of the above-styled case.

To understand GIRMA’s decision process, some background regarding GIRMA’s legal framework is necessary. By statute, GIRMA is not an insurance carrier but instead a self-insurance fund created by the General Assembly to allow municipal governments to pool risks. GIRMA enters into a Member Coverage Agreement (“MCA”) with each of its member cities that delineates the relationship between GIRMA, the Named Member, and additional Members who are afforded coverage, to include elected officials, employees, and others. An elected official is treated as a Member while “acting for and on behalf of the Named Member.” Members other than the Named Member are not a party to the GIRMA MCA, but are intended third party beneficiaries of the MCA and have rights under it.

While GIRMA is not insurance, the Georgia courts generally employ insurance principles to interpret the GIRMA MCA. Under the GIRMA MCA, Members are owed a duty of defense and indemnity. A liability insurer’s duty to defend and its duty to pay (i.e., indemnify) are separate and independent obligations. A liability insurer has a duty to defend its insured against all claims covered under a policy, even those that are groundless, false, or fraudulent. If there is even potential, or arguable, coverage, the insurer has a duty to defend.

With this backdrop, this claim was originally tendered for coverage when the complaint was filed against Mayor Don Haddix on May 19, 2011. As City Attorney, you tendered the claim for coverage via email to Kenneth Swanson of Gallagher Bassett Services, Inc., GIRMA’s third party administrator, on May 27, 2011. The complaint named the Mayor individually and not in his official capacity. The complaint stated that an email was sent to Joseph Grisham containing negative information about former mayor Harold Logsdon. While the complaint stated that a copy of the email was attached, the complaint forwarded to GIRMA did not have a copy of the email. On or about June 1, 2011, Mr. Swanson declined coverage after conferring with coverage counsel on the basis that the complaint did not contain allegations that the Mayor was acting in his official capacity or using city computer equipment.

On September 6, 2011, Mayor Haddix’s attorney, John Mrosek, again tendered the claim for defense and coverage stating that the Mayor’s comments were made “in connection with his discharge of official duties.” Aside from this statement, no additional facts were made available. A copy of the complaint without the offending email was again presented. On February 29, 2012, you transmitted a letter to me containing additional facts that Mayor Haddix had requested you to present. By this point, the Mayor had expended $9,969.40 in defense and settlement of the case. Your letter stated, “The email which initiated this matter was sent by the Mayor from his city email address, and was directed to a city employee concerning a matter that was going to be addressed at a future council meeting.” Also, attached to your letter were additional documents, including a letter from Harold Logsdon giving additional context. Mr. Logsdon states that the email includes discussion of ”possible changes to the ordinance governing operational hours of local bars.” Based upon these facts, you conveyed on behalf of the Mayor that he was seeking reimbursement on the basis that he was acting in his role as Mayor when he sent the email.

On the basis of your February 29, 2012 letter, GIRMA reconsidered its position and reimbursed the Mayor. The reason for GIRMA’s change of position was the additional factual information contained in, or attached to, your letter. Given the fact that the Mayor was communicating with a City employee regarding a matter of official business (i.e., changing a city ordinance), it was at least arguable that the Mayor was acting “for and on behalf of” the City at the time he sent the offending email communication.

Had all of the information been presented to GIRMA at the outset, GIRMA’s initial determination would have been to provide a defense under reservation of rights as to coverage, an approach GIRMA normally employs.

GIRMA owes a duty to the City of Peachtree City as well as all other Named Members to resolve claims in an economical and efficient manner. The question of whether the claim was actually one for which indemnity was available never ripened because the case was settled for a very nominal amount. The cost of a declaratory judgment action to have this question decided would have exceeded the amount reimbursed for defense and settlement of the claim. This claim was actually handled in the manner least costly to the City.

GIRMA’s actions and decisions are determined entirely based upon its contractual obligations. GIRMA protects the interests of all covered and potentially covered Members in defense of liability claims. As a matter of policy, GIRMA does not involve itself in political disagreements involving Named Member cities, and political considerations play no role in coverage determinations. A contrary approach would be unfair to elected officials and city employees who depend on GIRMA coverage for their protection and could lead to accusations of bad faith in claim handling.

Whether Mayor Haddix would have been entitled to indemnity from the City — and whether the City is entitled to indemnity from Mayor Haddix for the deductible expense — present issues of local government law distinct from any issues involving GIRMA. GIRMA’s decisions in this matter have been based entirely upon the contractual relationship between itself and the City of Peachtree City and GIRMA’s obligations to Mayor Haddix as an additional Member based upon that contractual relationship. I trust that this information will be useful to the Mayor and Council.

George R. VanLeuven, Jr.

Manager of Risk Management Services

Georgia Interlocal Risk Management Agency

Georgia Municipal Association

Atlanta, Ga.

AttachmentSize
GIRMA letter June 8,2012.pdf1.17 MB
Dondol
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Putting all of this Mayor and Council crap aside

I'll tell you what is really going to be fun is Watching Dandy "Don" ride
in the 4th of July parade and listening all of the Catcalls. I wonder if the kids will trow candy at him instead?

Robert W. Morgan
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Please don't do that. Just shun him on the 4th

Don't throw anything at him - somebody nearby may get hurt. Instead, just simply turn your back on him as he passes by. Thumbs down works too.

Do the same to Imker and the others if you are so inclined.

dawgday
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Correct

While his statement was unnecessay and highly inappropriate, frankly, the correct thing happened here. Haddix was in fact acting in his capacity as Mayor when he wrote the e-mail and thus was covered under the concept of the coverage. So, Council must now re-instate his pay as it is blantely wrong to extract payment for rightful coverage. However, Haddix did in fact breach ethics for failing to involve Council in the process. He should be brought up on ethics charges and removed from office ASAP. It seems no one has the courage to do so, and he is banking on that. So, PTC will continue to get pathetic representation, back-biting and a circus atmosphere with the leadership. You voted him in, so you are getting what you paid for.

It would be interesting to pull Imker's correspondence. Look at how he converses at the meetings, I can only image the caliber of his internal documents. Hard to image, but it appears his ego is bigger than Haddix's. Two clowns.

madmike
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Dawg: Ethics Charges

Good synopsis of the events. I agree that the proper way to handle this was through an Ethics complaint. There exists a board of Citizens appointed by council known as the Ethics Board (I am on that board)which offers a venue for these types of issues. The complaint is brought forth, the board determines if there is enough merit to proceed, and then relatively informal proceedings or hearings are held. All interested parties can present their sides and the board makes a decision.
This is still a viable option. All that needs to be done is to have a citizen bring the complaint to the city clerk. So far, no one has done that.

cogitoergofay
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Mr. Latella, you have disqualified

Mr. Latella, you have disqualified yourself from serving on the Ethics Board on any matter involving this controversy.

Why? Because as a quasi-judicial officer you are required to keep an open mind, wait for the evidence, deliberate with your colleagues and then rule. You have demonstrated on these blogs a clear pre-disposition.

You have clearly failed to do that. I will assume you will recuse yourself.

madmike
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Cogit...

I have not recused myself from anything as there is nothing to recuse myself from at this point. Let's cross that bridge when we get to it. My feelings about the Mayor were well known through letters to the editor and these blogs well before my appointment to the board and council approval thereof.

NUK_1
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cogit: why should he?

Mayor/council are expected to recuse themselves from voting on matters that directly affect them personally, but that sure didn't stop moron Mayor Haddix from voting against himself being censured or voting against his pay cut. A fish rots from the head down and the Mayor has set the most pathetic example possible in terms of ethics, character or integrity. Oh, don't let me leave out intelligence, another trait he sorely lacks.

Yeah, I agree, Latella should recuse himself on this one(if an ethics complaint is ever filed), but when dealing with this Mayor and his sheer arrogance+stupidity, it's turning into a race to the bottom with the other Councilmbers to join him, unfortunately.

borntorun
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GIRMA Decision

According to George Van Leuven at GIRMA, "Haddix qualified for legal coverage because the statement at the heart of the lawsuit was contained in an email Haddix wrote to a city employee on an official business matter".

Sounds like regardless of what is said even if it meets the legal definition of slander and/or defamation of character, as long as it's contained in an email issued on the city email system and the slanderous comment is included in some general context of a city matter, GIRMA will cover it.

So....lets say Dienhart and Imker are exchanging emails on the city email system about some city matter and one of 'em accuses one of the ladies on council of being of loose morals. Said lady council member finds about it and sues the council person who said it for slander and defamation of character and wins a monetary judgement. Does that mean GIRMA will also cover the judgement in this scenario? Based on what Van Leuven is saying in the Haddix decison, it would appear to be the case.

Mind-boggling....

cogitoergofay
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GIRMA is simply making excuses

GIRMA is simply making excuses for its change of decision. Why did two separate lawyers not send the offending email to GIRMA? Because the email itself was considered libelous. To send it again, to a third party, would be another act of libel (potentially). It was only when Logsdon settled that Meeker felt comfortable sending the actual email. GIRMA had the lawsuit. They could have called Lindsey. The lawsuit quoted the email. The lawsuit is privileged and the email is not.

GIRMA only paid the claim because (as they said) Haddix got out cheap and under the deductible.

Consider though that what has happened is that the entire council, all 5, has the worst reputation of any PTC council in history.

The entire recent conflagration is due to our City's insurance company's mishandling of the entire affair. They were more interested in saving money than in actually honoring their contract with the City. George VanLeuven is actually concocting excuses for why they changed their minds on the coverage. No, the insurer is simply making excuses for its mishandling of the entire affair.

GIRMA is not really an insurance company. It's worse than that. They are an adjunct to the Georgia Municipal Association, a local government trade group located in the shadow of the Georgia Capitol. They don't make waves and they regularly throw small cities under the bus.

We all buy insurance to cover us for the very few catastrophes that befall us. Given this insurer's gross mishandling of a small affair, I would recommend that we obtain another carrier or go back to being self-insured.
.

johngio
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Responsibility

It is ALL the mayor's responsibility. There is no partial this or partial that.

Robert W. Morgan
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I still think the $3000 settlement is included in the $9969.

And I think that is 100% wrong. The penalty for libel (the $3,000 settlement) is totally Haddix's responsibility. GIRMA dodged that issue by not responding directly.

johngio
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ARE YOU KIDDING ME?

My head is going to explode! The RIGHT thing for the mayor to do is pay the money -- period! Accept responsibility for your actions Mr. Mayor. When you screw up and do something you shouldn't do, man up and pay the consequences.

Two questions Mr. Mayor: 1) Are you doing what is in the best interest of the city? 2) Do you think a truly righteous man who owns up to his mistakes would pay? I certainly do. You and I have vastly different definitions of how a real man acts and gains respect.

Please respond Mr. Mayor. Explain why people like me don't worship the ground you walk on like the editors of this paper. Explain to me what characteristics make up a great and admirable man.

Entirely too much ink and attention is going toward justification of loopholes and finding fault from the council. The mayor erred the mayor should pay. KISS

John Giovanelli DC

pumpkin
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THANK YOU THANK YOU

Okay now will you all leave this alone and pay the mayor. Mayor if they refuse hope you can sue them for attaching your earnings as mayor.

pumpkin
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THANK YOU THANK YOU

Okay now will you all leave this alone and pay the mayor. Mayor if they refuse hope you can sue them for attaching your earnings as mayor.

Robert W. Morgan
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This whole thing is about the Haddix to Grisham e-mail

Right? The e-mail that started it all. The e-mail where Haddix accused Logsdon of coming to meetings part drunk. The evidence of libel. That e-mail.

So, request #1 from Meeker did not have the e-mail attached, but it referred to it. GIRMA didn't ask for a copy.

Request #2 from Mrosek, still no e-mail attached. Again, GIRMA doesn't ask for it.

Request #3 from Meeker who finally decides that the e-mail might be relevant and attaches it and GIRMA says of course it is city business - if only we had seen the e-mail before. Now we know what the magic formula was in the third letter - the freakin' e-mail was attached for the very first time. Wow!

This is what passes for professional behavior. You all ought to be ashamed. This does make Haddix look like an innocent victim and makes the rest of you look like incompetent fools - including GIRMA. Now council has no choice except to back off. And of course Haddix will take this as some sort of enablement and will be stumbling into his next fine mess before the month is over.

GeorgeDienhart
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Actually...

backing off is not the only option.

Robert W. Morgan
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Then not backing off must be the other option, I suppose

Believe me, I am all for that because the only remedy there is to sue and then resign or to resign and then sue. I do think this latest letter gives the lawsuit a bit more credibility and there is a slight possibility the city could lose. Probably worth the chance if the "resign" thing actually happens. That's what everybody I know really wants to happen.