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Town Council Discusses Town’s Lawsuit Liability
January 9, 2008 - While the Knightstown Town Council and its attorney rarely discuss the ongoing litigation between The Banner and the town of Knightstown and the town's insurer publicly, silence on this topic was not much of an option at the council's December 19 meeting. During public comments, Knightstown resident Terry Guerin, the council member-elect for Ward 4, said he had some questions for the council's attorney, David Copenhaver.
Guerin, who, at that time, still had a couple of weeks to go before taking office, asked whether the town's insurer would be obligated to pay the attorney fees and court costs awarded to The Banner as the result of the newspaper winning a public access lawsuit against the town and town's insurer.
"If not," Guerin asked, "then what is your best-case, worst-case scenario as far as financial impact on the town?"
"Certainly, I think the council's been made aware of that," Copenhaver replied. "I really don't want to comment on pending litigation in public. I would just say that currently the decision of the trial court puts a burden on the insurance carrier."
Copenhaver said the town's insurer had raised an issue with the Court of Appeals as to whether or not they should bear any responsibility for The Banner's attorney fees and court costs. Last March, Henry County Circuit Court Judge Mary Willis ruled that the town and its insurer were "jointly and severally" liable for $67,612.46 in fees, court costs and litigation expenses incurred by The Banner, although neither Copenhaver nor any member of the council disclosed this amount during the meeting.
"We have tried to keep the council advised of as many of the potential possibilities," Copenhaver said. "So, I'm sure that … they certainly had that information when they considered the budget and when they considered the (2008) salary ordinance. … I guess what I want to say is, the questions you asked, the best information available, then and now, was shared with the council."
Guerin was clearly not happy with Copenhaver's reluctance to disclose more specifics about this issue. "Your saying you can't comment on it … I think that's baloney, personally" he said.
"I don't know what you want me to say," Copenhaver said. "The amount of the judgement has already been in the newspaper. … Right now, under the judgement that was rendered by the trial court, the insurance carrier has a responsibility for it. That issue is on appeal. I don't know how the Court of Appeals will rule. Certainly, you can speculate any one of a number of possibilities."
Copenhaver said The Banner is arguing on appeal that the trial court's judgment was too low, while the town is arguing that it was too high. Additionally, he said the town's insurer is now arguing that it should have no responsibility at all for The Banner's attorney fees, court costs and litigation expenses.
Guerin said he was concerned about whether the town's 2008 budget, which was drafted last fall and still has yet to be approved by the state, had taken into account the possible outcomes of the litigation. He asked Nate Hamilton, the council's vice president, whether he knew the best-case and worst-case scenarios regarding the town's potential financial liability on this issue.
"No, I don't," Hamilton answered.
"Well, that's what I mean," Guerin said. "We're sitting in a situation where - I personally don't believe that the council really understands or has been told what the ramifications are, and that's my only concern."
"I guess we've tried to correspond and keep the council current with the situation," Copenhaver said.
"We have taken into consideration what the possibility is," council member Valerie Trump said. "It's a crapshoot, Terry. We don't know what the court is going to decide."
"If you've taken into consideration and you understand the potential ramifications, that's all I'm asking," Guerin said.
"And we have considered that," Trump said. "But then, on the other hand, you're coming to this side of the table, and there are issues here that you're going to have to face and you need to be prepared for that."
"I will be fully prepared," Guerin said. "I will not be surprised."
"We can't set up for the amount because we have no idea what it's going to be," council member Steve Nelson said. "I don't feel that the town of Knightstown owes anything, but I don't know if the judges are going to feel that way."
"I think you'll find we have tried to give detailed reports to the council every step of the way," Copenhaver said. "We haven't tried to keep this information, and we followed their directive."
"I know you don't like me to say, 'pending litigation,' but there is a strategy involved," Copenhaver said a few minutes later. "And when you're on this side of the table, if you're negotiating with a third party who's not in this room and not a citizen, you have to be careful because it's a negotiation and … at some point that negotiation is going to take place between the town and the insurance carrier."
Knightstown resident Jim Hope asked whether the town would need to borrow money to pay the judgment, or whether it would have sufficient funds to cover it.
"I don't know how we can answer that question," council member Cort Swincher said. "If something happens and it comes back and it's five thousand dollars, then there's probably money there. If it comes back and it's five million, then there's not money there."
(Note: The Banner's initial request for attorney fees, court costs and litigation expenses was for $188,095.64, and the trial court awarded $67,612.46. The Banner's current appeal only argues that the $40,000 of this judgment that represented appellate attorney fees was too low. There is absolutely no possibility of the Court of Appeals ruling that The Banner is entitled to a judgment as high - even one-tenth as high - as that suggested by Swincher. - Ed.)
"Since we walked into this issue years ago, I believe we all stand on the same page," Swincher continued. "We pay the insurance company for a reason. They should be responsible. … If we lose and we're penalized this money, we still pay the insurance company for a reason."
"That's absolutely right," Trump added.
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