5.3. SR 01-09-2006 - Laserfiche WebLink

Home Browse Search

. It's a disincentive to inter-local cooperation, In any inter-local cooperative effort that could be considered a "joint venture", the potential total liability exposure is apparently now equal to the stanltory tort limit times the number of participating political subdivisions. In other words, the total liability exposure that the cooperating political subdivisions must plan for and fund is now significantly greater. . It creates uneven results for claimants. E.g., if you have the misfortune to be run over by an Metro Transit bus, you could recover up to $300,000; if you're run over by a bus operated by a six-member joint powers entity, you could reco\'er up to $ 1.8 million. . Although the court didn't define "joint venture" precisely. one section of the opinion describes it as a "mutual unde11aking for a common purpose." This language is troubling because it's so broad. It seems pretty clear that any agreement that creates ajoint pov...ers entity - i.e., a joint board with the power to receive and expend funds, enter contracts, hire employees, or own property - will be considered a "joint vennlre". Uut it's possible that other types of intergovernmental cooperative arrangements \vill be affected as well. Even providing assistance to a neighboring city under a muulal aid agreement arguably might constitute a "muum\ undertaking for a common purpose," and therefore a 'joint venture" in which all the members are vicariously liable for each others' actions. . It increases the risk that a joint powers entity' s coverage limits could turn out not to be enough. When LMCIT issues coverage for a joint powers entity, that coverage protects all of the constituent political subdivisions as well for liability arising from the joint entity's activities. In Ulrn, coverage for the joint powers entity's activities is excluded under the individual city's own coverage. The goal is to be able to provide a single unified defense for all of the parties, rather than having multiple attorneys defending each city separately. But because of the "limit slacking" implication of the court's ruling, there's now a greater risk that the joint entity's coverage limit might not be enough.' Coverage issues for joint Jlowers agreements .Mutual aid agreements. service C011lracts, and simi/arjoint pOll'ers agreements The Reimer mling doesn't create any new coverage issues for most joint powers agreements, including mutual aid agreements, agreements under which a city purchases service from or provides service to another political subdivision, and so on. The ruling does increase the city's I iability exposure under these contracts. since there' s now a risk that a city could be held liable for its partner's actions under the Reimer ruling's "joint venU\fl~" theory. But the city's LMCIT liability coverage would cover the city's potential vicarious liability for another political subdivision's actions if this type ofagreemenl were deemed by the court to be a "joint venture". I Of course, Iherc's always some risk that the coverage limit will turn Ollt to be inadequate. whether it's a joint powers situation or an individual city, because some claims aren't capped by Ihe srannory limil. Federal civil rights claims are an example. 2