American Employers' Insurance v. City of Medford
Docket: No. 93-P-203
Court: Massachusetts Appeals Court; January 5, 1995; Massachusetts; State Appellate Court
The City of Medford denied indemnification to American Employers' Insurance Company for a $153,000 judgment paid to a student, Dennis Raimo, who was injured in a classroom accident involving teacher William Mahoney. The city argued that Mahoney's right to indemnity was personal and non-assignable. Employers initiated a lawsuit for indemnity, and the Superior Court ruled in favor of Employers under G.L. c. 41 § 100C, which mandates that public employers indemnify employees for financial losses incurred in the scope of their official duties. The accident occurred before the Massachusetts Tort Claims Act (G.L. c. 258) became effective, making G.L. c. 41 § 100C applicable. The judgment highlights that while the Tort Claims Act uses the term "may indemnify," indicating discretion, G.L. c. 41 § 100C imposes a mandatory indemnification obligation on municipalities. The court noted that the term "personal" in the Tort Claims Act suggests a limitation on indemnification rights when private insurance is involved, a distinction not present in the earlier statute. Governmental units are immune to tort claims, leading injured parties to seek compensation from public employees connected to the incident. If the employee was acting within their official capacity, it is just for the governmental employer to cover damages awarded against the employee to prevent excessive personal liability for public workers. The indemnification obligation under G. L. c. 41, § 100C requires that any defense or settlement be managed by designated legal counsel. Unlike earlier statutes, § 100C ensures that public employees do not have to pay out-of-pocket for damages. In the case of Mahoney, the city is liable for the judgment against him, and it is unfair for the city to benefit from insurance coverage provided by the Massachusetts Vocational Association. Other jurisdictions have reached similar conclusions regarding indemnity rights. The city’s argument against the assignment of indemnity rights by Mahoney is flawed; contractual rights can be assigned unless explicitly prohibited. The judgment was affirmed, noting that § 100C was later repealed but its provisions remained incorporated in the collective bargaining agreement.