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Unintended Consequences – A Political Subdivision May Now Have a Path to Avoid Paying Judgments against Its Employee

In Ayers v. Cleveland, 2017-Ohio-8571, an Ohio appellate court found that “R.C. 2744.07(A)(2) does not provide [a third-party] with a private cause of action against [a political subdivision] to enforce its statutory obligation to indemnify its employees.” Ayers at ¶ 33.

This case involved the efforts of a plaintiff to collect a 13 million dollar verdict that the plaintiff obtained against two detectives who were involved in the plaintiff’s criminal conviction. An appellate court subsequently overturned the criminal conviction which resulted in the lawsuit and the massive judgment against the detectives.

R.C. 2744.07(A)(2) requires political subdivisions to pay for judgments against their employees “arising from an act or failure to act in the course of employment while acting good faith.” However, in this case, following the 13 million dollar verdict, the city failed to pay the judgement against the detectives to the plaintiff. In fact, it appeared that the city actually “orchestrated a scheme to take the detectives through bankruptcy” rather than pay the judgment to the plaintiff so the city could to evade its obligation under the statute to pay the judgment on behalf of the detectives. Ayers at ¶ 93 (dissenting opinion).

The plaintiff filed a lawsuit against the city seeking to compel it to fulfill its obligation under the statute to pay plaintiff the judgment amount awarded to him. However, the appellate court found that “the purpose of R.C. 2744.07(A)(2) is not to benefit third parties who have been injured by the acts of a state employee, but rather, to shield the employee from financial ruin resulting from an act committed in good faith and within the scope of employment.” Ayers at ¶ 31. Accordingly, the appellate court found that the plaintiff “lacked legal standing to pursue a claim for indemnification under R.C. 2744.07(A)(2).” Ayers at ¶ 33. In other words, the plaintiff could not bring “a private cause of action against the [city] to enforce its statutory obligation to indemnify its employees.” Ayers at ¶ 33.

This case raises the possibility that a political subdivision might evade its obligations to pay civil judgments awarded against its employees by simply by refusing to pay the judgment. A political subdivision may even attempt to avoid paying a judgment by assisting its employees through the bankruptcy process.

To read this case, please click here.

Authors: Matthew John Markling and Patrick Vrobel

Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.

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