Mutual aid agreements

1. Mutual aid agreements

2. AZ Republic headline “New Yarnell Records Depict Non-Stop Chaos.” Mutual aid agreement included indemnity. Prescott required to indemnify State for Prescott’s negligence. If indemnity had been a general indemnity, Prescott might have had to indemnify State for passive negligence. Risk of losing immunity under workers’ compensation statutes if indemnity not written correctly. Yarnell

3. City sponsors event on county right-of-way. City agrees to indemnify county for liability arising out of event. Participant injured due to latent defect in street. City required to indemnify county. Two recent rural city lawsuits

4. Three risk pool members and county participate in SWAT team. County is directing the team. SWAT team injures target of operation as a result of negligent discharge of firearms. All agree to indemnify the others. The three risk pool members each have their own attorney. Attorneys obligated to shift liability to other defendants. Risk pool pays nearly as much in defense costs as it does for indemnity obligation. Swat team

5. ADOT Department of Homeland Security Border Patrol Department of Motor Vehicles County Upstream igas

6. Six armored vests in return for broad indemnity of Department of Motor Vehicles by city. Indemnify Department of Homeland Security in return for funds to provide ambulance to support Katrina response. Imbalance of consideration

7. ADOT pass-through of federal funds. • ADOT gives cities and towns a “take it or leave it” proposition: • To receive federal funds, city must indemnify ADOT for ADOT’s negligence. • Possible contractual fixes: • Non-appropriation clause. • Get indemnity from state contractors. • Legislation may be best alternative. Imbalance of negotiating leverage

8. County dive team with municipal team members. County directs and supervises all operations. Even though the municipal team members must follow the county’s direction, the city must indemnify the county for damages resulting from the county direction. Other examples

9. Better indemnity. “Just say no.” Joint representation for liability defense with binding arbitration for allocation of damages. Tools available to cities and towns

10. Indemnify: To save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon him. Also, to make good; to compensate; to make reimbursement to one of a loss already incurred by him. Indemnity: Is a collateral contract or assurance, by which one person engages to secure another against an anticipated loss. What it means to indemnify

11. To the fullest extent permitted by law, each Participating Jurisdiction (as “indemnitor”) shall defend, indemnify and hold harmless each of the other Participating Jurisdictions (as “indemnitees”). • Plain language • FCD of Maricopa County v. Paloma Inv. Ltd. Partnership, 230 Ariz. 29; 279 P.3d 1191 (Div. 1 2012) • MT Builders, LLC v. Fisher Roofing, Inc., 219 Ariz. 297; 197 P.3d 758 (Div. 1 2008) • Clear intent of the parties in the contract • Schweber Electronic v. National Semiconductor Corp., 174 Ariz. 406; 850 P.2d 119 (Div. 1 1992) • To require indemnitor to defend, it must say “defend” • Octotillo, LLC v. WLB Group, Inc., 219 Ariz. 200; 196 P.3d 222 Contracts 101

12. . . . its officers, officials, employees, agents, volunteers, successors, and assigns (“Indemnified Group”) . . . Protect yourself

13. . . . for claims, damages, losses, liabilities and expenses of any nature whatsoever (including but not limited to reasonable attorneys’ fees, court costs, the costs of appellate proceedings, and all claim adjusting and handling expense) . . . Indemnify against liability v. loss or damages. • MT Builders, LLC v. Fisher Roofing, Inc., 219 Ariz. 297; 197 P.3rd 758 (Div. 1 2008) • FCD of Maricopa County v. Paloma Inv. Ltd. Partnership, 230 Ariz. 29; 279 P.3d 1191 (Div. 1 2012) Protect yourself against . . .

14. . . . relating to, arising out of, resulting from or alleged to have resulted from the indemnitor’s acts, errors, mistakes or omissions relating to any action or inaction under this Mutual Aid Agreement (collectively, “Claims”) . . . Claims related to the agreement

15. . . . including but not limited to work, services, acts, errors, mistakes, or omissions in the performance of this Mutual Aid Agreement by anyone directly or indirectly employed by or contracting with the indemnitor, or any person for whose acts and liabilities are the obligation of the indemnitor. What about the actions of others?

16. If any claim, action or proceeding is brought against the Indemnified Group pursuant to this section, indemnitor shall have a duty, at its sole cost and expense, to resist or defend such claim or action on behalf of the Indemnified Group . . . What if the party to be indemnified is negligent?

17. General indemnity – silent on indemnitee’s negligence; entitled to indemnification for passive negligence, but not active negligence. • Specific indemnity – addresses indemnitee’s negligence requiring indemnification for indemnitee’s negligence. • Grubb & Ellis Management Services, Inc. v. 407417 B.C. LLC, 138 P.3d 1210 • Washington Elementary School District No. 6 v. Baglino Corp., 169 Ariz. 58; 817 P.2d 3 • Passive – failure to discover, take adequate precautions; mere nonfeasance. • Active – personal participation; affirmative acts; acts or omissions with knowledge or acquiescence. • Estes Company v. Aztec Construction, Inc., 677 P.2d 939 general v. specificpassive v. active

18. Decision Tree Negligence Type Indemnity Coverage? * Incorporation by reference is NOT clear and unequivocal –Baglinoand Allison.

19. Who is indemnified: Party, agents, employees, successors, assigns, officers, officials, etc. • Against what: Claims, actions, suits, allegations, loss, damages, liabilities, personal injury, property damage, etc. • Loss v. liability – the difference could be millions. See FCD v. A Tumbling-T v. Flood Control District of Maricopa County, 220 Ariz. 202; 204 P3d 1051 (Div. 1 2008) • Personal injury/property damage v. any and all types of claims. • Arising from what: Acts, errors, omissions, mistakes, under the Agreement. • Triggers when duty attaches. • Arizona does not apply “mechanical application” of passive/active analysis. Courts look at “contract and all-encompassing language of clause.” See Allison Steel Manufacturing Co. v. Pima Superior Court; Sundt Construction Co., 22 Ariz. App. 76; 523 P.2d 803. See also Baglino, Goettle. Drafting Notes - recap

20. . . . but only to the extent that such Claims result in vicarious/derivative liability to the indemnitee and are caused by the act, omission, negligence, misconduct or other fault of the indemnitor, its officers, officials, agents, employees or volunteers, provided, however, that the indemnitor shall have no obligation to indemnify the Indemnified Group for the Indemnified Group’s passive negligence. Need to avoid indemnity for passive negligence

21. Insurance provisions set forth in this Mutual Aid Agreement are separate and independent from the indemnity provisions of this Mutual Aid Agreement, and neither the insurance provisions nor the indemnity provisions shall be construed in any way to limit the scope, magnitude, or enforcement of the other provisions. The indemnity provisions of this Mutual Aid Agreement shall survive the termination of this Mutual Aid Agreement. housekeeping

22. Indemnity language result • Indemnifying for negligence of Indemnitor and for negligence of Indemnitee • Indemnifying for negligence of Indemnitor and silent about negligence of Indemnitee • Indemnity for negligence of Indemnitor in whole or in part • Each indemnify the other for vicarious liability. • Specific indemnity – worst outcome • General indemnity – must indemnify for passive negligence of Indemnitor • Must indemnify for negligence of Indemnitee • Best outcome

23. Educate fire chiefs and police chiefs. Audit all agreements with other governments. Avoid claim of reliance damages on apparent authority of fire chief or police chief. Just say no

24. Only works when all defendants are defended by same insurer. One attorney would represent all defendants. Once damages are determined, the allocation among the defendants would be allocated pursuant to binding arbitration. All parties would have to agree at outset. Must address coverage and limit issue. Joint representation

25. Not covered by coverage provided member city or town. • Need separate, independent coverage. • If require members to name the joint power entity as a named insured: • Could have too much coverage. • Could have exposure for actions that a member does not control. • Naming a joint power entity as a named insured is not a good idea if you don’t control. Joint power entity

26. INDEMNITY CITY MUTUAL AIDAGREEMENT COUNTY WORKERS ’ NO WORKERS ’ COMPENSATION COMPENSATION IMMUNITY I MMUNITY EMPLOYEE Preserving workers’ comp immunity

27. For purposes of workers’ compensation, an employee of a party to this Agreement, who works under the jurisdiction or control of, or who works within the jurisdictional boundaries of another party pursuant to this specific intergovernmental agreement, is deemed to be an employee of both the party who is his primary employer and the party under whose jurisdiction or control or within whose jurisdictional boundaries he is then working, as provided in A.R.S. § 23-1022(D). The primary employer party of such employee shall be solely liable for payment of workers’ compensation benefits for the purposes of this section. Each party herein shall comply with the provisions of A.R.S. § 23-1022(E) by posting the public notice required. Workers’ comp indemnity provision

28. Put one party in charge. • That entity provides insurance for all participants. • The participants contribute to the cost of insurance. • Joint defense agreement. • Once damages determined, the allocation of damages determined by binding arbitration. Mutual aid agreements

29. Regional issues are common and impact multiple jurisdictions. • Fire suppression • Joint law enforcement events • Emergency responses • Public transit • Regional parks • Regional libraries • IGAs govern these relationships. • Indemnities allocate risks. • Don’t overlook the indemnity provision just because its at the end of the IGA. • The Yarnell IGA might have been drafted differently, exposing Prescott to significant liability. • Don’t stumble into liability. • Audit all your IGAs. What does this mean to you?