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Court News Ohio

Creditor Cannot Use Indemnification Law to Collect Judgments Won against Police Officers

A person who has won a civil judgment against a public employee cannot use a state indemnification law to require the government body to pay the judgment — unless the employee requests that the employer pay, the Ohio Supreme Court ruled today.

In a 6-1 decision, the Supreme Court affirmed an Eighth District Court of Appeals decision that a Cuyahoga County man could not use that law to force the city of Cleveland to pay a  $13.2 million judgment he won against two former police officers.

Writing for the Court majority, Justice Patrick F. Fischer stressed the ruling today is limited to the rights of a judgment creditor to seek indemnity from a government body under R.C. 2744.07(A)(2). He noted the trial court must consider the other legal theories David Ayers raised when claiming the city and the officers conspired to avoid paying the judgment by having an officer declare bankruptcy.

Justice Fischer wrote that the right to seek indemnity, or reimbursement, is a personal right of the government employee, and that a third party such as Ayers cannot claim that right when the employee declines to pursue it.

Chief Justice Maureen O’Connor and Justices Sharon L. Kennedy, Judith L. French, R. Patrick DeWine, and Michael P. Donnelly joined the opinion.

In a dissenting opinion, Justice Melody J. Stewart wrote that nothing in R.C. 2744.07(A)(2) limits the right of a creditor to seek payment of a judgment from the government, especially in cases where there is no dispute that the creditor is owed the money. She stated the General Assembly intended for its laws to have just and reasonable results, and denying judgment creditors the right to seek the funds would be unjust.

Former Inmate Prevails in Civil Rights Lawsuit
After a decade in prison , Ayers prevailed in a federal lawsuit and was released in 2011. He filed a civil case claiming Cleveland and police detectives Michael Cipo and Denise Kovach violated his civil rights.

The trial court dismissed the claims against the city, and the case continued against the two detectives. During negotiations, the detectives offered to assign to Ayers any indemnification claims they would make against the city in exchange for an agreement by Ayers not to collect a judgment from the detectives personally. Ayers rejected the offer.

A jury found the detectives violated Ayers’ federal constitutional rights and entered a judgment against Cipo and Kovach for $13.2 million, which was increased by adding attorney fees and court costs. Cipo died, and Ayers did not make any claim to have the Cipo estate pay the judgment. Kovach declared bankruptcy, and a bankruptcy court discharged her personal liability for Ayers’ judgment.

Second Lawsuit Filed
Ayers filed a second lawsuit in Cuyahoga County Common Pleas Court, alleging attorneys for Kovach and the city conspired to prevent him from collecting the judgment. The officers never asked the city to indemnify them under R.C. 2744.07(A)(2) for any judgment that Ayers might win against them, and the city never took steps on its own to indemnify the two. Ayers raised several claims against the city and the lawyers, including interference with the enforcement of a judgment, unjust enrichment, and civil conspiracy. He also claimed that as a judgment creditor, he could “stand in the shoes” of the officers and through R.C. 2744.07(A)(2) request indemnification from the city to pay his judgment.

The trial court agreed that he could use the indemnification law to seek payment from Cleveland. The city appealed , and in a 2-1 decision, the Eighth District reversed the trial court. Ayers appealed to the Supreme Court, which agreed only to consider whether third parties, not public employees, could use R.C. 2744.07(A)(2) to enforce the payment of a court judgment.

Immunity Law Protects City
Justice Fischer wrote that the indemnification provision must be considered with the “over-arching framework of political-subdivision liability in Ohio,” which generally shields government bodies from liability for the acts of their employees.

R.C. 2744.02(A)(1) states that political subdivisions are not liable in civil damages for injury, death, or loss caused by the acts of government employees. The law has five major exceptions, which permit citizens to pursue governments for damages through civil lawsuits, but none of those exceptions apply to Ayers, the opinion noted.

R.C. 2744.07 provides a separate protection for government employees. If judgments are obtained against employees for injury, death, or loss caused by employees acting within the scope of their official duties, then political subdivisions must indemnify the employees and pay the judgment.

The opinion stated that the law requires the employee seeking indemnification from the employer to request the protection. The Court stated that the law indemnifies the “employee” and not the “judgment” and does not state any other person may enforce the indemnification right on behalf of the employee.

Citing the Court’s 1987 Worth v. Aetna Cas. & Sur. Co. decision, the opinion stated that indemnification is a personal right that protects the person being sued for the loss when acting on behalf of the employer. It does not protect a person injured by the employee’s act.

“Because the statute does not specifically provide for a third party to enforce an employee’s right of indemnification against a political subdivision, we may not read that provision into the statute,” the Court stated.

Creditors Have Right to Obligate Government Bodies, Dissent Maintained
In her dissent, Justice Stewart explained the law’s purpose is to pay judgments obtained against employees of a political subdivision so that employees are not burdened by those judgments.

She wrote there is no dispute that Ayers’ judgment qualifies under the statute, and the only question is how the political subdivision’s indemnification obligation is invoked. She noted that 2744.07(A)(2) does not establish a procedure for an employee to seek indemnification by an employer. However, in several other statutes, including R.C. 9.87(E), which allows state officers to seek indemnification, the procedures to invoke it are spelled out. Without a procedure, there is no indication that 2744.07(A)(2) requires only the employee to initiate the process to be indemnified, the dissent stated.

The dissent argued the majority’s position does not follow the law’s requirement that an employee be “held harmless” for the liability incurred by doing their jobs. Under the majority’s reasoning, the employee may have to pay the judgment and be reimbursed, which actually harms the employee, the dissent stated.

Justice Stewart noted the law does not say the government has to indemnify employees for “losses” they suffer as a result of paying judgments, but rather indemnifies employees against the judgments. The difference is significant, the dissent stated.

“The statute cannot be applied in a way that subjects employees to financial ruin or that allows employees to control whether a legally qualifying judgment is paid,” the dissent stated.

2018-0852. Ayers v. Cleveland, Slip Opinion No. 2020-Ohio-1047.

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