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 Court of Appeals Says Town, Insurer Both Liable

July 2, 2008 - The Indiana Court of Appeals has rejected the latest attempt by Knightstown's insurer to leave the town solely responsible for attorney fees and court costs incurred in a public access lawsuit the town and insurer lost to The Banner nearly two years ago.

The town's insurer advanced three arguments for why it believed it should not be jointly and severally liable with the town for attorney fees and court costs awarded by Henry Circuit Court Judge Mary Willis. In a five-page ruling issued last Thursday, the Court of Appeals rejected them all.

The Banner sued Knightstown and its insurer in 2004 to compel disclosure of the terms of a settlement that ended a former police dispatcher's civil rights lawsuit against the town and police department. While The Banner lost at the trial court level, the Court of Appeals reversed in late 2005, ruling the settlement was a matter of public record, and the Indiana Supreme Court left this ruling standing in July 2006.

In March 2007, Willis ordered the town and insurer jointly and severally liable for $67,612.46 in attorney fees and court costs, a ruling that was appealed by The Banner. The Court of Appeals issued a ruling on this second appeal this March, and the town's insurer asked for a rehearing - a request that was granted - because not all of the issues it had raised on cross-appeal had not been addressed.

The insurer argued it should never have been sued by The Banner and was not a necessary party to the newspaper's lawsuit. Writing for a unanimous three-judge panel, Judge Ezra Friedlander said the town's insurer had, in fact, been necessary to the litigation.

"In view of the relationship between the Town and (insurer) … and the nature of (the insurer's) clientele in general, (the insurer's) role in the events leading to litigation, and in conducting the litigation itself, was far from passive," Friedlander wrote, saying the insurer was clearly a necessary party.

The town's insurer fared no better arguing it should not be liable for attorney fees and court costs awarded under the Access to Public Records Act because it is not a public agency. The Court of Appeals also found the insurer's claim that it had actually prevailed against The Banner in an earlier appeal unpersuasive.

The Court of Appeals had, in its 2005 ruling, acknowledged that the town's insurer is not a public agency as that term is defined under the APRA. However, Friedlander said in the opinion issued last week that "it is inaccurate to say that this was the only issue in which those entities had a stake.

"Again, the significant factor here is the close relationship between the Town and (its insurer) with respect to this litigation. Along with the Town, (the insurer) actively sought to prevent disclosure of the settlement agreement, which in turn triggered (The Banner's) lawsuit."

If it wants to contest this latest decision, the town's insurer has until Monday, July 28, to file a petition seeking transfer to the Indiana Supreme Court. If transfer is not sought, the case will go back to the Henry Circuit Court for Willis to clarify her method of calculation and, if necessary, correct her prior order awarding fees and costs.


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