L.A. v. Bd. of Educ. of Trenton

• Decision Date: 25 March 2015
• Docket Number: No. A-59 September Term 2013, 073401.,A-59 September Term 2013, 073401.
• Citation: 110 A.3d 914,221 N.J. 192
• Parties: L.A. and The Horace Mann Insurance Company, Petitioners–Appellants, v. BOARD OF EDUCATION OF The CITY OF TRENTON, MERCER COUNTY, Respondent–Respondent.
• Court: New Jersey Supreme Court

221 N.J. 192

110 A.3d 914

L.A. and The Horace Mann Insurance Company, Petitioners–Appellants

v.BOARD OF EDUCATION OF The CITY OF TRENTON, MERCER COUNTY, Respondent–Respondent.

No. A-59 September Term 2013, 073401.

Supreme Court of New Jersey.

Argued Jan. 5, 2015.

Decided March 25, 2015.

Gidian R. Mellk argued the cause for appellants (Mellk O'Neill, attorneys; Ms. Mellk and Arnold M. Mellk, Princeton, of counsel and on the brief).

Patrick F. Carrigg, Trenton, argued the cause for respondent Board of Education of the City of Trenton, Mercer County (Lenox, Socey, Formidoni, Giordano, Cooley, Lang & Casey, attorneys; Michael A. Pattanite, Jr., on the briefs).

Beth N. Shore, Deputy Attorney General, submitted a letter in lieu of brief on behalf of respondent Commissioner of Education (John J. Hoffman, Acting Attorney General of New Jersey, attorney).

Opinion

Justice SOLOMON delivered the opinion of the Court.

We are called upon to determine whether N.J.S.A. 18A:16–6 entitles a school board employee to indemnification for attorney's fees and costs spent in defense of a civil action arising from the same allegations contained in a dismissed criminal indictment. We conclude that in such circumstances N.J.S.A. 18A:16–6 requires indemnification unless there is proof by a preponderance of the evidence that the employee's conduct fell outside the course of performance of his or her employment duties.

Here, rather than conducting an evidentiary hearing, the Administrative Law Judge (ALJ) disposed of the matter by way of summary decision. Because there are disputed issues of material fact regarding whether L.A. was acting within the scope of the responsibilities of his employment, the judgment of the Appellate Division is reversed. The matter is remanded to the Commissioner of Education for a hearing to determine whether L.A.'s conduct fell outside the course of performance of his employment duties.

I.

The relevant facts gleaned from the scant record are as follows. Petitioner L.A. was employed by the Trenton Board of Education (Board) as a security guard at an elementary school. While at work, L.A. allegedly had unlawful sexual contact with two minor students, N.F. and K.O. The allegations were referred to the Institutional Abuse Investigation Unit (IAIU) of the Department of Children and Families (DCF). In its investigative report, the IAIU stated that the “[s]exual [a]buse/[s]exual [m]olestation was substantiated regarding the actions of [L.A.].” However, the report explained that “[n]o adjudicative findings have been made” and “IAIU's review herein is solely investigative.”

As a result of the sexual abuse allegations against L.A., a Mercer County grand jury returned two separate indictments—one arose out of the allegations regarding N.F. and the other arose out of the allegations regarding K.O. In the N.F. indictment, L.A. was charged with third-degree aggravated criminal sexual contact, N.J.S.A. 2C:14–3(a), and second-degree endangering the welfare of a minor, N.J.S.A. 2C:24–4. In the K.O. indictment, L.A. was charged with two counts of second-degree sexual assault, N.J.S.A. 2C:14–2(b), and one count of second-degree endangering the welfare of a minor, N.J.S.A. 2C:24–4.

In order to resolve both indictments, L.A. entered into a plea agreement with the State in which he agreed to plead guilty to one count of second-degree endangering the welfare of N.F. in exchange for dismissal of the remaining charges in the N.F. indictment and dismissal of the K.O. indictment. During his plea colloquy, L.A. made no admissions regarding the allegations contained in the K.O. indictment, but he did admit that he had “engag[ed] in conversation of a sexual nature with two females, both of whom were minors and under [his] supervision,” and that he “engag[ed] in an inappropriate touching of at least one of those minors during the course of that day[.]”

Subsequently, a civil complaint was filed on K.O.'s behalf by her guardian ad litem alleging that L.A. sexually assaulted K.O., and that the Board negligently hired L.A. The Board answered the complaint on its own behalf, taking no position with regard to the allegations against L.A. However, L.A. was assigned counsel by Horace Mann Insurance Agency (Horace Mann), pursuant to a private insurance policy.¹ K.O.'s civil action was settled without any admission of wrongdoing by L.A. or the Board.

After the settlement was finalized, L.A., through counsel provided by Horace Mann, filed a verified petition against the Commissioner of Education (Commissioner) seeking reimbursement for the attorney's fees and costs incurred in defending against K.O.'s civil action. The matter was transferred to the Office of Administrative Law, and L.A.'s counsel and the Board filed cross motions for summary decision.

The ALJ issued an initial decision² based only upon the moving papers and supporting documents without an evidentiary hearing.

The ALJ granted L.A.'s motion for summary decision, denied the Board's motion, and awarded L.A. attorney's fees and costs pursuant to N.J.S.A. 18A:16–6, which addresses the right to indemnification for officers and employees of boards of education in civil actions. The ALJ concluded that the Board had failed to meet its burden of establishing that L.A.'s conduct fell outside of the performance of his duties as an elementary school security guard because the Board failed to prove that K.O.'s allegations of abuse in the civil action had occurred. The ALJ determined that the sexual assault allegations against L.A. were “never substantiated in a prior adjudicatory hearing” and that indemnification could not be denied in reliance upon “mere suspicion.” The ALJ stated:

To be indemnified for costs associated with a civil suit, a school employee's action must arise from and be during the course of performance of one's duties. While it is undisputed that the claim in this matter of sexual assault does not arise from a security officer's duties, the claim was never substantiated in a prior adjudicatory hearing. Under New Jersey Supreme Court precedents, absent such evidence, a school employee is entitled to indemnification for costs in defending a civil suit, regardless of mere suspicion that there may be truth to the claim. Thus, I [conclude], that summary decision for [L.A.] is appropriate at this time.

The Commissioner adopted the ALJ's initial decision and ordered the Board to reimburse L.A. for attorney's fees and costs for the defense of K.O.'s civil action. The Commissioner, agreeing with the ALJ's reasoning, stated “the civil case against [L.A.] was settled without admission or adjudication of the alleged facts; consequently there is no proof that he engaged in any untoward conduct toward the child, K.O.”

The Board appealed. The Appellate Division reversed the Commissioner, holding that “the statutory provisions of N.J.S.A. 18A:16–6 and –6.1 must be read collectively and are complementary.” The panel noted that N.J.S.A. 18A:16–6.1 requires a favorable outcome in criminal and quasi-criminal proceedings brought against board of education employees before indemnification is warranted and, therefore, N.J.S.A. 18A:16–6, which governs indemnification in civil proceedings, required L.A. to prove the outcome in the related criminal indictment was in his favor before he would be entitled to indemnification for defending K.O.'s civil action. The panel held that “the Commissioner did not consider [that L.A.'s] conduct led to a criminal conviction of endangering the welfare of children, but was persuaded by the fact that the events occurred while L.A. was working on school property and the civil litigation filed by K.O. was settled without L.A.'s admission of wrongdoing.”

The panel determined that the Commissioner's “reasoning ignore[d] the [IAIU] investigative findings, the criminal conviction resulting from the conduct [against N.F.], and the likely testimony from the victims presented at a hearing,” and held that “L.A.'s guilty plea resolved the charges in both indictments and was not a final disposition of the criminal charges favorable to L.A.” Finally, the panel determined:

In matters such as this one, where the conduct giving rise to alleged civil liability is also the basis for criminal charges, the factual basis for and ultimate disposition of those criminal charges is highly probative when determining whether the employee's conduct arose out of and in the course of the performance of his or her duties. Here, the record does not support a sufficient nexus between L.A.'s official duties as a security guard and his conduct with the students to trigger the protection of N.J.S.A. 18A:16–6.

The panel further held that “indemnification was not warranted” because the IAIU report substantiated K.O.'s allegations against L.A. and provided sufficient evidence to show that the claim did not arise out of or in the course of performance of his employment duties.

Horace Mann, on behalf of L.A., filed a petition for certification with this Court arguing that the Appellate Division incorrectly determined that L.A. had the burden of showing a “favorable outcome” in the criminal proceedings to be entitled to indemnification under the civil statute, N.J.S.A. 18A:16–6. We granted certification. L.A. v. Bd. of Educ. of Trenton, 217 N.J. 286, 87 A. 3d 773 (2014).

II.

A.

L.A. contends that the Appellate Division improperly imported the requirement under the criminal indemnification statute, N.J.S.A. 18A:16–6.1 —that he must show that he received a favorable outcome in the criminal proceeding to be entitled to indemnity—into the civil indemnification statute, N.J.S.A. 18A:16–6, which contains no such requirement. L.A. argues that had the Legislature intended that boards of education be required to indemnify employees for costs associated with the defense of civil actions only when a final, favorable disposition of the related criminal matter was reached, it would have included such language in the civil indemnification statute.

L.A....