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My Township Got Sued? Now What?

Litigation is almost always stressful, costly, and time-consuming. Most townships seek to avoid litigation where possible, but in some instances it is unavoidable. If your township is served with a lawsuit, it is important to have a plan and to take the appropriate steps in response, as failing to do so can have serious ramifications for your township. This month’s E-Letter will discuss basic steps to follow when your township is sued.

Contact the Township Attorney

It should come as no surprise that the first step after a lawsuit is served on your township is to contact the township attorney. You should send them a copy of the complaint and provide as much context or background regarding the lawsuit as you are able. This is something that should be done as soon as possible, for a number of reasons.

There are a number of sensitive deadlines that arise when a lawsuit is filed. When a complaint is filed, the Michigan Court Rules generally require an answer to be filed in less than a month. A failure to file a timely answer can result in a default judgment against the township—meaning the court will grant the relief sought by the complaint. While default judgments can be set aside, it is an uphill battle that creates additional and unnecessary work and risk. Responding to a complaint requires admitting or denying the allegations of the complaint and the assertion of affirmative defenses which can be a time-consuming process, so it is best to give your attorney as much time as possible to prepare a thorough and detailed answer.

In addition to the deadline to file an answer to a complaint, there are other pleadings that can require immediate attention. Some lawsuits may be accompanied by motion for a preliminary injunction or a temporary restraining order, meaning a temporary court order prohibiting the Township from acting in a certain way until there is a decision on the merits of the case. The timeframe to respond to these motions can be very short, and often require immediate attention from your attorney to prevent an order from being entered against your township. A failure to timely respond to these motions can result in an adverse judgment being issued against the township, which can remain in place for months while litigation runs its course.

Notifying your attorney as soon as possible will also allow your attorney to file an appearance on behalf of the township so that they can receive notices related to the litigation. This will ensure that filing deadlines and hearings are not missed. Additionally, once your attorney is apprised of the suit, they can help coordinate litigation efforts with the township board and staff, as explained below.

Contact Your Insurance Provider

After contacting the township attorney, the next step should be to send a copy of the complaint to the township’s insurance provider, as it is common for municipal insurance policies to provide coverage for certain types of litigation. This should also be done as quickly as possible.

Once you send your insurer a copy of the complaint, they will respond with a determination of whether your policy provides coverage for this type of lawsuit. If your policy provides coverage, your insurer will typically assign an insurance attorney to defend your township from the lawsuit, which can represent a substantial savings to your township. It may take days or even weeks to obtain a determination letter from your insurer, and insurers may not reimburse townships for legal expenses incurred by the township prior to the assignment of insurance counsel, so it is crucial to get the ball rolling on this as soon as possible. In some instances, even if your policy would otherwise cover the type of lawsuit filed against your township, coverage may be denied if the Township waits too long to file a claim.

Lastly, if your insurer denies coverage for the lawsuit, there may be a basis for the township to challenge that determination, which is likewise a process better started sooner rather than later, as the longer your township defends the suit without insurance coverage, the more costs it will incur that it may not be able to recuperate later on.

One last point about insurance counsel—even if insurance counsel is assigned, you may want to consider authorizing the township attorney to assist in the defense of the township, especially if the litigation involves a more complex area of municipal law or a situation with which your attorney is familiar. This will provide the benefit of your township attorney’s expertise and familiarity with the township, while still offsetting legal costs by the work performed by an insurance assigned attorney.

Inform the Board and Other Township Officials and Employees

Once a lawsuit is filed against your township, you should notify the township board of the suit and the actions the township has taken in response, if any. This can be done by the township attorney or another member of the board, such as the supervisor. We recommend doing this promptly, such as by sending an email to the board, rather than waiting until the next board meeting. If you notify the board via email, be sure to avoid any back-and-forth email exchanges with a quorum of the board about the lawsuit to avoid violating OMA.

Public statements by board members have the potential to harm or undermine your township’s litigation position. Notifying the board of the suit can put individual members on notice not to discuss matters related to the litigation while it is pending, which can ensure that the township addresses the litigation in a consistent and defensible manner, if at all. Thus, we recommend asking the board to avoid publicly commenting on the ligation when you notify them of the suit. Public statements by other township officials and employees can also become problematic, so we recommend informing them of the litigation as well. In addition to not commenting on pending litigation, board members and township staff may need to gather relevant records to share with your attorney to include in a responsive pleading or to produce as part of discovery, and should be instructed that no documents relating to the pending litigation should be disposed of or destroyed.

Once the board is notified of the suit, it is typically prudent to schedule a closed session with the township attorney to discuss the lawsuit and for the board to provide direction, if necessary. Depending on the urgency of the suit, it may be necessary to call a special board meeting to discuss the lawsuit as soon as possible, which under OMA requires notice at least 18 hours in advance. Note that OMA requires a 2/3 majority vote of all serving board members to enter a closed session (for a 5-member board, this requires an affirmative vote of 4 members), so you should take care to schedule a special meeting that at least 2/3 of the board can attend. Once in closed session with the township attorney, the board can discuss the nature of the lawsuit, what to expect as the litigation progresses, and trial or settlement strategy.

It can also be very helpful for your board to designate a member as a lead contact for the township attorney and to provide that member with authority to make decisions on behalf of the township. It can be cumbersome and time-consuming for the township attorney to repeatedly come before the entire board to discuss litigation and receive board approval for minor litigation decisions, so we recommend delegating at least some decision-making authority to a single board member, with the expectation that big decisions (such as settling the lawsuit or embarking on a strategy that will incur considerable expenses) will come back for board authorization. To avoid the mad scramble of assigning the board member in the wake of a recently filed lawsuit, it may be helpful to establish a policy in advance that designates a board member as the primary contact for the township attorney and authorizes them to make a decision on behalf of the township until the board can convene.

Conclusion

The early stages of a lawsuit are crucial. Responding promptly and appropriately can save your township considerable time and resources and will ensure that it is in the best possible position to defend itself.

By Jake Witte and Eric Conn

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