HomeMy WebLinkAbout84-018 PuglieseMr. Robert A. Pugliese
6932 Hemlock Road
Harrisburg, PA 17112
II. Factual Basis for Determination:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
December 27, 1984
OPINION OF THE COMMISSION
Re: Purchase of Legal Service, Surcharge Action
Dear Mr. Pugl i ese:
I. Issue:
84 -018
You ask whether the Ethics Act poses any restrictions on your securing
legal services to defend a surcharge action registered against you as a
township supervisor.
You currently serve, with two other persons, on the Board of Supervisors
of a Second Class Township of West Hanover Township, hereinafter, the
Township. During 1983 the Township undertook two projects as part of the
Township's on -going recreational program. One was the construction of a
soccer field and the other was to repair three Township facilities. Neither
of these projects were expected to cost in excess of $4,000.00 and the
advertisements for bids were not made. In both cases, the actual outlay to
complete these projects exceeded $,4000.00. As a result, questions arose as
to whether a competitive bidding process should have been undertaken with
respect to these projects.
The auditors of the Township, after reviewing these transactions, filed
their report for 1983 and did not impose any surcharge as a result of these
contracts. Nevertheless, as provided for in the Second Class Township Code,
53 P.S. 65553, hereinafter, the Code, three citizens filed an appeal from the
auditors' report. This appeal is currently pending in the Court of Common
Pleas in Dauphin County.
Mr. Robert Pugliese
December 27, 1984
Page 2
Because of this appeal, you needed to respond and to engage legal
counsel. Initially, you requested the Township solicitor to contact the
Township's errors and omissions insurance carrier to provide your legal
defense in this case. The insurer refused to provide a defense contending,
that because the Code provided that a surcharge action could result in
individual liability on the part of the Supervisor(s), that this was not the
type of coverage within the errors and omissions policy. You have not
provided us with a copy of this policy, nor do we wish to dispute this
assertion of the insurer. Hence, for purposes of this response we will assume
the factual correctness of this position.
You were then placed in a position of having to secure legal counsel to
defend this court action. You sought the advice of the Township solicitor, the
Pennsylvania State Association of Township Supervisors and several other
sources to determine if you could, at Township expense, engage counsel to
defend you in this suit. Every source and opinion indicated you were entitled
to secure such counsel at public expense. As a result of this information, at .
a public meeting you engaged or retained an attorney to represent your
interests in this action. No public monies have been spent to the date of
your request letter for these legal services, however, because you wanted to
secure our opinion as to whether such an expendenture is appropriate.
Before responding we make two final statements. First, our jurisdiction
is limited to ruling on the propriety of the proposed action under the Ethics
Act. We have no role in deciding the correctness of these actions under any
statute, such as the Code, other than the Ethics Act or the positions of any
of the persons or parties mentioned here, such as the auditors, the citizens
or the insurer. Second, you wish us to note that, not only did the Township
auditors fail to impose a surcharge with respect to the two projects outlined
above, but also that the Township solicitor, in reviewing the legal
implications of these expenditures opined that the Code had not been violated.
You point to these facts and argue that an elected official should not be
required to "reach into his own pocket" to pay to defend against an action
that has been twice "approved ", i.e. by the solicitor's opinion and by the
auditors report which imposed no surcharge.
III. Applicable Law:
The law to be applied to this question is as follows:
Section 3. Restricted activities.
(a) No public official or public employee shall use his
public office or any confidential information received
through his holding public office to obtain financial gain
other than compensation provided by law for himself, a
member of his immediate family, or a business with which
he is associated. 65 P.S. 403(a).
Mr. Robert Pugliese
December 27, 1984
Page 3
IV. Discussion:
In order for an action to be acceptable under Section 3(a) of the Ethics
Act, the official must be voting, for example, to allow himself "compensation"
and that item must be provided by law. In the present case it is far from
clear that payment of the costs of this legal defense to the surcharge action
can be considered part of the "compensation" of a supervisor. Equally unclear
is the status of these payments as to whether they are allowed by law.
We have searched for some definitive ruling or precedent to assist us in
reviewing this question. We have found none directly on point. One recent
case, however, is instructive. In Employers Mutual Casualty Company v.
Supervisors of Lewis Township, Pa. Cmwlth. , 477 A. 2d 607 (1984),
the Court decided that an errors and omissions - in T surance carrier was required
to provide insurance coverage to a township where the supervisors were
surcharged. The Court concluded that the policy which provided for coverage
and payment of any loss where liability arose from the employer's performance
of duties within the scope of his employment was not contrary to public policy
and the insurer was, therefore, obligated to pay losses under the policy. The
Court concluded that Section 701 of the Political Subdivision Tort Claims Act,
42 P.S. 8564(a), provided authority for political subdivision to purchase
and insure any liability arising from the performance of official duties. The
errors and omissions insurance was found to be authorized and the carrier
liable to pay even in the face of a loss which resulted from a surcharge
judgment.
In the present case, it is clear that the surcharge and the need for a
legal defense arose out of actions related to your official duties. The
Employers Mutual case, above, would seem to teach that any loss resulting from
this action would itself be payable from the Townships errors and omission
policy. It would be anomalous that if the loss itself might be payable from
this policy that you would be precluded from securing a defense to same from a
similarly purchased public source or substitute (private counsel) thereof.
Thus, even assuming the costs of this defense would be deemed "compensation,"
it would appear that the costs of this policy and, therefore, the costs of
defending same, if same is denied by the insurer, can be said to be "provided
by law."
Accordingly, should you seek or secure such legal defense and incur costs
related therto and take actions as a Supervisor to seek or secure payment pay
for same from the Township funds, you would not thereby violate Section 3(a)
of the Ethics Act.
Mr. Robert Pugliese
December 27, 1984
Page 4
V. Conclusion:
The costs of this legal defense may not constitute "compensation." Even
if these costs are "compensation," the payment of same and your actions to
secure payment or reimbursement of same from the Township are allowed by law.
Thus, your actions in this situation would not violate Section 3(a) of the
Ethics Act.
Pursuant to Section 7(9)(i), this opinion is a complete defense in any
enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any civil or criminal proceeding, providing the requestor has
disclosed truthfully all the material facts and committed the acts complained
of in reliance of the advice given.
This letter is a public record and will be made available as such.
Finally, any person may request within 15 days of service of the opinion
that the Commission reconsider its opinion. The person requesting reconside-
ration should present a detailed explanation setting forth the reasons why the
opinion requires reconsideration.
SSC /sfd
By the Commission,