Are New Jersey School Boards Required to Indemnify an Alleged Criminal for Attorneys’ Fees?

By Laurel B. Peltzman, Esq.

In a recent case, the New Jersey Supreme Court was tasked with determining whether or not a school board employee is entitled to indemnification for attorney’s fees and costs under N.J.S.A. 18A:16-6 when the fees and costs are incurred in a civil suit arising from the same allegations contained in a criminal indictment that has already been dismissed.  L.A. was employed by the Trenton Board of Education (the “Board”) as an elementary school security guard.  During the course of the workday, L.A. allegedly had unlawful sexual contact with two minors, N.F. and K.O. The Institutional Abuse Investigation Unit (IAIU) of the Department of Children and Families conducted an investigation and found that the claims of inappropriate sexual contact were substantiated.

Thereafter, a grand jury returned two separate indictments against L.A., one arose out of the alleged behavior concerning N.F. and one arose out of the alleged behavior concerning K.O.  In order to resolve both indictments, L.A. entered into a plea agreement wherein he pled guilty to one count of second-degree endangering the welfare of N.F. in exchange for the dismissal of the remaining charges in the N.F. indictment and dismissal of the K.O. indictment in its entirety. During the plea agreement proceedings, L.A. admitted that he had “engaged in conversation of a sexual nature with two females, both of whom were minors and under [his] supervision.”

Subsequently, a civil action was brought against L.A. on behalf of K.O. alleging that L.A. sexually assaulted K.O. and that the Board negligently hired L.A. The Board did not pay for L.A.’s legal counsel for the civil action and L.A. received legal counsel under a private insurance policy of the New Jersey Education Association.  The civil suit was ultimately settled without an admission of wrongdoing by any party.

After the matter was settled, L.A. filed a verified petition against the Commissioner of Education seeking reimbursement for attorneys’ fees and costs incurred in defending against K.O.’s civil suit. Under N.J.S.A. 18A:16-6, a board of education employee will be indemnified for attorney’s fees and costs incurred in defending civil actions arising out of an act or omission that took place in the course and scope of employment duties. This statute requires that the underlying civil suit be related to conduct falling within the employment duties of the school board employee.

L.A’s verified petition was transferred to the Office of Administrative Law and the Court granted a motion for summary decision on behalf of L.A. and awarded L.A. attorneys’ fees pursuant to N.J.S.A. 18A:16-6.  The Administrative Law Judge (“ALJ”) found that the Board had not met 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 did not prove that K.O.’s allegations of abuse had occurred. The Commissioner adopted the ALJ’s decision.  The Board appealed and the Appellate Division reversed.  The Appellate Division held that N.J.S.A. 18A:16-6 required L.A. to establish that the outcome of the criminal indictment was in his favor before he would be entitled for indemnification regarding the civil suit.  L.A. then filed for Certification with the Supreme Court.

The Supreme Court granted Certification and held that the matter was decided prematurely when the ALJ granted summary decision.  The ALJ should have heard testimony and determined by the preponderance of the evidence whether L.A. was acting within the scope of the duties of his employment.  The Court explained that when the ALJ decided that L.A. was acting within the scope of his employment responsibilities because L.A. had not been found guilty to have committed a crime against K.O., the ALJ failed to consider the factual overlap between the offenses alleged in the N.F. criminal matter, which L.A. admitted to, and the offenses alleged in the K.O. indictment.  Moreover, the ALJ failed to consider L.A.’s admission during his plea hearing that he spoke inappropriately to K.O. and failed to consider evidence in the IAIU report substantiating K.O.’s allegations.  Summary decision was inappropriate and the matter was remanded to the Commissioner for an evidentiary hearing.

Although the final outcome of L.A.’s specific case is uncertain, this is a positive case for New Jersey boards of education.  If a board employee is involved in a criminal case and a companion civil case, the fact that the criminal case is settled does not automatically lead to reimbursement of attorneys’ fees and costs for the board employee in the civil suit.