(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued October 13, 1998 -- Decided June 2, 1999
Garibaldi, J., writing for a majority of the Court.
This appeal involves the interpretation of provisions of the Tort Claims Act (TCA) governing the
State's obligations to defend and indemnify its employees in lawsuits brought against them. N.J.S.A. 59:1-1
to -14-4.
Professor Barbara Chasin teaches sociology at Montclair State University. In the fall of 1990, James
Lloyd enrolled in one of Chasin's courses. Thirteen weeks into the semester, Lloyd, who was a member of
the Marine Reserves, was called to active duty as part of Operation Desert Storm. At that time, Lloyd had
achieved an "A" average, based on a quiz and a mid-term examination. Prior to leaving campus, Lloyd met
with Chasin and signed an "Incomplete Contract" in which he agreed to take a make-up final examination or
write a paper to complete the course.
While Lloyd was on active duty, the Legislature enacted L. 1991 ch. 167, (Desert Storm Law), which
provides academic relief for students called to military service in the Gulf War. The Desert Storm Law
required that a student who was called to active duty and had a minimum 8 weeks' attendance in a course
was entitled to receive a grade "based on the work completed up to the time when the student was called to
active service."
On his return, Lloyd requested Chasin to award him a grade for his course work and provided her
with a copy of the Desert Storm Law. Chasin refused and issued Lloyd an "Incomplete." On 10/14/91, the
University Provost sent Chasin a memo urging that she reconsider her decision. The Provost's letter stated
that he understood Chasin's position, but that as state employees they had an obligation to obey the laws
enacted by the Legislature. Chasin still refused to give Lloyd a grade.
Lloyd unsuccessfully sought administrative relief from the Grade Grievance Committee. A Deputy
Attorney General appeared at the Committee's organization meeting and apparently expressed the Attorney
General's view that Lloyd was entitled to a grade. The Committee expressed its reluctance to substitute its
judgment for Chasin's and the Provost upheld that ruling.
Lloyd filed suit against Chasin, the University and the Provost in July 1992. He sought equitable
relief in the form of the award of a grade pursuant to the Desert Storm Law and exemplary damages for
defendants' intentional and malicious failure to abide by that Law. On receipt of the complaint, Chasin
requested the Attorney General for defense and indemnification. The Attorney General rejected the request
"based upon the actions of Professor Chasin" and the Attorney General's discretion to refuse representation
pursuant to N.J.S.A. 59:10A-2.
The Chancery Division suit was dismissed because Lloyd failed to exhaust administrative remedies,
and the matter was sent to the Office of Administrative Law for a hearing. Before a hearing was held, the
case settled. Under the settlement, Lloyd received a grade, but his transcript was annotated to indicate the
grade was administratively awarded. Lloyd agreed to drop his pending claims, and no damages were
awarded.
Chasin sent the Attorney General a demand that it indemnify her for her costs of attorneys' fees.
The Attorney General did not respond. Chasin filed suit against the State, the Attorney General and
Montclair State University seeking reimbursement for $12,216 in legal fees. The Law Division granted
Chasin summary judgment, concluding that Chasin had acted in good faith. The Law Division also granted
Chasin's motion for an additional award of $10,000 in attorneys' fees to cover the indemnification action.
The Appellate Division reversed and remanded for a plenary hearing to determine the circumstances
under which the Attorney General provided advice to Chasin. The Appellate Division rejected the Law
Division's conclusion that a state employee is free to disregard the Attorney General's legal position, and the
State's contention that Chasin was not entitled to indemnification because Lloyd's suit did not seek
compensatory damages for tortious behavior. The opinion suggests that if Chasin willfully disregarded the
Attorney General's advice, her actions would fall outside the scope of her employment and the State would
not be required to indemnify her.
The Supreme Court granted both Chasin's and the Attorney General's petitions for certification.
HELD: The Attorney General is required to defend or indemnify a state employee only in a civil action
seeking damages for tortious conduct. Because the action filed against Chasin sought equitable relief, Chasin
is not entitled to indemnification. Further, Chasin forfeited any right to defense or indemnification by
willfully disregarding the Attorney General's legal position.
1. The TCA establishes the Attorney General's duty to defend and indemnify state employees. The history
of the TCA demonstrates that it was intended to apply only to civil actions seeking damages for tortious
conduct. Thus, the mandatory defense and indemnification provisions apply only to such actions. The
defense of any other action is left to the Attorney General's discretion. (pp. 8-18)
2. Lloyd's underlying suit against Chasin sought primarily injunctive relief. His request for exemplary
damages does not alter the fundamental nature of his claim. Lloyd's claim against Chasin was therefore
outside the scope of the defense and indemnity provisions of the TCA. (pp. 18-20)
3. Even if the TCA were applicable, Chasin's willful disregard of the Attorney General's legal position would
forfeit any right to defense and indemnification. An objective reading of the record discloses that Chasin
knew the requirements of the Law and the legal position of the Attorney General and simply refused to
follow them. (pp. 20-26)
4. Chasin is not entitled to indemnification under N.J.S.A. 18A:60-4, which provides that the state is required
to defray the costs of defense of any professor employed by a state institution sued for an act or omission
arising out of his or her employment. Because that statute is fatally inconsistent with the defense and
indemnity provisions of the TCA, it was impliedly repealed by the passage of the TCA in 1972. (pp. 26-33)
The judgment of the Appellate Division is AFFIRMED as MODIFIED.
JUSTICE O'HERN, dissenting, is of the view that the State initially represented that it would
indemnify Chasin unless she was guilty of willful misconduct, but reneged after she had incurred the legal
expenses. He would affirm and allow the remand on the question of Chasin's conduct.
JUSTICE STEIN, dissenting, is of the view that the essence of Lloyd's action against Chasin alleged
tortious conduct and therefore the TCA applied; that there is no basis in the record to conclude that
Chasin's actions constituted willful misconduct; and that the Attorney General should be estopped from
refusing to indemnify Chasin.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, and COLEMAN join in
JUSTICE GARIBALDI's opinion. JUSTICE O'HERN filed a separate dissenting opinion, in which
JUSTICE STEIN joins. JUSTICE STEIN filed a separate dissenting opinion, in which JUSTICE O'HERN
joins.
SUPREME COURT OF NEW JERSEY
A-161/
162 September Term 1997
BARBARA CHASIN,
Plaintiff-Appellant
and Cross-Respondent,
v.
MONTCLAIR STATE UNIVERSITY,
THE STATE OF NEW JERSEY AND
PETER VERNIERO, ATTORNEY GENERAL,
Defendants-Respondents
and Cross-Appellants.
Argued October 13, 1998 -- Decided June 2, 1999
On certification to the Superior Court,
Appellate Division.
Andrew W. Dwyer argued the cause for
appellant and cross-respondent (Reinhardt &
Schachter, attorneys).
Jeffrey J. Miller, Assistant Attorney
General, argued the cause for respondents and
cross-appellants (Peter Verniero, Attorney
General of the State of New Jersey, attorney;
Joseph L. Yannotti, Assistant Attorney
General, of counsel; Valerie L. Egar, Deputy
Attorney General, on the brief).
The opinion of the Court was delivered by
GARIBALDI, J.
This appeal involves the interpretation of the provisions of
the Tort Claims Act ("TCA"), N.J.S.A. 59:1-1 to -14-4, that
govern the State's obligations to defend and indemnify its
employees in lawsuits brought against them. Specifically, does
the TCA oblige the State to defend and indemnify plaintiff,
Barbara Chasin, a professor at Montclair State University, in an
underlying suit that did not seek damages for tortious conduct?
We also consider whether Professor Chasin's refusal to follow the
legal advice of the Attorney General justifies the State's
refusal to indemnify her. Finally, we determine whether N.J.S.A.
18A:60-4 requires the State to defend and indemnify plaintiff.
While Lloyd was on active duty, the Legislature enacted L. 1991 ch. 167, ("Desert Storm Law"), which provides academic relief for students called to military service in the Gulf War. The Act provides:
1. A student who is a member of the New Jersey National Guard or of the Reserve component of the Armed Forces of the United States, and who is unable to complete a course or courses at a New Jersey institution of higher education because the student is called to active duty in consequence of the current United Nations action in the Persian Gulf known as operation "Desert Shield" or "Desert Storm," shall be entitled to receive a grade in each course for which the student has completed a minimum of 8 weeks' attendance and all other academic requirements during that period. The grade shall be based on the work completed up to the time when the student was called to active service.
On his return, Lloyd requested that Chasin award him a grade
for his course work and mailed Chasin a copy of the Desert Storm
Law. Chasin refused and gave Lloyd an "Incomplete." On October
14, 1991, the University Provost sent Chasin a memorandum urging
that she reconsider her decision to deny Lloyd a grade:
I believe that you have asked that Mr. Lloyd
fulfill the terms of the incomplete contract
entered into in December 1990 or,
alternatively, you will give him an F. I
urge you to read carefully the attached copy
of the law. . . .Our efforts to change the
legislation were unsuccessful and the bill
was signed into law on June 19, 1991. I
appreciate your concerns and understand the
position you have taken. But, as employees of
the State of New Jersey we have an obligation
to obey the laws enacted by the legislature.
I hope that you will agree.
The Provost's position was clear. He expressed sympathy for
Chasin's position, but felt that she was obliged to “obey” the
Law.
Chasin still refused to give Lloyd a grade. In fact, Chasin
wrote a letter on October 25, 1991, to Montclair State's
President, Irving D. Reid, in an attempt to solicit his support.
Although she asserted her position was consistent with the
statute, Chasin premised that conclusion on her own belief that
to comply with the Law as written would be:
to take arbitrary and standardless action in assigning
a grade. This would undermine the credibility and
validity of Montclair State College as an academic
institution. I do not believe that the New Jersey
state legislature intended such a result in writing
this law. In its attempt to 'protect' the participants
in the Persian Gulf by this law, the legislature paid
insufficient attention to the distinct character of
higher education.
Chasin's language in the letter, “I do not believe that the New
Jersey state legislature intended. . . .” and “the legislature
paid insufficient attention. . . ,” indicates that Chasin knew
her position contradicted the Desert Storm Law. Chasin
understood the law, and simply disagreed with it.
Early in the fall of 1991, Lloyd unsuccessfully sought
administrative relief from the University Grade Grievance
Committee. Deputy Attorney General Grey DiMenna appeared at the
Committee's organization meeting, and, according to Chasin's
counsel, “tried to imprint [the college administration and
Attorney General's] view on the Committee. . .in light of a
narrow view of the 'Desert Storm' legislation." Chasin's counsel
also maintained that, ". . . injecting a legal issue at this
early stage of the proceeding is prejudicial.” In her statement
to the Committee, Chasin did not claim that her position was
consistent with the statute. The Committee, however, expressed
its reluctance to substitute its judgment for Chasin's and the
University Provost upheld that ruling.
The dissent relies heavily on the Provost's failure to award
a grade as evidence that he supported Chasin's interpretation of
the statute. Post at ___ (slip op. at 10-11) (Stein, J.,
dissenting). Under Montclair State's Grade Grievance Procedure,
however, the Provost is prohibited from changing a grade or
ordering a Professor to change a grade. Instead, the Provost may
only recommend that the grade be altered. Faced with Chasin's
adamant refusal to acknowledge the plain language of the statute,
the Provost may well have upheld the grade in an effort to
influence Lloyd's position and avoid further dispute with Chasin.
In July 1992, Lloyd filed suit in the Chancery Division
against Chasin, the University, and the Provost of the University
to compel them to comply with the Desert Storm Law.
Specifically, he sought equitable relief -- the award of a grade
pursuant to the Desert Storm Law. He also sought exemplary
damages from the Provost of the University and Chasin for their
"intentional, wanton and malicious failure to abide by the duly
enacted law of the State of New Jersey." On receipt of the
complaint, Chasin sent a formal request for defense and
indemnification to the Attorney General, who rejected Chasin's
request. The Attorney General's decision was “based upon the
actions of Professor Chasin with regard to this matter and the
Attorney General's discretion pursuant to N.J.S.A. 59:10A-2 to
refuse such representation."
The Chancery Division suit was dismissed because Lloyd
failed to exhaust his administrative remedies, and the matter was
sent to the Office of Administrative Law for a hearing. Before a
hearing was held, the case settled. The initial decision of the
Administrative Law Judge (“ALJ”) approving the settlement
characterizes Lloyd's petition as “seeking to compel compliance
with L.1991 c.167.” Neither the decision nor the stipulation of
settlement mentions a claim for damages. Lloyd received a grade,
but his transcript was annotated to indicate that the grade was
administratively awarded. In exchange, Lloyd dropped the
pending claims against Chasin, the University Provost, and the
University.
Immediately after the settlement and pursuant to the TCA,
Chasin sent the Attorney General a Demand for Indemnification.
The Attorney General did not respond. In July 1995, Chasin filed
suit against the State of New Jersey, the Attorney General, and
Montclair State University seeking reimbursement for $12,216 in
legal fees she incurred defending the Chancery and Administrative
actions. In her complaint, Chasin alleged that Lloyd's
adminstrative petition sought compliance with the statute and
damages. The Attorney General's answer expressly denied that the
petition sought any damages. The Law Division granted Chasin
summary judgment. The court specifically found that the function
of the Attorney General was to provide advice that a state
employee was free to follow or disregard. The court further
concluded that Chasin had acted in good faith and awarded her
$12,216 in attorney's fees. The State moved for reconsideration
of the ruling, and Chasin moved for an additional award of fees
to cover the cost of the indemnification action. The court
denied the State's motion, but granted Chasin an additional
$10,000 in attorney's fees.
The Appellate Division reversed and remanded for a plenary
hearing to determine the circumstances under which the Attorney
General provided advice to Chasin. The court rejected both the
Law Division's conclusion that a state employee is free to
disregard the Attorney General's legal position, and the State's
contention that Chasin was not entitled to indemnification under
the TCA because Lloyd's suit did not seek compensatory damages
for tortious behavior. The court found that the Attorney
General's legal position was binding on state employees and that
the TCA applied to actions for equitable relief. Within that
framework, the court focused on whether Chasin knowingly
disregarded the Attorney General's advice, and therefore, acted
outside the scope of her employment. The opinion suggests that
if Chasin willfully disregarded the Attorney General's advice,
her actions would fall outside the scope of her employment and
the State would not be required to indemnify her. The court
deemed the record insufficient on this issue and ordered a
remand. Both Chasin's and the Attorney General's Petitions for
Certification were granted.
153 N.J. 49 (1998).
The Legislature intended the TCA to reestablish "the general rule of the immunity of public entities from liability for injuries to others." Brook v. Odom, 150 N.J. 395, 402. The TCA was also intended to supersede the patchwork of statutory provisions providing for the defense and indemnification of state employees. See N.J.S.A. 59:12-2 (repealing all statutes "inconsistent" with the TCA). The TCA, therefore, provides the unified scheme under which the Attorney General's duty to defend and indemnify employees must be evaluated.
N.J.S.A. 59:10A-1 establishes the Attorney General's basic duty to defend state employees:
Except as provided [in N.J.S.A. 59:10A-2], the Attorney General shall, upon a request of an employee or former employee of the State, provide for the defense of any action brought against such State employee or former State employee on account of an act or omission in the scope of his employment.
N.J.S.A. 59:10A-2 provides that the Attorney General may
refuse to provide a defense for a state employee under N.J.S.A.
59:10A-1 if he determines that:
a. the act or omission was not within the
scope of employment; or
b. the act or failure to act was because of
actual fraud, willful misconduct or actual
malice; or
c. the defense of the action or proceeding
by the Attorney General would create a
conflict of interest between the State and
the employee or former employee.
N.J.S.A. 59:10A-3 provides that "[i]n any other action or
proceeding, including criminal proceedings, the Attorney General
may provide for the defense of a State employee or former State
employee, if he concludes that such representation is in the best
interest of the State." (emphasis added.)See footnote 1
The State's duty to indemnify an employee parallels the duty
to defend. N.J.S.A. 59:10-1 requires the State to indemnify
employees for whom a defense is provided. That section
specifically exempts the State from paying "punitive or exemplary
damages or damages resulting from the commission of a crime."
Ibid. If the Attorney General refuses to defend a state
employee, the State is only required to indemnify that employee
if "the act or omission upon which the claim or judgement was
based occurred within the scope of his employment . . . and the
State fails to establish . . . actual fraud, actual malice or
willful misconduct." N.J.S.A. 59:10-2. If an employee qualifies
under that provision, the State is obliged to reimburse that
employee for all costs, including reasonable attorneys' fees.See footnote 2
Thus, even if an employee is not provided with a defense under
the TCA, that employee may recover attorneys' fees in limited
circumstances.
The language of a statute must be construed according to its plain meaning, so long as that meaning comports with the statute's legislative intent. Merin v. Maglaki, 126 N.J. 430, 434-35 (1992). Additionally, "whatever the rule of [statutory] construction, it is subordinate to the goal of effectuating the legislative plan as it may be gathered from the enactment read in full light of its history, purpose, and context." State v. Haliski, 140 N.J. 1, 9 (1995) (quoting State v. Gill, 47 N.J. 441, 444 (1966)). The limits of the TCA provisions that relate to defense and indemnification are derived from consideration of both their plain language and the history and context within which they were enacted.
N.J.S.A. 59:10A-1 mandates a defense in "any action," unless one of the exceptions of N.J.S.A. 59:10A-2 applies. Those exceptions authorize the Attorney General to refuse a defense when the act complained of falls outside the scope of employment, constitutes "actual fraud, willful misconduct, or actual malice," or creates a conflict of interest. N.J.S.A. 59:10A-2. The third provision governing the duty to defend, N.J.S.A. 59:10A-3, vests the Attorney General with the discretion to defend a state employee, "in any other action or proceeding, including criminal proceedings."
The Appellate Division read the plain language of N.J.S.A. 59:10A-1 to require a defense in "any action," regardless of the remedy sought. The court reasoned that N.J.S.A. 59:10A-3 merely preserves the right of the Attorney General to defend an employee in cases where a specific exception under N.J.S.A. 59:10A-2 applies. That right, however, is preserved by the use of the discretionary "may" rather than the directive "shall" in N.J.S.A. 59:10A-2: "[t]he Attorney General may refuse to provide for the defense . . ." (emphasis added). Under the Appellate Division's construction of the TCA, N.J.S.A. 59:10A-3 is superfluous. It is a well-established canon of construction that
a legislative provision should not be read in isolation or in a way which sacrifices what appears to be the scheme of the statute as a whole. Rather, a statute is to be interpreted in an integrated way without undue emphasis on any particular word or phrase and, if possible, in a manner which harmonizes all of its parts so as to do justice to its overall meaning.
[Zimmerman v. Municipal Clerk of Tp. of
Berkeley,
201 N.J. Super. 363, 368 (App. Div.
1985) (citing Alexander v. New Jersey Power &
Light Co.,
21 N.J. 373 (1956)).]
N.J.S.A. 59:10A-1 therefore must be understood with
reference to N.J.S.A. 59:10A-2 and -3. Given the statutory
scheme and the title of the Act, N.J.S.A. 10A-1 mandates that the
Attorney General defend "any action" brought in tort; N.J.S.A.
59:10A-2 specifies three instances when such representation of
tort cases may be refused by the Attorney General; and N.J.S.A.
59:10A-3 vests the Attorney General with the discretion to defend
in cases not covered by N.J.S.A. 59:10A-1. Because N.J.S.A.
59:10A-3 grants discretion "in any other action, including
criminal proceedings" (emphasis added), that discretion cannot be
limited to criminal proceedings, but must include some civil
actions. N.J.S.A. 59:10A-1 requires the Attorney General to
defend state employees against tort liability, so the civil
claims left to N.J.S.A. 59:10A-3 must seek a remedy other than
tort damages.
The history of the TCA demonstrates that it was intended to
apply only to civil actions seeking damages for tortious conduct.
The Report of the Attorney General's Task Force on Sovereign
Immunity (1972) (Task Force Report) was submitted to the
Legislature as a pre-cursor to the TCA. The Task Force Report
focused on "the 'selective abolition' of the State's sovereign
immunity 'in contract and tort.'" Helduser v. Kimmelman,
191 N.J. Super. 493, 508-09 (App. Div. 1983). The Task Force Report
recommended that the Attorney General defend and indemnify state
employees against "civil liability arising within the scope of
their employment." Task Force Report at 15. The Task Force
Report, however, focused on the recommendation that "[t]he
Attorney General . . . should provide for the defense of all
State employees sued for negligence." Id. at 16. "A major
premise" of the proposed TCA was to provide limited recovery for
a claimant's "economic loss." Ibid. Numerous references to
suits for negligence, civil liability, economic loss, and limited
liability establish that the Task Force Report only sought to
require defense and indemnity in civil actions seeking damages
for tortious conduct. The language proposed to accomplish that
goal was adopted by the Legislature in N.J.S.A. 59:10-1 to -10A-6. By adopting the proposed sections, the Legislature manifested
its intent that the TCA only apply to civil claims for
compensatory damages for tortious conduct. Limiting the duty to
defend to civil claims for tort damages is also consistent with
the underlying legislative intent that courts make a "chary
interpretation of a public entity's exposure to liability" that
is called for under the TCA. Brooks, supra, 150 N.J. at 402.
The legislative intent establishes that civil actions seeking
tort damages are covered by the mandatory defense and
indemnification provisions of the TCA. Such an interpretation
gives meaning to the language "[i]n any other action . . .
including criminal proceedings" contained in N.J.S.A. 59:10A-3.See footnote 3
This construction comports with prior defense and
indemnification cases that distinguished tort actions from other
suits. See In re Napoleon,
303 N.J. Super. 630, 633-34 (App.
Div. 1997); Helduser v. Kimmelman, supra, 191 N.J. Super. at 503.
In In re Napoleon, supra, 303 N.J. Super. at 632, Napoleon, the
Medical Director at a state prison, sought defense and
indemnification from the Attorney General in a license suspension
or revocation hearing before the New Jersey Board of Medical
Examiners. The Attorney General rejected Napoleon's request for
defense and indemnification, stating that it would be
inappropriate for the Attorney General to provide a defense in a
case that she had initiated before the professional board. Id.
at 633. Moreover, the Attorney General stated that the nature of
the allegations and proceedings did not obligate the Attorney
General to provide a defense under N.J.S.A. 59:10A-1 or -3 and to
indemnify Napoleon under N.J.S.A. 59:10-1. Ibid.
The Appellate Division upheld the denial, observing that
"[t]he duty to defend arises in the context of actions filed in
accordance with the New Jersey Tort Claims Act, N.J.S.A. 59:1-1
to 13-10; that is, the Attorney General has a duty to defend
present and former State employees only for tortious acts." Id.
at 633-34 (emphasis added). The court noted that the proceeding
against Napoleon was not a civil action for damages but rather a
"disciplinary hearing" before the appropriate licensing
authority. Id. at 634. The court also observed that
indemnification was properly denied because the indemnification
provisions only are triggered "for damages awarded in a civil
action for tortious conduct," and because Napoleon was not
entitled to a defense, then necessarily he was not eligible for
indemnification. Ibid.
Helduser v. Kimmelman, supra,
191 N.J. Super. 493 was a
consolidated appeal brought by two suspended members of the state
police who were charged with crimes. Both men were acquitted and
thereafter submitted requests to the Attorney General for
reimbursement of their legal fees. Their requests were denied.
On appeal, Helduser argued that N.J.S.A. 59:10A-1 requires the
Attorney General to provide for a defense of a state employee in
any action brought against that employee unless a specific
exception under N.J.S.A. 59:10A-2 applies. Id. at 498. Helduser
also relied on N.J.S.A. 59:10-2, asserting that it mandated
reimbursement for his counsel fees when the Attorney General
refused to provide a defense, because the State failed to show
that his conduct was motivated by actual fraud or malice. Ibid.
In affirming the denial of indemnification for the officers,
the Appellate Division relied on the history of the TCA:
As previously stated the language of N.J.S.A.
59:10-1 and -2, and the statement
accompanying the bill that became N.J.S.A.
59:10A-1 et seq. as well as other legislative
history, about which more will be said
shortly, all indicate that the
indemnification provisions in N.J.S.A. 59:10-1 and -2 apply only to civil actions for
damages based upon an employee's tortious
conduct. Similarly, N.J.S.A. 59:10A-1 and -2
were intended to govern the Attorney
General's duty to defend state employees in
civil actions. The reference in N.J.S.A.
59:10A-3 to "any other action or proceeding,
including criminal proceedings," was simply
to preserve the Attorney General's prior
statutory and inherent authority to represent
or furnish a defense for state employees.
In discussing N.J.S.A. 59:10A-3, the court further observed:
More likely, the reference to "any other
action or proceeding" was simply a catch-all
to cover actions not arising under the Tort
Claims Act, including civil actions not
seeking damages, as well as criminal actions,
in which the Attorney General should have
discretionary authority to furnish a defense
for a state employee when the state interest
would be served.
Thus, both Napoleon and Helduser stand for the proposition
that the Attorney General's obligation to defend and indemnify
arises only in the context of civil actions seeking damages for
tortious conduct. We agree that the mandatory defense and
indemnification provisions apply only to those civil actions.
The defense of any other action is left to the Attorney General's
discretion.
In this case, Lloyd's underlying suit sought primarily injunctive relief. Claims of this type are not encompassed by the mandatory defense provision of the TCA. This conclusion is unaffected by Lloyd's ancillary request for exemplary damages which he dropped when he sought administrative relief after his suit was dismissed by the Chancery Division. In any case, Lloyd's request for exemplary damages does not alter the fundamental nature of his claim. Cf. Shaner v. Horizon Bancorp., 116 N.J. 433, 450-51 (1989) (observing that we consider the nature of the underlying controversy as well as the remedy sought in determining whether the cause of action has been historically primarily equitable on legal in nature).
In an attempt to shoehorn Chasin's indemnification claim into the TCA, the dissent argues that Lloyd's suit against Chasin was a tort action. Post at ____ (slip op. at 9) (Stein, J., dissenting). Lloyd filed suit in the Chancery Division, which handles primarily equitable claims. The ALJ's intial decision and the stipulation of settlement do not mention any claim for damages. The Attorney General's answer in this case expressly denies that the administrative petition sought damages. Implicitly acknowledging that Lloyd's claim was equitable, the Appellate Division extended the coverage of the TCA to “any” civil action. Chasin relied on that position in her submissions to this Court; nowhere does she suggest that Lloyd's claim sounded in tort. Neither the parties nor any court involved in this action ever considered Lloyd's claim as anything other than equitable; the dissent is utterly alone in taking this unsupported position.
Because Chasin was not entitled to a defense under N.J.S.A. 59:10A-1, she also cannot receive indemnification. The remaining indemnification provisions of the TCA are similarly inapplicable to this case. N.J.S.A. 59:10-2 requires the State to indemnify an employee when the Attorney General refuses to defend an action where N.J.S.A. 59:10A-1 entitles the employee to a defense, and the employee demonstrates that the action taken was within the scope of employment, and not the result of willful misconduct, actual fraud or actual malice. That provision, however, applies only when the underlying claim is a civil action for damages. The proof required for indemnification parallels the first two exceptions to the defense provision, listed in N.J.S.A. 59:10A-2. In other words, the statute requires the State to indemnify an employee who demonstrates that the first two exceptions of N.J.S.A. 59:10A-2 do not apply, and whom the Attorney General refused to defend. That category of employees would include those refused a defense under the third exception, a conflict of interest, and those mistakenly refused a defense because the Attorney General erroneously applied one of the first two exceptions.
To summarize, N.J.S.A. 59:10-2 requires the State to indemnify an employee in a N.J.S.A. 59:10A-1 action that the Attorney General fails to defend. The TCA, therefore, indemnifies employees refused a defense only when the underlying claim is a civil action seeking damages in tort. Because Lloyd's claim against Chasin sought injunctive relief, it was outside the scope of N.J.S.A. 59:10-2. Accordingly, the TCA does not require the Attorney General to defend Chasin, and thus, cannot require the State to indemnify her.
The Appellate Division concluded that a state employee seeking to have the Attorney General defend or indemnify her is not free to disregard the Attorney General's advice. We agree. Therefore, even if Chasin's claims could be considered under the TCA, an argument we reject, her willful disregard of the Attorney General's legal position would forfeit any right to defense and indemnification. In cases where a defense is provided, the TCA expressly grants the Attorney General “exclusive control” of the representation and requires the employee to "cooperate fully with the Attorney General's defense." N.J.S.A. 59:10A-4. The official comment to the related indemnification provision make it plain that the Legislature intended the Attorney General's advice to bind employees: "In order to insure that the State's interest will be adequately protected it is provided that a State employee shall not be entitled to indemnification . . . unless he cooperates fully with any defense provided by the Attorney General." Comment to N.J.S.A. 59:10-3. Similarly, the discretionary defense provision authorizes the Attorney General to defend state employees in criminal cases or civil cases not seeking damages when a defense is "in the best interest of the State." N.J.S.A. 59:10A-3.
Both Lloyd and the University Provost provided Chasin with a copy of the Desert Storm Law. The Provost also urged the Professor to "read carefully the attached copy of the law." After noting that the University had opposed the Law and expressing sympathy for the Professor's position, the Provost stated that "as employees of the State of New Jersey we have an obligation to obey the laws enacted by the legislature. I hope that you will agree." In a letter to the University President dated October 25, 1991, Chasin asserted that her position was "consistent" with the Desert Storm Law. Her letter also said, "I do not believe the Legislature intended [to require the award of a grade without further testing] in writing this law. . . . The law specifically requires that the grade be based upon the work which the student had completed up to the time when the student was called to active service. Mr. Lloyd has not provided evidence as to how he has completed that work."
Despite her assertion to the contrary, Chasin's own arguments demonstrate that her position was not "consistent" with the Desert Storm Law. As the dissent notes, Chasin sought "some form of demonstration from [the student] that he has learned the material . . . a take-home final or paper." Post at ___ (slip op. at 5) (O'Hern, J., dissenting). Paradoxically, Chasin asserts that completing this requirement would not constitute additional work. Even if Lloyd could have provided a sufficient “demonstration” without substantial studying, he would still have been forced to produce a paper not required of any other student. It defies logic to contend that such a paper or take-home exam would not constitute additional work.
Chasin sought to base Lloyd's grade on work produced after Lloyd was called to active service, because she did not "believe" that the Legislature meant what it said. In her Statement to the Grade Grievance Committee, Chasin contended that "it would be a violation of accepted academic principles to assign a grade to Mr. Lloyd . . ." and that "[a]cademic freedom, in this case, means that a faculty member has the right, according to long accepted procedures, of deciding how students shall be evaluated in a course." Although Chasin again stated that Lloyd had produced no evidence of having mastered the information covered between the midterm and his departure, she did not re-assert that requiring such evidence was consistent with the Law. On the contrary, Chasin informed the Committee, “I am willing to excuse Mr. Lloyd from assignments after Dec. 4 until the end of the semester . . . I consider my proposal very reasonable and flexible. . . .” Chasin apparently considered “excusing” Lloyd from assignments undisputedly covered by the Law discretionary, a part of a “reasonable and flexible” proposal. She relied on concerns for academic freedom and political objections to the Law to support her refusal to award a grade. Although she is entitled to those views, it was evident that Chasin's position was contrary to the express language of the Desert Storm Law.
It is equally clear that Chasin was aware of the Attorney General's belief that the Desert Storm Law required her to award a grade. Deputy Attorney General Grey Dimenna alleges that he had several conversations with Chasin's counsel informing him of her duties under the statute. Dimenna also appeared at the meeting of the University's Grade Grievance Committee. A letter from Professor Chasin's counsel to Professor Catherine Becker, President of the Montclair State Federation of College Teachers, noted that Dimenna appeared at the hearing and "tried to imprint [the administration's] view on the Committee as [sic] what the final determination should be in light of a narrow view of the 'Desert Storm' legislation." In view of such an admission, Chasin's contention that she was unaware of the Attorney General's interpretation of the Desert Storm Law is difficult to credit. In a situation where a state employee's actions are obviously at odds with the express language of a valid statute, and the Attorney General informs the employee of her duties, that advice cannot be considered advisory.
We find no merit in the dissent's suggestion that Chasin was somehow misled by the Attorney General's Office, another assertion that Chasin never made. Post at ___ (slip op. at 18) (Stein, J., dissenting). An objective reading of the record discloses that from Chasin's initial refusal to give Lloyd his grade, she knew of the requirements of the Desert Storm Law, and simply refused to follow them. Ante at ___ (slip op. at 2-5; 22-23). Likewise, it is clear that before Lloyd filed his suit, as early as the Grievance Committee Meeting, Deputy Attorney General Grey Dimenna advised Chasin that her position was inconsistent with the Law. Ante at ___ (slip op. at 5). Although in hindsight it would have been better if Deputy Attorney General Dimenna had communicated the State's position in writing to Chasin and the Grievance Committee, all the parties, including Chasin and her attorney, understood the State's position. A fair reading of the record discloses that Chasin was informed of the Attorney General's legal position prior to Lloyd's filing his suit. She had sufficient time to change her position on the Desert Storn Law but refused. Indeed, at any time during the proceedings, Chasin could have withdrawn from the suit. She chose not.
Chasin's knowing disregard and failure to heed the express language of a valid statute and the legal position of the Attorney General forfeits her right to indemnification. If a state employee is free to disregard the legal position of the Attorney General and still be indemnified, then the exercise of the Attorney General's discretion is severely constrained. An employee could force the State to fund a defense that the Attorney General rejected as adverse to state interests. That result would subvert the goals of the Legislature. The advice of the Attorney General must be considered binding on state employees.See footnote 4
We affirm the Appellate Division's conclusion that an employee must follow the Attorney General's advice, but because we conclude that Professor Chasin was not entitled to indemnification under the TCA, no remand is necessary.
Chasin also asserts that N.J.S.A. 18A:60-4 requires that the State indemnify her for her legal expenses. That statute provides, in pertinent part:
Whenever any civil action has been or shall be brought against any professor . . . employed in a teaching capacity . . . by any other institution of higher education . . . for any act or omission arising out of and in the course of the performance of the duties of such office, position or employment, the state shall defray all costs of defending such action, including reasonable counsel fees and expenses . . .
N.J.S.A. 18A:60-4 was enacted prior to the TCA. The
Legislature expressly repealed the statute on July 1, 1994, as a
part of the Higher Education Restructing Act of 1994. L. 1994,
c. 48, § 308. That express repeal of N.J.S.A. 18A:60-4 does not
eliminate Chasin's claim for indemnification. However, because
N.J.S.A. 18A:60-4 was impliedly repealed by the passage of the
TCA in 1972, Chasin's claim is eliminated.
In Kemp by Wright v. State,
147 N.J. 294, 305-06 (1997), we
addressed whether preexisting statutes that are not expressly
repealed in TCA may be impliedly repealed by the enactment of the
TCA. In that case, we held that a preexisting statute, N.J.S.A.
26:11-12, which granted good faith immunity to county boards of
health and their agents, was impliedly repealed by the enactment
in 1972 of the TCA. We further found that the express repeal of
N.J.S.A. 26:11-12 in 1976 was not inconsistent with holding that
that statute had been impliedly repealed by the TCA in 1972.
To reach those conclusions, we examined the "Legislature's
intention regarding the TCA's effect on preexisting statutes."
Ibid. We began by examining the language of N.J.S.A. 59:12-2
that provides:
All acts or parts of acts inconsistent with
[the Tort Claims Act] are, to the extent of
such inconsistency, repealed, including
without limitation:
P.L.1971, c. 199, s. 26 (C. 40A:12-26).
N.J.S. 18A:20-35
N.J.S. 38A:4-9
N.J.S. 38A:4-10
R.S. 53:1-22
The legislative history of N.J.S.A. 59:12-2 supports the State's position that N.J.S.A. 18A:60-4 is "fatally inconsistent" with the TCA. That legislative history discloses that the TCA was intended to eliminate the patchwork of provisions governing the general liability of state employees. The Task Force Report cited N.J.S.A. 18A:60-4 and a number of other pre-TCA statutes, and observed "[i]t is apparent that the pattern of immunity established by statute is completely lacking in uniformity and fails to take into consideration many other State employees subjected to the type of liability against which the above statutes have been directed." Task Force Report 37-38.
We disagree with Chasin and the assertion of the dissent that N.J.S.A. 18A:60-4 is consistent with the Attorney General's discretion under N.J.S.A. 59:10A-3. Post at ___ (slip op. at 9) (O'Hern, J., dissenting). In particular, the dissent relies on previous precedent preserving pre-TCA statutes obligating local authorities to indemnify local employees. See Bower v. Bd. of Educ., 149 N.J. 416, 423-31 (1997) (affirming indemnification under N.J.S.A. 18A:16-6 and 18A:16-6.1); Lameiro v. West New York Bd. of Educ., 136 N.J. Super. 585, 589-91 (Law Div. 1975)(rejecting implied repeal of N.J.S.A. 18A:16-6 by TCA). Those cases addressed N.J.S.A. 59:10-4, which grants local authorities the power to indemnify local employees. Statutes requiring local authorities to indemnify local officials do not conflict with statutes granting the power to indemnify. The stated intent underlying N.J.S.A. 59:10-4 is "not . . . to indemnify persons who are not traditionally considered the State's employees but it is the position of the Legislature that indemnification of all public employees should be encouraged." Comment to N.J.S.A. 59:10-4. Thus, mandatory indemnification at the local level by a municipality does not conflict with the TCA, which sought to transfer responsibility for and encourage indemnification of municipal employees.
On the other hand, N.J.S.A. 10A:10-3 commends the Attorney General to defend a state employee in civil actions not seeking damages and criminal cases when in "the best interest of the State." That standard is fundamentally inconsistent with requiring the Attorney General to defend professors at state universities who knowingly disregard the statutory mandates of the Legislature. Unlike the statutes involved in the cases cited by Chasin, N.J.S.A. 18A:60-4 is "fatally inconsistent" with the TCA, because it requires the Attorney General to defend a professor at a state university, even in actions for injunctive relief that are not "in the best interest of the State."
The dissent maintains that N.J.S.A. 18A:60-4 merely requires the reimbursement of counsel fees, and is not “fatally inconsistent” with the TCA. Post at ___ (slip op. at 15) (Stein, J., dissenting). That position represents a critical misreading of both statutes. N.J.S.A. 18A:60-4 not only requires the reimbursement of counsel fees, but also requires the State to “save harmless” a professor from “any financial loss.” The inconsistency between these two requirements is self-evident. Further, the contention that the education law “does not even involve the Attorney General's office” appears to be based on N.J.S.A. 18A:60-4's use of the words “the State shall defray all costs. . .” Post at ____ (slip op. at 15) (Stein, J., dissenting). Nearly every indemnification provision in the TCA uses similar language; no one would contend that those provisions do not “involve the Attorney General's office.” See, e.g., N.J.S.A. 59:10-1 (“the State shall provide indemnification. . . .”); N.J.S.A. 59:10-2 (“the State shall pay or reimburse him. . . .”); N.J.S.A. 59:10-2.1 (“the State shall reimburse the officer. . . .”).
Further, as in Kemp, the later express repeal of N.J.S.A. 18A:60-4, in the Higher Education Restructuring Act of 1994, is consistent with our holding that N.J.S.A. 18A:60-4 was implicitly repealed by the TCA. The legislative history of the Higher Education Restructuring Act of 1994, L. 1994, c. 48, ¶ 307, effective July 1, 1994, which repealed N.J.S.A. 18A:60-4, illustrates this. The Senate Education Committee's Statement accompanying the Restructuring Act specifically addresses a number of statutes and then states "[t]he remaining repealed sections are those statutes which are no longer operative." Because no mention of N.J.S.A. 18A:60-4 appears prior to that passage, the Legislature seems to have believed that N.J.S.A. 18A:60-4 was "no longer operative."
Chasin reads the legislative history differently, concluding that N.J.S.A. 18A:60-4 was repealed to be replaced by a new statute, N.J.S.A. 18A:3B-6(h). That statute provides that each state university or college
shall elect within 75 days of the effective date of this act whether it, and its employees, shall be represented in all such matters by the Attorney General. If the institution elects not to be represented by the Attorney General, it shall be considered and its employees considered employees of a sue and be sued entity for the purposes of the "New Jersey Tort Claims Act" only. The institution shall be required in that circumstance to provide its employees with defense and indemnification consistent with the terms and conditions of the Tort Claims Act in lieu of the defense and indemnification that such employees would otherwise seek and be entitled to from the Attorney General.
Chasin reasons that the Legislature's decision to replace N.J.S.A. 18A:60-4 with a comparable provision militates against the conclusion that the statute was repealed by the TCA. The new statute does not, however, replace the old one. Instead, it binds either the Attorney General or the University to defend and indemnify employees to the extent required by the TCA, and not N.J.S.A. 18A:60-4. If Professor Chasin's reasoning were correct, a comparable provision would have defined the duty to indemnify with a reference to N.J.S.A. 18A:60-4 and not the TCA. Instead, this new statutory scheme suggests that the Legislature believed N.J.S.A. 18A:60-4 inoperative to the extent that it required a defense not countenanced by the TCA. The new statute was intended to introduce a measure of autonomy into the defense and indemnification of state universities and their employees by preserving the right to seek outside counsel. It was not meant to alter the duty to indemnify an employee. Thus, the reference to the TCA in N.J.S.A. 18A:3b-6(h) supports the conclusion that the Legislature viewed N.J.S.A. 18A:60-4 as inoperative. We find ample evidence that the State's duties under N.J.S.A. 18A:60-4 are inconsistent with the TCA were implicitly repealed by that statute. Accordingly, the State is not obligated to indemnify Chasin pursuant to N.J.S.A. 18A:60-A.
We conclude that Professor Chasin is not entitled to indemnification under either the TCA or N.J.S.A. 18A:60-4. The judgment of the Appellate Division is affirmed and modified in accordance with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, and COLEMAN join in JUSTICE GARIBALDI's opinion. JUSTICE O'HERN filed a separate dissenting opinion, in which JUSTICE STEIN joins. JUSTICE STEIN filed a separate dissenting opinion, in which JUSTICE O'HERN joins.
SUPREME COURT OF NEW JERSEY
A-161/
162 September Term 1997
BARBARA CHASIN,
Plaintiff-Appellant
and Cross-Respondent,
v.
MONTCLAIR STATE UNIVERSITY,
THE STATE OF NEW JERSEY AND
PETER VERNIERO, ATTORNEY GENERAL,
Defendants-Respondents
and Cross-Appellants.
O'HERN, J., dissenting.
I find it unusual that the Court should strain so hard to
deny legal representation to a professor at one of our State
universities in connection with a student's claim against her.
I have a sense that there is implicit in the Court's decision a
determination that it was an unpatriotic act not to award the
requested grade to a veteran of the 1991 Persian Gulf War. At
first glance, the teacher's position does appear to conflict
with the 1991 Desert Storm Law, L. 1991, c. 167. On closer
analysis, as the Appellate Division found, she should be given
a hearing to explain her position. The record, fairly read,
strongly suggests that Professor Chasin acted in good faith.
If she did, then for the Court to sustain the Attorney
General's denial of indemnification for her counsel fees
undermines the protection that the Legislature intended to be
provided to State employees sued because of the faithful
discharge of their public duties.
We often say that government must "turn square corners."
F.M.C. Stores Co. v. Borough of Morris Plains,
100 N.J. 418,
426 (1985) (citation omitted). If a mixed metaphor may be
forgiven, the State did more here than cut corners; rather it
kept moving the goalposts in order to prevent this teacher from
obtaining reimbursement for the legal fees that she incurred in
vindicating her proper performance of her public duties. First
the State represented to Professor Chasin that she would be
able to recover her legal expenses under N.J.S.A. 59:10-2 of
the Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3, so long as
she was not guilty of willful misconduct. Then after she had
incurred the legal expenses, the State told her that she had no
rights under the TCA, but that it was entirely discretionary
whether the Attorney General should provide her a legal
defense. Finally, when N.J.S.A. 18A:60-4 of the Higher
Education Act, N.J.S.A. 18A:60-1 to -15, appeared to provide a
parallel form of indemnity to that under the TCA, the State
argued that 18A:60-4 had been impliedly repealed. Except to
require a hearing on the issue of willful misconduct, the
Appellate Division did not accept the State's arguments. I
would affirm its judgment.
Professor Chasin is entitled to indemnification under N.J.S.A. 59:10-2 because that is what the Attorney General's office represented to her before she incurred the expenses.
A fair regard for the rights of public employees suggests
that public employers should not renege on promises of such
consequence. The Attorney General's August 25, 1992 letter
denying representation stated: "This decision is based on the
actions of Professor Chasin. . . ." In addition, the letter
recited that there would be a serious question of a conflict of
interest if the Attorney General were to represent both Chasin
and the State. The letter concluded: "In light of this
determination, whether Professor Chasin will be entitled to
indemnification by the State will be governed by the provisions
of N.J.S.A. 59:10-2."
N.J.S.A. 59:10-2 provides indemnification for tortious
conduct if the employee establishes that the act or omission
complained of occurred within the scope of the employment and
the State fails to establish that the employee "acted or failed
to act because of actual fraud, actual malice or willful
misconduct."
It is certain that the record in this case does not
establish that the teacher's actions were the result of fraud,
actual malice or willful misconduct. Of course, I agree that a
public employee has a duty to cooperate with the Attorney
General and, indeed, that once the Attorney General agrees to
defend a public employee, the Attorney General has exclusive
control over the employee's representation. N.J.S.A. 59:10A-4.
I therefore agree that an employee may not willfully or
wrongfully disregard the advice of the Attorney General. This
does not, however, mean that the employee must follow the
incorrect advice of an Attorney General at the expense of
forfeiture of her right to indemnification.
In its opposition to Professor Chasin's motion to be
indemnified for the legal fees that she had incurred, the
Attorney General furnished an affidavit by a Deputy Attorney
General stating:
I indicated that Professor Chasin was
obliged by that law to award Lloyd a grade
on the basis of the work he completed in
the course to the date he was called to
active duty in the Persian Gulf Conflict
[presumably his mid-term exam grade]. It
was my opinion that Professor Chasin could
not require th