2016/17 Primary Liability Program - Memorandum of Coveragesba,6�
Memorandum of Coverage — Primary Liability Program
Issued to the City of La Quinta
Effective July 1, 2016 — July 1, 2017
Administered by the California Joint Powers Insurance Authority
Effective July 1, 2016 — July 1, 2017, as a joint protection program authorized pursuant to
Article 11(a) of the California JPIA joint powers agreement
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COVER PAGE
MEMORANDUM OF COVERAGE — PRIMARY LIABILITY PROGRAM
FOR THE
CALIFORNIA JOINT POWERS INSURANCE AUTHORITY
MEMBER:
MAILING ADDRESS:
La Quinta
78-495 Calle Tampico
La Quinta, CA 92253-2839
PROTECTION LIMITS: Primary layer: $20,000,000
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PROTECTION PERIOD: From July 1, 2016 at 12:01 a.m. Pacific Time until July 1, 2017 at
12:01 a.m. Pacific Time.
ENDORSEMENT(S): None
This Memorandum, and any endorsements thereto, are a description of the terms and conditions of the
Program through which certain specified and limited self-insured risks of liability are administered by the
Authority and shared by its Members. This Memorandum is not an insurance policy. As provided in
Section 990.8 of the California Government Code and appellate court cases of Orange County Water
District v. Association of California Water Agencies JPIA (1997) and City of South El Monte v. Southern
California Joint Powers Insurance Authority (1995), the pooling of self-insured claims or losses among
the Members of the Authority shall not be considered insurance nor be subject to regulation under the
Insurance Code.
California JPIA
/s'7�lra�ats�
President
TABLE OF CONTENTS
1. INTRODUCTION
2. PROTECTION PROVIDED
A. Payments on Behalf of Protected Parties
B. Defense and Settlement
C. Protection Limit
D. Statuto7y Limitations
E. Territorial Limitation
F. Chief Executive Separation Payment
3. DEFINITIONS
4. EXCLUSIONS
5. CONDITIONS AND RESPONSIBILITIES
A. Inspection and Audit
B. Severability of Interest
C. Protected Party's Duties in the Event of an Occurrence or Claim
D. Other Protection
E. Termination or Amendment
F. Changes
G. Subrogation
H. Assignment
I. Joint Powers Agreement
J. Appeal of Disputes
K. Arbitration
L. Limitation of Liability
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MEMORANDUM OF COVERAGE — PRIMARY LIABILITY PROGRAM
for the
CALIFORNIA JOINT POWERS INSURANCE AUTHORITY
1. INTRODUCTION
This Memorandum is a description of the terms and conditions of the Program through
which certain self-insured risks of liability are administered by the Authority and shared
by its Members pursuant to the Joint Powers Agreement creating the Authority under
the provisions of Section 6500 et seq. of the Government Code.
As provided in Section 990.8 of the Government Code, pooling of losses in this Program
is not insurance. The sole duty of the Authority is to administer the Program adopted
by the Members. The Authority can indemnify only Claims or losses, which are pooled
under the terms of this Memorandum and the Joint Powers Agreement. There is no
transfer of risk from the Member or any Protected Party to the Authority nor
assumption of risk by the Authority.
The provisions of the Program are subject to and subordinated to the Joint Powers
Agreement or any action taken by the Executive Committee or the Board of Directors in
connection with the Program. This Program has been adopted pursuant to action taken
by the Executive Committee, and is subject to any amendment, modification or extension
by the Executive Committee or the Board of Directors.
The terms of this Memorandum shall be construed in an evenhanded fashion in
accordance with the principles of California contract law. If the language of this
Memorandum is alleged to be ambiguous or unclear, the issue of how the protection
should apply shall be resolved in a manner most consistent with the relevant terins of this
Memorandum without regard to authorship of the language and without any
presumption of arbitrary interpretation or construction in favor of either the Protected
Party or the Authority. Any controversy or dispute arising out of or related to an
interpretation or breach of this Memorandum shall be settled in accordance with the
appeals procedures as set forth in this Memorandum.
Throughout this Memorandum, words and phrases that appear in bold print are defined
in 3. DEFINITIONS.
2. PROTECTION PROVIDED
A. Payments on Behalf of Protected Parties
Subject to all provisions of this Memorandum, the Authority will cause the Program to
pay on behalf of the Protected Party all sums that the Protected Party shall become
legally obligated to pay as Damages by reason of Tort Liability imposed by law, or the
Tort Liability of others assumed in a Protected Contract, because of:
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— Primary Liability Program Page 1 of 27 July 1, 2016 — July 1, 2017
(i) Bodily Injury or Property Damage, including Automobile Liability
(ii) Personal Injury;
(iii) Public Officials Errors and Omissions;
(iv) Broadcast/Publication Injury;
(v) Employment Practices Injury; or
(vi) Employee Benefit Administration Liability
caused by an Occurrence during the Protection Period, to which this Memorandum
applies.
B. Defense and Settlement
The Authority, at the shared expense of its Members, and out of funds of the Program
deposited or obligated to be deposited by its Members, shall investigate, negotiate, settle,
or Defend, at the Authority's sole discretion, any Claim which has been tendered to the
Authority and which in the sole opinion of the Authority is encompassed by this
Program. The Authority shall control selection of defense counsel. Defense Costs
incurred by the Protected Party prior to the tender of the Claim, as required by 5.
CONDITIONS AND RESPONSIBILITIES, to the Authority are the sole obligation of
the Protected Party. The date of the tender of the Claim shall be the date written notice
of said Claim is received at the Authority's offices (or it's designated Claims
Administrator).
The obligation of the Authority as described above shall cease to apply after the
Protection Limit has been exhausted by any combination of payments hereunder for
judgments, settlements, or Defense Costs, or if the Authority tenders the Protection
Limit on behalf of any Protected Party. For purposes of excess insurance or
reinsurance, any Defense Costs incurred prior to the tender of the Protection Limit shall
be deducted from the Protection Limit that is tendered.
With respect to any Claim or part thereof which has been tendered to the Authority and
over which the Authority assumes full or partial responsibility or charge of the
settlement or Defense, the Authority shall, if applicable, cause the Program to pay:
(i) All expenses incurred by the Authority on behalf of a Protected Party;
(ii) Costs taxed against a Protected Party in the Claim; and
(iii) Other reasonable expenses incurred by a Protected Party at the Authority's
request to assist the Authority in the investigation or Defense of the Claim;
but this shall not include the office expenses of the Protected Party, the
salaries of Employees or officials of the Protected Party, nor expenses of
any claims administrator engaged by the Protected Party.
With respect to a Claim for which the Authority has determined that only a portion is
encompassed by this Program, the Authority shall cause the Program to fund any
Defense to the Claim against the Member and any settlement or final judgment of that
Claim, subject to the reservation by the Authority of the right to recover from the
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— Primary Liability Program Page 2 of 27 July 1, 2016 — July 1, 2017
Member any amounts paid by the Authority for such settlement or final judgment which
are paid to claimants for Claims , or portions thereof, not encompassed by the Program.
With respect to a Claim for which the Authority has determined that no portion is
encompassed by this Program, the Claim shall be referred, in its entirety, back to the
Protected Party.
The payment of Defense Costs will reduce the Protection Limit under this Program.
C. Protection Limit
The Protection Limit shown on the Cover Page and the rules below determine the most
the Program will pay, inclusive of Defense Costs, regardless of the number. of-
(i)
£
(i) Protected Parties;
(ii) Claims made; or
(iii) Persons or organizations that sustain injuries or Damages.
The Protection Limit stated on the Cover Page is the most the Program will pay per
Member for the sum of Damages, Defense Costs and expenses as included in B.
Defense and Settlement under any or all or any combination of Bodily Injury, Property
Damage, Personal Injury, Public Officials Errors and Omissions,
Broadcast/Publication Injury, Employment Practices Injury, Employee Benefit
Administration Injury, or Chief Executive Separation Payment arising out of any one
Occurrence.
For the purpose of determining the Protection Limit all Bodily Injury, Property
Damage, Personal Injury, Public Officials Errors and Omissions,
BroadcastiPublication Injury, Employment Practices Injury, Employee Benefit
Administration Liability, or Chief Executive Separation Payment arising out of
exposure to substantially the same general condition(s) shall be considered as arising out
of one Occurrence. All protection shall be deemed to arise from a single Occurrence
where the underlying cause is continuous or repeated exposure to the same generally
harmful conditions, such as a breach or breaches of security, malware, virus, hacking, or
similar cyber -related events.
Any actual or alleged loss of use of tangible property not physically injured or destroyed
shall be deemed to occur at the time of the Occurrence that caused such loss of use. Any
other injury or damage occurring or alleged to have occurred over more than one
Protection Period shall be deemed to have occurred during the Protection Period when
the Occurrence began.
For an Additional Contribution, Tort Liability may be assumed in a Protected
Contract on behalf of a Railroad, and the Protection Limit for such assumed Tort
Liability shall be $2,000,000 per occurrence and in the aggregate. For purposes of this
coverage, the Additional Contribution shall be determined based upon the number of
railroad crossings for which a Member seeks coverage.
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— Primary Liability Program Page 3 of 27 July 1, 2016 — July 1, 2017
D. Statutory Limitations
Notwithstanding sections 2.A. and 2.B. above, the defense and/or indemnity protections
afforded by this agreement to a past or present elected or appointed official or Employee
of a Member are not broader than the Member's own duty to defend and indemnify its
official or Employee under California Government Code sections 825, et seq. and 995, et
seq. All immunities, defenses, rights, and privileges of the Member under the
Government Code apply to the Program as well, including any defense that the official
or Employee acted outside the course and scope of employment or acted with fraud,
corruption or actual malice, or any defense that the action or proceeding or type of
damage sought is not the type for which the Member is obligated to provide defense
and/or indemnity. The defense and/or indemnity protections are also subject to all the
terms, conditions, and Exclusions of this Memorandum and do not apply if not covered
by this Memorandum, even if an obligation to defend and/or indemnify would exist
under the Government Code.
E. Territorial Limitation
This Memorandum applies to Claims arising out of Occurrences during the
Protection Period, anywhere in the world, that are filed in the state or federal courts of
the United States of America.
F. Chief Executive Separation Payment
This Program will also pay a Chief Executive Separation Payment to an eligible Chief
Executive who is separated from employment involuntarily, by the governing body of
the Member. A Chief Executive that is forced to resign in lieu of termination will also
be eligible for the Chief Executive Separation Payment. The Authority at its sole
discretion shall determine eligibility for the Chief Executive Separation Payment.
Conditions of eligibility require the separated Chief Executive to place the Authority on
notice of intent to be considered for the Chief Executive Separation Payment within 60
days of the date of separation. The Chief Executive will be required to complete and
submit a Waiver to the Authority, within 60 days of the date of separation. The Chief
Executive will further be required to submit a Certification to the Authority within 60
days following the Waiting Period.
The Authority will compute the proper payment, and payment shall commence within 30
days following the submission of the first Certification. For a qualifying Chief
Executive who has applied for, but not yet received benefits from a public retirement
system, the Authority will require the Chief Executive to provide written proof, from
the provider, of the amount of public retirement benefit to be paid, prior to calculating
and paying the Chief Executive Separation Payment. Payments will be made in arrears
where necessary.
The Chief Executive Separation Payment shall not be considered "unemployment
insurance," nor shall it be considered a "severance" payment, and it shall not be payable
if excluded by the terms of Exclusion "AA".
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— Primary Liability Program Page 4 of 27 July 1, 2016 — July 1, 2017
The Chief Executive Separation Payment can only be waived by the Chief Executive
if it is specifically noted, by name, within any separation or employment agreement
entered into with the Member.
3. DEFINITIONS
Additional Contribution means an assessment charged to a Member for the cost or
additional exposure associated with the Member's participation in an optional liability
protection available through this Memorandum.
Administration under Employee Benefits Administration Liability means:
A. Giving counsel to employees with respect to the Employee Benefits Programs;
B. Interpreting the Employee Benefits Programs;
C. Handling of records in connection with the Employee Benefits Programs; or
D. Effecting enrollment, termination, or cancellation of employees under the
Employee Benefits Programs, provided all such acts are authorized by the
Member.
Aircraft iueauS any vehicle dejlslled LV LrCLllJpvrt people or properly through the a11.
Airport means any locality either on land or water which is adopted for the landing and
taking off of Aircraft, including all land, water, buildings, structures, equipment or other
improvements necessary or convenient in the establishment and operation of an Airport.
Authority means the California Joint Powers Insurance Authority.
Automobile means a land motor vehicle, trailer, or semi -trailer.
Automobile Liability means Tort Liability for Bodily Injury or Property Damage,
arising from the use of an Automobile by a person defined in the Protected Party
definition, parts `B", "E" or "F".
Bodily Injury means bodily injury, sickness, or disease sustained by any person,
including death resulting from any of these at any time.
Broadcast/Publication Injury means injury caused by or arising out of-
A.
£
A. Any form of defamation or other tort related to disparagement or harm to the
character, reputation or feelings of any natural person or organization including but
not limited to libel, slander, product disparagement, trade libel, infliction of
emotional distress, outrage, or outrageous conduct;
B. Any form of invasion of, infringement of, or interference with rights of privacy or
publicity; including but not limited to false light, public disclosure of private facts,
intrusion, and commercial appropriation of name or likeness;
C. Infringement of copyright or trademark;
D. Plagiarism or piracy or misappropriation of ideas under implied contract;
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E. Unauthorized use of names, trade names, trademarks, service marks, titles, formats,
ideas, characters, character names, characterizations, performances, plots, musical
compositions, slogans, program material, or any other similar material; or
F. Denial of access to broadcast facilities based upon application of judgment or
standards relating to the acceptability of material for public broadcast; committed in
the course of the Protected Party's broadcast or publication activities.
Certification means a signed statement by a Chief Executive that he or she is entitled to
the Chief Executive Separation Payment because he or she is unemployed or is
employed but receiving Compensation that is lower than he or she was earning at the
time of the Occurrence. The initial executed Certification is a form provided by the
Authority and must be received within 60 days following the Waiting Period.
Chief Executive means the governing body -appointed chief administrative officer of a
Protected Party whether called city manager, chief administrative officer, general
manager or other title designating the highest appointed official of the governmental
entity.
Chief Executive Separation Payment means a payment that shall be paid once a month,
in arrears, for a time period not to exceed six months, following the Waiting Period.
The payment shall equal the amount of the Chief Executive's salary at the time of the
separation of employment Occurrence, plus payment of the Medical Benefit, less the
total amount of Compensation being received after the separation of employment
Occurrence and any other payments made to the Chief Executive, by the member,
during the payment period.
Claim means a notice, demand, or Suit against a Protected Party to recover Damages.
Claim does not include an administrative claim filed with the Equal Opportunity
Employment Commission, the California Department of Fair Employment and Housing,
or other similar state or federal administrative agency.
Compensation for purposes of computation of the Chief Executive Separation
Payment means:
A. Wages or salary earned as an employee of a new employer, subsequent to
separation,
B. Payments from a defined benefit retirement plan commencing subsequent to
separation for which benefits were earned while employed by the Member,
C. Unemployment insurance, and
D. Income earned from self-employment or from work or activities as an independent
contractor, consultant, or in a similar capacity subsequent to separation.
Compensation does not include Social Security, Medicare or disability benefits.
Dam means a structure described by California Water Code sections 6002 through 6004.
Damages means compensation in money recovered by a party for loss or detriment it has
suffered through the acts of a Protected Party. Damages does not include defense of
Claims or any punitive, exemplary or multiplied damages or non -monetary relief or
redress or injunctive relief.
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Defense Costs means all fees and expenses incurred in connection with the adjustment,
investigation, defense, and appeal of a Claim covered hereunder, including attorney fees,
court costs, premiums for appeal bonds, and interest on judgments accruing after the
entry of judgment, and also shall include the costs of any claims administrator or defense
counsel assigned by the Authority to respond to any Claim on behalf of the Authority.
Defense Costs shall not include the office expenses of the Protected Party, nor the
salaries of employees or officials of the Protected Party, nor expenses of any claims
administrator engaged by the Protected Party. Defense Costs also do not include any
fee or expense relating to coverage issues between the Authority and any Protected
Party.
Discrimination means injury caused by or arising out of:
A. Unlawful discrimination because of race, sex, color, age, religion, or national origin,
or membership in any similar legally protected class; or
B. Violation of the discrimination prohibitions of the Americans with Disabilities Act
of 1990, any rules or regulations promulgated thereunder and amendments thereto
or similar provisions of any federal, state, or local statutory law or common law.
Employee includes any person falling within the definition of "employee" under section
810.2 of the Government Code_ That section proviries: "Employee includes an -
officer ...
nofficer... employee, or servant, whether or not compensated, but does not include an
independent contractor." Employee also includes any volunteer designated by the
Member to perform specific functions in the course and scope of authorized activities
under the direction and control of the Member.
Employee Benefit Administration Liability means liability for injury or damage caused
by or arising out of any negligent act, error or omission of the Protected Party in the
Administration of the Member's Employee Benefits Programs.
Employee Benefits Program means group life insurance or self-insurance, group
medical, dental or vision -care insurance or self-insurance, pension plans, retirement
plans, deferred compensation plans, workers' compensation, unemployment insurance,
social benefits, disability benefits, and other similar employee benefits.
Employment Practices Injury means injury arising out of the following offenses:
A. Wrongful dismissal, discharge, or termination of employment;
B. Breach of any oral or written employment contract or quasi -employment contract;
C. Employment-related coercion or misrepresentation;
D. Violation of employment discrimination laws;
E. Workplace sexual or other harassment;
F. Wrongful failure to employ or promote;
G. Wrongful discipline, negligent evaluation, or wrongful demotion;
H. Wrongful deprivation of a career opportunity; or
I. Employment-related:
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— Primary Liability Program Page 7 of 27 July 1, 2016 — July 1, 2017
(i) Invasion of privacy,
(ii) Defamation, or
(iii) Wrongful infliction of emotional distress.
Fungi means any type or form of fungus, including mold or mildew and any mycotoxins,
spores, scents, or byproducts produced or released by fungi.
Hostile Fire means a fire that becomes uncontrollable and breaks out from where it is
intended to be.
Levee means a permanent embankment intentionally constructed for the purpose of
preventing overflow of a watercourse or body of water.
Medical Benefit means the cost of all benefits to which a Chief Executive is entitled
under the Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA).
Member means the entity, including all of its departments and constituent agencies, that
is a signatory to the Joint Powers Agreement creating the Authority as may be amended
from time to time, which has adopted a resolution to participate in the Program,, and
whose name appears on the Cover Page of this Memorandum. Member includes any
other agency for which the Member's governing board or council acts as the governing
board, and also includes any commissions, agencies, districts, authorities, redevelopment
agencies, boards, or similar entities coming under the Member's sole direction and
control. Member shall include any other agency authorized by the Authority's
Executive Committee or Board of Directors.
Memorandum means this Memorandum of Coverage — Primary Liability Program
authorized by the Joint Powers Agreement of the Authority specifying the terms and
conditions of the Program through which certain specified and limited self-insured risks
of liability are administered by the Authority and shared by its Members.
Nuclear Material means "source material," "special nuclear material," or "by-product
material" as those terms are given meaning in the Atomic Energy Act of 1954 or any law
amendatory thereto.
Occurrence means:
A. With respect to Bodily Injury or Property Damage, an accident, including
continuous or repeated exposure to conditions, that first occurs during the
Protection Period and that results in Bodily Injury or Property Damage neither
expected nor intended from the standpoint of the Protected Party;
B. With respect to Public Officials Errors and Omissions, actual or alleged conduct
described in the definition of Public Officials Errors and Omissions during the
Protection Period;
C. With respect to Employee Benefits Administration Liability, actual or alleged
conduct described in the definition of Employee Benefits Administration Liability
during the Protection Period,
D. With respect to Personal Injury, Broadcast/Publication Injury, and Employment
Practices Liability, an offense described in the definitions of those terms; or
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— Primary Liability Program Page 8 of 27 July 1, 2016 — July 1, 2017
E. With respect to Chief Executive Separation Payment, injury arising out of-
(i)
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(i) Dismissal, discharge, resignation in lieu of termination or termination of the
employment of a Chief Executive; or
(ii) Failure to renew an employment contract which results in termination of the
employment of a Chief Executive
for which liability on the part of a Protected Party can be settled through the
acceptance by the Chief Executive of a Chief Executive Separation Payment in
exchange for a Waiver and Certification.
All claims based on or arising out of Harassment or similar conduct (including
molestation or sexual abuse) by an Employee, or more than one Employee acting in
concert, will be considered arising out of one Occurrence and shall be deemed to have
been committed at the time of the first of such acts or alleged acts, regardless of the
number of:
(i) Protected Parties;
(ii) Claims made; or
(iii) persons or organizations that sustain injuries or Damages.
If a series of wrongful acts committed by one Employee, or more than one Employee
acting in concert, takes place over more than one Protection Period, the wrongful acts
will be deemed to have been committed during the first Protection Period and only the
Protection Limit for that Protection Period shall apply.
Personal Injury means injury, other than Bodily Injury, Property Damage or Public
Officials Errors and Omissions, resulting from one or more of the following offenses:
A. False arrest, detention, or imprisonment;
B. The use of force for the purpose of protecting persons or property;
C. Malicious prosecution or abuse of process;
D. Wrongful entry by any employee of the Member into a room, dwelling, or other
similar premises that a person occupies;
E. Wrongful eviction by any employee of the Member of a person from a room,
dwelling, or other similar premises that such person occupies;
F. The publication or utterance of a libel or slander, including statements that
disparage a person's or organization's goods, products, or services;
G. A publication or utterance that violates a person's right of privacy;
H. Interference with an existing or prospective economic advantage, contract, or
agreement;
I. Discrimination;
J. Violation of civil rights; or
K. Infliction of emotional distress.
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Pollutants/Hazardous Materials includes without limitation:
A. Any flammable or explosive substances, radioactive materials, asbestos, poly-
chlorinated biphenyls, chemicals, substances known to cause cancer or reproductive
toxicity, pollutants, contaminants, hazardous wastes, toxic substances, or related
materials which are regulated by or under any federal, state, or local environmental
law;
B. Any material identified as hazardous in Sections 66261.10 through 66261.126 of
Title 22 of the California Code of Regulations, as amended from time to time
(collectively);
C. Any solid, liquid, gaseous or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals, and waste. The term "waste" includes
materials to be recycled, reconditioned, or reclaimed; or
D. Fungi and bacteria of any kind, unless caused by an otherwise covered Occurrence.
Program means the California Joint Powers Insurance Authority Primary Liability
Protection Program described by this Memorandum and the Agreement of the Members
creating the Authority. The Program is a fund created by the Members for the purpose
of pooling self-insured losses.
Property Damage means:
A. Physical injury to or destruction of tangible property which occurs during the
Protection Period, including the loss of use thereof at any time resulting there
from; or
B. Loss of use of tangible property that has not been physically injured or destroyed
provided such loss of use is caused by an Occurrence during the Protection
Period.
Protected Contract means a written agreement that satisfies all of the following:
A. The agreement pertains to the Member's operations and by the contract terms the
Member assumes the Tort Liability of another to pay damages because of Bodily
Injury or Property Damage to a third person or organization;
B. The agreement is entered into prior to the Bodily Injury or Property Damage for
which a Claim is made; and
C. The agreement, including its value, is reported by the Member and approved by the
Authority through issuance of an evidence of coverage letter prior to the Bodily
Injury or Property Damage and the value is added to the Member's annual
payroll for use in any retrospective deposit or annual contribution computation.
A Protected Contract may cover an architect, engineer, or surveyor for his or her
role as a Public Official, except for the application of paragraphs B.(i) and B.(ii)
below. Protected Contracts may apply to contract public works directors, building
officials, planning directors, city managers, Chief Executives, city attorneys, city
prosecutors, redevelopment directors, or other contracted Public Officials for
occurrences arising out of their official duties, but this coverage applies only to the
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named contract Public Official and does not extend to other individuals within the
contractor's firm.
A Protected Contract does not include any part of any contract or agreement:
A. That indemnifies any person or organization for injury or damages caused by or
arising out of the ownership, operation, maintenance or use of any Aircraft,
Airport or Watercraft;
B. That indemnifies an architect, engineer, or surveyor. This exclusion does not apply
in the instance where an individual is under an exclusive contract as a contract
Public Official solely for the benefit of the Member (i.e., no work is performed by
the person for any other person or entity), for injury or damage arising out of:
(i) Preparing, approving, or failing to prepare or approve maps, drawings,
opinions, reports, surveys, change orders, designs or specifications; or
(ii) Giving or failing to give directions or instructions, if that is the primary cause
of the injury or damage;
C. Under which the Protected Party, if an architect, engineer, or surveyor, assumes
liability for injury or damage arising out of the Protected Party's rendering or
failing to render professional services; including those listed in B. above and
supervisory, inspection, or engineering services; or
D. That indemnifies any person or organization for damages by fire, explosion, or
water damage to premises rented or loaned to the Member.
Limited Protected Contract means a written agreement, contract or permit in which:
A. The Member assumes the Tort Liability of another to pay damages because of
Bodily Injury or Property Damage to a third party in one of the following:
(i) Easements or License Agreements;
(ii) Teases of Real or Personal Property;
(iii) Encroachment Permits;
(iv) Special Events Sponsored by the Member; or
(v) Use of Facilities, Equipment, real or personal property by the Member;
B. The Member assumes the Tort Liability of another to pay damages because of
Bodily Injury or Property Damage to a third party for an activity not named in
paragraph A. directly above, and upon its review of the agreement, Authority staff
has determined at its sole discretion that any risks assumed in the agreement do not
significantly increase the Member's risk exposure, and an Evidence of Coverage
letter has been issued by the Authority; or
C. The Member is obligated to provide evidence of coverage for a third party to
participate in a funding program administered by another government or evidence of
coverage required by bond indentures entered into by the Member if Authority
staff has determined in its sole discretion that any risks assumed in the agreement do
not significantly increase the Member's risk exposure, and an Evidence of
Coverage letter has been issued by the Authority;
Memorandum of Coverage
— Primary Liability Program Page l 1 of 27 July 1, 2016 — July 1, 2017
and which is entered into prior to the Bodily Injury or Property Damage for which a
Claim is made.
A Limited Protected Contract does not include any part of any contract or agreement
that indemnifies any person or organization for injury or damages caused by the sole
negligence of such person or organization, or that cannot be included in a Protected
Contract.
A Limited Protected Contract also does not include any part of a contract or agreement
that indemnifies the owner or operator of a Railroad.
Protected Party means:
A. The Member named on the Cover Page;
B. Persons who are, or were, elected or appointed officials or Employees of the
Member, whether or not compensated, while acting within the scope of their duties
or employment as such, including while acting on outside committees,
commissions, or boards at the direction of the Member, except that the protection
so provided does not apply to Bodily Injury to another official or employee of the
Member in the course of and arising out of his or her duties to or employment by
the same Member, nor does it apply to other individuals within the contract
appointed official's firm or organization, but only to the named appointed official.
C. Any nonprofit California corporation or unincorporated association under written
contract, approved by the Member's governing board or council, to perform
specified functions under the Member's direction and control. The corporation or
unincorporated association is a Protected Party only for Occurrences arising out
of the functions described in the contract. For the purposes of this section, direction
and control means the authority of the Member to be involved in decision making
and to overturn decisions;
D. Any person or entity identified as an additional Protected Party in a letter
certifying such additional Protected Party status issued by the Authority, for
Bodily Injury or Property Damage during the time period identified in the letter;
if a particular activity is identified in the letter, the person or entity is a Protected
Party only for Occurrences arising out of the described activity. Additional
Protected Party status will apply only where required by the terms of a written
agreement;
E. Any person while using an Automobile owned, hired, or leased by a Member, and
any person or organization legally responsible for the use thereof, provided the use
is with the express permission of the Member, and only for Bodily Injury and
Property Damage. This protection does not apply to:
(i) Any person or organization, or any agent or employee thereof, other than the
member, engaged in selling, repairing, servicing, delivering, testing, road
testing, parking or storing, Automobiles, with respect to any Occurrence
arising out of any such occupation or activity;
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— Primary Liability Program Page 12 of 27 July 1, 2016 — July 1, 2017
(ii) With respect to any hired automobile, to the owner or a lessee thereof, other
than the Member, or to any agent or employee of such owner or lessee; or
(iii) Any person or organization, or to any agent or employee thereof, engaged in a
business of operating buses or other Automobiles for the transport of
members of the public unless that business is owned by the Member and
operated by its employees.
(This Memorandum does not provide Underinsured or Uninsured Motorist
coverage.); or
F. The Authority, its officers and employees while acting in the course and scope of
their duties or employment.
No person or entity is a Protected Party with respect to the conduct of any current or
past partnership, joint venture or joint powers authority (including any separate entity
created pursuant to a joint powers agreement). However, for any person who is an
official or Employee of a Member, who participates in the activities of a partnership,
joint venture, or joint powers authority and is acting for or on behalf of the Member at
the time of the Occurrence, protection is afforded by this Memorandum. Such
coverage shall be in excess of, and shall not contribute with, any collectible insurance,
celf_ingtuance or other coverage rnrnviraPd to the other Joint pnWerc aiithprity� agency or
entity.
Protection Period means the time period shown on the Cover Page of this
Memorandum.
Public Officials Errors and Omissions means any act, error, omission, misstatement,
misleading statement, neglect, or breach of duty by any Protected Party in the discharge
of that individual's duties for the Member; or any matter claimed against any Protected
Party solely by reason of the individual being or having been an employee of the
Member. Public Officials Errors and Omissions does not include Bodily Injury,
Property Damage, Personal Injury, Broadcast/Publication Injury, or Employment
Practices Injury.
Radioactive Contamination Injury means Bodily Injury or Property Damage caused
by or arising from ionizing radiations or contamination by radioactive material.
Railroad means a commercial railway as described by the California Public Utilities
Code, Section 229. Railroad includes street railroad as described by the California
Public Utilities Code, Section 231. Railroad does not include amusement railroad rides
that do not cross public streets.
Suit means a civil proceeding in which a Protected Party is named as a defendant or
cross defendant, or an arbitration proceeding or alternative -dispute resolution proceeding
to which a Protected Party submits with the Authority's written consent.
Termination for Cause means dismissal, discharge, termination of employment, or
failure to renew a contract for the reasons stated in 29 USC § 1111 of the Employee
Retirement Income Security Act of 1974. This includes ending the employment of a
Chief Executive because the Chief Executive has been convicted of robbery, bribery,
extortion, embezzlement, fraud, grand larceny, burglary, arson, a felony violation of a
Memorandum of Coverage
— Primary Liability Program Page 13 of 27 July 1, 2016 — July 1, 2017
state or federal law regulating a controlled substance (felony drug conviction), murder,
rape, kidnapping, perjury, assault with intent to kill, or any felony involving abuse or
misuse of the Chief Executive's position to obtain illegal personal gain.
Tort Liability means civil liability that would be imposed by law in the absence of any
agreement or contract.
Waiting Period means a period of time after the termination of employment Occurrence
equal to the greater of (1) six months or (2) the number of months of salary received by
the Chief Executive as a severance payment from the Member, regardless of whether the
severance payment is made in lump sum or in multiple payments.
Waiver means a full and complete relinquishment by a Chief Executive of any and all
rights to sue a Protected Party for any Benefit, compensation, injury, or damages,
known or unknown, past, present or future, arising out of the employment of, termination
of the employment of, or failure to employ the Chief Executive. The Waiver is a form
provided by the Authority and must be signed and returned to the Authority within 60
days following the termination of employment. Waiver does not mean any waiver and
release agreement signed by the Chief Executive directly with the member, during the
separation process.
Watercraft means a vessel, more than 25 feet in length, designed to transport persons or
property in, on, or through water.
4. EXCLUSIONS
This Memorandum, including any obligation to defend or to pay Defense Costs, does
not apply to:
A. Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out
of the ownership, maintenance, use or operation of any Watercraft, Aircraft, or
Airport or any air show events sponsored or controlled by the Protected Party or
conducted on property owned by the Protected Party. Protection does apply to use
of an Aircraft or Watercraft, if the Aircraft or Watercraft is not owned in whole
or in part by the Member and the Member exercises no part in the servicing or
maintenance of the Aircraft or Watercraft. However, this limited protection does
not apply to:
(i) Loss, loss of use of, or damage to the Aircraft or Watercraft;
(ii) Use of any Aircraft or Watercraft for hire or reward; or
(iii) Public Officials Errors and Omissions coverage.
Memorandum of Coverage
— Primary Liability Program Page 14 of 27 July 1, 2016 — July 1, 2017
B. Any Claim, obligation or alleged obligation for which a Protected Party or any
insurance company as his/her/its insurer may be held liable under any workers'
compensation, unemployment compensation or disability benefits law, or under any
similar law.
C. Any Claim, liability, alleged liability, loss, cost, or expense for Bodily Injury to:
(i) An employee of the Protected Party arising out of and in the course of
employment by the Protected Party; or
(ii) The spouse, child, parent, brother, or sister of that employee as a consequence
of paragraph (i) above.
This Exclusion C. applies whether the Protected Party may be liable as an
employer or in any other capacity, and to any obligation to share damages with or
repay someone else who must pay damages because of the injury. However, this
exclusion does not apply to liability assumed in a Protected Contract or Limited
Protected Contract.
D. Injury to or destruction of:
(i) Property owned by the Protected Party;
(ii) Property rented to or !eased to the Protected Parry where it has assumed
liability under any contract for damage to or destruction of such property
unless the Protected Party would have been liable in the absence of such
assumption of liability; or
(iii) Property in the care, custody, or control of any Protected Party.
E. Any Claim, liability, alleged liability, loss, cost, or expense caused by, arising out
of or in any way connected with the operation of the principles of eminent domain,
condemnation proceedings, or inverse condemnation, by whatever name called,
whether such liability accrues directly against the Protected Party or by virtue of
any agreement entered into by or on behalf of the Protected Party. This Exclusion
E. shall not apply to liability, loss, cost or expense arising from property damage
caused by earth movement, subsidence of land, flooding not caused by the failure of
a Dam or Levee, or sewer backup, even though a legal theory upon which a
claimant seeks recovery is the principle of inverse condemnation. This Exclusion E
shall not apply when the Claim alleges damages arising out of temporary physical
measures taken by the Member for public safety reasons in an effort to prevent or
reduce a loss.
F. Any Claim, liability, alleged liability, loss, cost, or expense arising out of the actual,
alleged or threatened discharge, dispersal, seepage, migration, release, escape, or
any other forms of exposure to or the presence of Pollutants/Hazardous Materials
including any Claim, liability, alleged liability, loss, cost or expense directly or
indirectly caused by or arising out of any:
(i) Request, demand, or order that any Protected Party or others test for,
monitor, clean up, remove, contain, treat, detoxify, or neutralize, or in any
way respond to, or assess the effects of Pollutants/Hazardous Materials;
Memorandum of Coverage
— Primary Liability Program Page 15 of 27 July 1, 2016 - July 1, 2017
(ii) Claim by or on behalf of a governmental authority or any other entity or
person for costs of or damages because of testing for, monitoring, cleaning up,
removing, containing, treating, detoxifying, or neutralizing, or in any way
responding to, or assessing the effects of Pollutants/Hazardous Materials; or
(iii) Actions or steps taken to mitigate damages or to relocate persons, property or
business as a result of Pollutants/Hazardous Materials.
EXCEPTION TO EXCLUSION, PROTECTION FOR CERTAIN ACCIDENTAL
POLLUTION INJURIES. However this Exclusion F. does not apply to Bodily
Injury or Property Damage arising out of or caused by any actual, alleged or
threatened discharge, dispersal, seepage, migration, release or escape of
Pollutants/Hazardous Materials if all of the following:
(i) It was directly caused by Hostile Fire, explosion, lightning, windstorm,
vandalism or malicious mischief or collision, overturning or upset of a motor
vehicle or railroad vehicle;
(ii) It was accidental and was neither expected nor intended by the Protected
Party;
(iii) It was instantaneous and was demonstrable as having commenced at a specific
time and date during the term of this Memorandum;
(iv) Its commencement became known to the Protected Party within seven days;
(v) Its commencement was reported in writing to the Authority within twenty
days of becoming known to the Protected Party; and
(vi) Reasonable efforts were expended by the Protected Party to correct or
terminate the discharge, dispersal, seepage, migration, release, or escape of
Pollutants/Hazardous Materials.
Nothing contained in this EXCEPTION TO EXCLUSION, PROTECTION FOR
CERTAIN ACCIDENTAL POLLUTION INJURIES shall operate to provide any
protection or obligation to defend or pay Defense Costs with respect to:
(i) Any site or location used by others on the Protected Party's behalf for the
handling, storage, disposal, dumping, processing, or treatment of waste
material. This exclusion applies whether or not the action by others was
known to the Protected Party;
(ii) Any clean-up costs mandated by the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) and any similar laws
or statutes;
(iii) Clean up, removal, containment, treatment, detoxification or neutralization of
Pollutants/Hazardous Materials situated on premises the Protected Party
currently owns, rents or occupies; or
(iv) Any Claim, liability, alleged liability, loss, cost, or expense based upon or
arising out of Personal Injury or Public Officials Errors and Omissions.
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— Primary Liability Program Page 16 of 27 July 1, 2016 — July 1, 2017
G. Any Claim, liability, alleged liability, loss, cost, or expense directly or indirectly
based on or arising out of the hazardous properties of Nuclear Material. However,
this exclusion does not apply to Radioactive Contamination Injury.
H. Any Claim, liability, alleged liability, loss, cost, or expense directly or indirectly
caused by any complete or partial failure, interruption or surge in the member's
supply of water, electrical power, gas or fuel, unless such failure, interruption or
surge results from sudden and accidental physical destruction of tangible property
which is used in the generation or transmission of the supply.
1. Any Claim, liability, alleged liability, loss, cost, or expense arising out of the partial
or complete structural failure of a Dam or Levee.
J. Any Claim, liability, alleged liability, loss, cost, or expense caused by, or arising
out of, or in connection with the operation of any hospital, clinic (including a mobile
clinic), or established health-care facility owned or operated by the Protected
Party, but protection does apply to liability arising out of the rendering of
emergency medical aid by paramedics, emergency medical technicians, or other
Protected Parties who are not acting in the course of their employment by a
hospital, clinic, or established health-care facility. Protection also applies for
liability arising out of the operation of any hospital, clinic (including a mobile
clinic) or established health care facility, owned and operated by the Protected
Party for animal care and control purposes.
K. Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out
of or in connection with the ownership, maintenance, use, or operation by the
Protected Party of any Railroad.
L. Any Claim, liability, alleged liability, loss, cost, or expense caused by, based upon
or arising out of the Employee Retirement Income Security Act of 1974, Public Law
93-406, or any amendment or addition thereto, or any statute or common law rule
which imposes fiduciary duties and responsibilities with respect to employee
benefits or retirement plans; however this exclusion does riot apply to liability
protected under Employee Benefit Administration Liability.
M. Any Claim, liability, or alleged liability for punitive or exemplary damages or fines
or other damages imposed primarily for the sake of example and by way of
punishing the Protected Party, including liability of a Member to defend or pay
damages where the governing body thereof has elected to provide a defense or pay
damages for a Claim, action or judgment for punitive or exemplary damages.
N. Any Claim, liability, alleged liability, loss, cost, or expense caused by the
intentional conduct of a Protected Party with willful and conscious disregard of the
rights or safety of other or with malice. However, where the Protected Party did
not authorize, ratify, participate in, consent to or have knowledge of such conduct
by its past or present Employee, elected or appointed official or volunteer and the
claim against the Protected Party is based solely on its vicarious liability arising
from its relationship with such Employee, elected or appointed official or volunteer,
this exclusion does not apply to that Protected Party.
Memorandum of Coverage
— Primary Liability Program Page 17 of 27 July 1, 2016 — July 1, 2017
O. Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out
of any violation of state or federal antitrust or restraint -of -trade laws.
P. Any Claim, liability, alleged liability, loss, cost, or expense arising out of:
(i) the adoption or administrative application of any ordinance, resolution or
regulation;
(ii) the approval or disapproval of any land -use entitlement including but not
limited to general plan amendments, zoning amendments, permits, tract maps,
development agreements, owner -participation agreements, or disposition -and -
development agreements;
(iii) the approval or disapproval of any rent control ordinance, outdoor advertising
ordinance, or adult bookstore ordinance; or
(iv) the approval or disapproval of the operation of a medical marijuana
dispensary, any ordinances governing that activity and any and all
enforcement efforts.
This exclusion shall not apply to the physical enforcement of an ordinance,
resolution or regulation, such as Tort Liability arising from the act of delivering a
fine, citation, warning, notice or inspection.
Q. Any Claim, liability, alleged liability, loss, cost, or expense including Tort
Liability:
(i) Arising out of or as a consequence of an actual or alleged breach of any
contract or agreement;
(ii) For any amount actually or allegedly due under the terns of any contract or
agreement; or
(iii) Arising out of or as a consequence of the failure, refusal, or inability of a
Protected Party or anyone acting on behalf of a Protected Party to enter
into or renew any contract or agreement.
However, this exclusion shall not apply to Tort Liability imposed by law for
Damages caused by, arising out of, or as a consequence of failure or delay by a
Protected Party or anyone acting on behalf of a Protected Party to fully perform
any duties or obligations under any contract or agreement.
As used in this exclusion, the term "contract or agreement" shall include but not be
limited to a Protected Contract or Limited Protected Contract.
R. Any Claim, liability, alleged liability, loss, cost, or expense for declaratory,
injunctive, equitable or other relief, writs of mandate or prohibition or other
prerogative writs, or other relief not seeking Damages. This includes any expense
or cost incurred by a Protected Party arising from the cost of reasonable
accommodation of any disabled person, including any Employee.
S. Any Claim, liability, alleged liability, loss, cost, or expense for Personal Injury or
Broadcast/Publication Injury directly or indirectly caused by or arising out of any:
Memorandum of Coverage
— Primary Liability Program Page 18 of 27 July 1, 2016 — July 1, 2017
(i) Oral or written publication of material, if done by or at the direction of the
Protected Party with knowledge of its falsity;
(ii) Oral or written publication of material whose first publication took place
before the beginning of the Protection Period; or
(iii) Act, omission, or offense committed by a Protected Party with actual malice.
T. Any liability for which the Protected Party is obligated to pay damages by reason
of liability assumed in a contract or agreement. This Exclusion does not apply to
liability for Bodily Injury or Property Damage:
(i) Assumed in a contract or agreement that is a Protected Contract or Limited
Protected Contract; or
(ii) That the Protected Party would have independent of a written contract or
agreement.
U. Any Claim by a Member against a Protected Party, except that this section shall
not apply to a Claim brought against the Authority.
V. Any Claim by a Member against another Member.
W. Any Claim, liability, alleged liability, loss, cost, or expense based upon or arising
out of:
(i) Loss of, loss of use of, injury to, destruction of, diminution of value of,
disappearance of, or costs of recovery of any money or securities, or any
financial loss or default;
(ii) Refunds of taxes, fees, or assessments;
(iii) The issuance, management of proceeds or repayment of bonds, notes or other
debt instruments by any Member or any agent acting on behalf of such
Member; or
(iv) The purchase, transfer, or sale of any securities by any Member or agent
acting on behalf of such Member.
X. Any Claim, liability, alleged liability, loss, cost, or expense for Public Officials
Errors and Omissions Liability based upon or arising out of-
(i)
£
(i) Liability of any Protected Party arising out of estimates of probable costs or
cost estimates being exceeded or for faulty preparation of bid specifications or
plans including liability for mechanic's lien claims, stop notice claims, change
order claims, site differential claims, or similar claims for the value of services
or materials provided; this exclusion extends to such claims, however
denominated, including claims of breach of oral or written contract, third
party beneficiary claims, quantum meruit claims, and/or open account claims;
(ii) Any Protected Party obtaining remuneration or financial gain to which the
Protected Party is or was not legally entitled;
(iii) Liability assumed by a Protected Party in a contract or agreement, but this
exclusion does not apply to liability for Damages that the Protected Party
would have independent of the contract or agreement; or
Memorandum of Coverage
— Primary Liability Program Page 19 of 27 July 1, 2016 — July 1, 2017
(iv) Willful violation of penal code or ordinance committed by or with the
knowledge or consent of any Protected Party.
Y. Under Employment Practices Injury, any Claim, liability, alleged liability, loss,
cost, or expense that:
(i) Constitutes benefits due or to become due or the equivalent value of such
benefits, including but not limited to perquisites, fringe benefits, payments in
connection with an employee benefits plan, service, disability or industrial
disability retirement benefits, severance pay or any other payment other than
salary or wages to or for the benefit of an Employee arising out of the
employment relationship;
(ii) Is representative of back salary either unpaid in whole or part or paid at an
improper rate to an Employee by the Member;
(iii) Is based upon, arises from, or is in consequence of the employment
reinstatement of the claimant by the Member or the continued employment of
the claimant;
(iv) Is based upon, arises from, or is a consequence of an Occurrence that began
prior to this Memorandum's Protection Period;
(v) Constitutes front pay, future damages or other future economic relief or the
equivalent thereof, if the Member is ordered to reinstate the Employee
pursuant to a judgment or other final adjudication, but fails to do so;
(vi) Is in the form of paid administrative leave; or
(vii) Is based upon, arises from or is in consequence of an actual or alleged
violation of the responsibilities, obligations or duties imposed by the
Employee Retirement Income Security Act of 1974, the Fair Labor Standards
Act, the National Labor Relations Act, the Worker Adjustment and Retraining
Notification Act, the Consolidated Omnibus Budget Reconciliation Act of
1985, the Occupational Safety and Health Act, rules or regulations
promulgated there under and amendments thereto or similar provisions of any
federal, state, or local statutory law or common law.
However, with respect to the exclusions listed in items (i) through (vii) immediately
above, no fact pertaining to or knowledge possessed by any Protected Party shall
be imputed to any other Protected Party to determine if protection is available
under this Memorandum.
Z. Any Claim, liability, alleged liability, loss, cost, or expense for Employee Benefit
Administration Liability based upon or arising out of:
(i) Any dishonest, fraudulent, criminal or malicious act, libel, slander,
discrimination, or humiliation;
(ii) Failure of performance of contract by an insurer;
(iii) Failure of any investment plan to perform as represented by a Protected
Party;
Memorandum of Coverage
— Primary Liability Program Page 20 of 27 July 1, 2016 — July 1, 2017
(iv) Advice given by a Protected Party to an Employee to participate or not
participate in subscription plans; or
(v) The inability of any Employee Benefits Program to meet its obligations due
to insolvency or inadequacy of funding.
AA. Any demand under the Chief Executive Separation Payment coverage where the
following exists:
(i) Termination for Cause;
(ii) Lack of notice of intent to be considered for payment and receipt of a duly
executed Waiver within 60 days of separation;
(iii) Lack of a duly executed Certification within 60 days following the Waiting
Period; or
(iv) Made by a separated interim or acting Chief Executive.
BB. Any Claim, liability, alleged liability, loss, cost or expense falling within the
Protection Provided terms of the "Memorandum of Coverage — Cyber Liability
Program" issued by the Authority, parts I.B "Privacy Regulatory Claims Coverage"
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5. CONDITIONS AND RESPONSIBILITIES
A. Inspection and Audit
The Authority shall be permitted but not obligated to inspect the Protected Party's
property and operations at any time. Neither the Authority's right to make inspections
nor the making thereof nor any report hereon shall constitute an undertaking, on behalf of
or for the benefit of the Protected Party or others, to determine or warrant that such
ptupeity ut upwatiuiis ate safe ur healthful, ur are in compliatrce with airy law, rule ur
regulations. The Authority may examine and audit the Protected Party's books and
records at any time during the Protection Period and extensions thereof and within three
years after the final termination of this Program, as far as they relate to the subject
matter of this Memorandum.
B. Severability of Interest
The term Protected Party is used severally and not collectively, and the protection
afforded applies to each Protected Party against whom a Claim is made as if a separate
Memorandum were issued to it, but the inclusion herein of more than one Protected
Party shall not operate to increase the per Member Protection Limit.
C. Protected Party's Duties in the Event of Occurrence or Claim
(i) In the event of any Occurrence, written notice containing particulars
sufficient to identify the Protected Party and also reasonably obtainable
information with respect to the time, place, and circumstances thereof, and the
names and addresses of the injured and of available witnesses, shall be given
Memorandum of Coverage
— Primary Liability Program Page 21 of 27 July 1, 2016 — July 1, 2017
by or for the Protected Party to the Authority's Claims Administrator as
soon as practicable.
(ii) If a Claim is made against a Protected Party, the Protected Party shall
immediately forward to the Authority's Claims Administrator every demand,
notice, summons or other process received by the Protected Party or the
Protected Party's representative.
(iii) The Authority's Claims Administrator will review the Claim, undertake
whatever investigation is indicated, and take appropriate action, depending on
the circumstances. A Claim may be returned to claimant as "insufficient," if
it does not contain minimum and essential information about the incident or
the identity of the claimant. A Claim may also be returned as "late," if the
prescribed time for filing has been exceeded. The Claims Administrator may
request that the Member reject the Claim, or take no action until further
notice, or such actions may be taken by the Claims Administrator if claims
handling authority has been delegated to the Authority by the Member.
(iv) The Protected Party shall cooperate with the Authority and, upon the
Authority's request, assist in making settlements, in the conduct of Claims,
attending hearings and trials, securing and giving evidence, obtaining the
attendance of witnesses and in enforcing any right of contribution or
indemnity against any person or organization who may be liable to the
Protected Party because of injury or damage with respect to which
protection, including any Defense obligation, is afforded under this
Memorandum; and the Protected Party shall not, except at the Protected
Party's own cost, voluntarily make any payment, assume any obligation or
incur any expense. No Claim shall be settled without the prior written
consent of the Authority, and the Authority shall not be required to
contribute to any settlement to which it has not consented. The Protected
Party shall not take any action whatsoever, subsequent to an Occurrence or
Claim that could increase the liability exposure of, or jeopardize the program
or Authority in any way.
D. Other Protection
If collectible insurance or any other coverage or protection with any insurer, any
permissibly self-insured general employer, joint powers insurance authority or any other
source is available to the Protected Party covering a loss also protected hereunder
(whether on a primary, excess or contingent basis), the protection hereunder (including
any Defense obligation) shall be in excess of, and shall not contribute with, such
insurance or other coverage or protection, provided that this clause does not apply with
respect to any insurance purchased by a Protected Party specifically to be in excess of
this Memorandum. Under no circumstances shall the protection afforded by this
Program be considered primary, pro rata, concurrent or co -existent with such insurance,
coverage, or other protection, unless agreed to by the Member through a written
agreement approved by the Authority through the issuance of an evidence of coverage
letter prior to a loss.
Memorandum of Coverage
— Primary Liability Program Page 22 of 27 July 1, 2016 — July 1, 2017
Protection Provided under this Memorandum of a Claim, liability, alleged liability, loss,
cost or expense also falling within the coverage terms of the "Memorandum of Cyber
Liability Coverage" issued by the Authority, parts I.A "Privacy Liability (including
employee liability)", I.D "Security Liability", and/or I.E "Multimedia Liability", shall be
on an excess and non-contributory basis except that if coverage exists under this
Memorandum, it shall apply to the Retention amount in the Memorandum of Cyber
Liability Coverage.
E. Termination or Amendment
This Memorandum may be terminated or amended at any time in accordance with the
Joint Powers Agreement and Bylaws of the Authority. The Executive Committee may
adopt exclusions of coverage, copayments or deductibles for actions or omissions of a
Member that are deemed to be a risk to the program. Such exclusions, copayments or
deductibles may be imposed immediately upon adoption by the Executive Committee or
as a consequence of a Member's failure to adhere to an approved Performance
Improvement Plan.
F. Changes
Notice to any agent or knowledge possessed by any agent of the Authority or by any
other person shall not effect a waiver of or a change in any part of this Memorandum,
nor shall the terms of this Memorandum be waived or changed, except by a written
addendum issued by the Authority to form a part of this Memorandum.
G. Subrogation
The Authority shall reserve the right to subrogate for any payments made hereunder and
to assume the Protected Party's recovery rights. The Protected Party shall do nothing
after loss to prejudice such rights and shall do everything necessary to secure such rights.
The Protected Party may waive subrogation rights, but only through written agreement
executed before the Occurrence giving rise to the loss. The Authority shall have
standing to seek subrogation recovery in its own name or in the name of the Protected
Party, and the Protected Party shall cooperate with and assist the Authority in pursuing
such recovery, including assigning its right to recover subrogated amounts, and if
necessary executing a written agreement to effect such assignment. Any amount so
recovered shall be apportioned as follows:
(i) The Authority shall be reimbursed to the extent of all payment under this
Memorandum. Any remaining balance shall be applied to reimburse the
Protected Party;
(ii) The expenses of such recovery proceedings shall be apportioned in the ratio of
respective recoveries. If there is no recovery in proceedings conducted solely by
the Authority, the Authority shall bear the expenses thereof.
H. Assignment
Assignment of interest under this Memorandum shall not bind the Authority until its
consent is endorsed hereon; if, however, the Member shall be adjudged bankrupt or
insolvent, such protection and Defense obligations as are afforded by this Memorandum
Memorandum of Coverage
— Primary Liability Program Page 23 of 27 July 1, 2016 — July 1, 2017
shall apply (a) to Member's legal representative, as the Member, but only while acting
within the scope of said representative's duties as such, and (b) with respect to the
property of the Member, to the person having proper temporary custody thereof, as a
Protected Party, but only until the appointment and qualification of a legal
representative.
I. Joint Powers Agreement
The provisions of this Memorandum are subject to and subordinate to the terms and
provisions of the Agreement creating the Authority, and in the event of any conflict
between the terms and provisions of said Agreement and this Memorandum, the terms
and provisions of the Agreement shall control.
Appeal of Disputes
No party is entitled to appeal or arbitrate claims under this Memorandum other than the
Member. Specifically, Employees are not intended to be third party beneficiaries of this
agreement and shall have no right to bring an action against the Authority for a
declaration of rights to protection under this Memorandum. The sole remedy of any
Employee shall be the Employee's right to defense or indemnity against the employing
Member under the provisions of the California Government Code.
Any disputes concerning coverage, protection, Defense obligations, or procedures of the
Program, as interpreted by the Authority's staff, shall be appealed to the Authority's
Executive Committee in accordance with the following procedures.
(i) A written notice that a Claim is not covered by the Memorandum will
normally be provided to the Member by the Claims Administrator. A
Member may request any determination of a lack of coverage made by the
Claims Administrator to be reviewed by the Chief Executive Officer. Such a
request shall be in writing and must be made within 90 days of the date of the
written notice from the Claims Administrator.
(ii) Upon request, the Chief Executive Officer shall review a determination of a
lack of coverage made by the Claims Administrator or Authority staff and
shall send to the Member a written determination of coverage.
(iii) If a Member disagrees with the coverage determination by the Chief
Executive Officer, the Member may appeal the decision to the Appeals
Committee. The Appeals Committee consists of the Executive Committee
and the chairs of the Managers and Finance Officers Committees. Appeals
must be in writing within 90 days of the date of the Chief Executive Officer's
written decision. The appeal request must state why the Member disagrees
with the denial, and the Member should present any information that may
have a bearing on the ultimate determination of coverage.
(iv) The appeal request shall be presented by Authority staff to the Appeals
Committee, on a regularly scheduled Executive Committee meeting day,
allowing time for sufficient review and agenda deadlines. Staff shall notify
the Member in advance of the meeting at which its appeal will be presented.
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(v) If the Member would like to personally address the Appeals Committee, the
Member or the Member's representative may attend the meeting and speak
to the issue.
(vi) The Appeals Committee may refer the appeal to the Coverage Committee and
consider the recommendation of the Coverage Committee during its
deliberation on the appeal. The Appeals Committee's decision is final.
Authority staff will notify the Member of the Appeals Committee's decision
in writing.
(vii) Following a final determination regarding a Claim, consideration of the
decision may be reopened at the request of the Member if circumstances
change as follows: (1) a new and distinct Claim arising out of the prior
Occurrence is presented to the Member, or (2) new and distinct causes of
action are added to the Claim. If the new Claim or causes of action are
reasonably thought by the Member to be covered, the Appeals Committee
will reconsider the issue, in accordance with the procedure in this paragraph
J., upon request. Any request for such reconsideration must be in writing
within 90 days of the notice to the Member of the new Claim or cause of
action.
If a Member disputes a coverage issue relating to the application or scope of an
exclusion, then, during the course of the administrative and arbitration proceedings
provided herein, only upon the request of the Member, the Authority shall defend the
Claim against the Member and have the right to control any settlement of that Claim,
subject to the right of the Authority to recover from the Member any amounts paid out
by the Authority for such defense or settlement which are finally determined by the
Appeals Committee, or as a result of the Binding Arbitration Process, not to be owed by
the Authority under the Program. If the Member does not elect to request such a
defense, Defense Costs incurred during the coverage appeal shall be at the sole cost and
expense of the Member.
K. Arbitration
If the Member has followed the coverage Appeals Procedure outlined in 5.1 Appeal of
Disputes and disagrees with the final determination of the Appeals Committee, the
Member may request consideration of the coverage issue through the Authority's
Binding Arbitration Process.
The Arbitration process shall be as follows:
(i) Following a decision by the Appeals Committee, the appealing Member shall
notify the Chief Executive Officer in writing, within 30 days of the Appeals
Committee's final decision, that it wishes to participate in Binding Arbitration
and shall submit a non-refundable $1,000 arbitration appeal fee. The written
notice shall specify the grounds for the arbitration.
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(ii) Following payment of the arbitration appeals fee, the name of each Member,
other than the appealing Member and the Members represented on the
Appeals Committee, shall be placed in an unmarked envelope. Each envelope
shall be placed in a box and eleven envelopes shall be drawn by the Chief
Executive Officer. A representative of the appealing Member may be present
at the drawing.
(iii) The Chief Executives of the eleven Members shall be the pool of potential
arbitrators. The eleven Members and the names of their Chief Executives
shall be given in writing to the appealing Member.
(iv) The appealing Member shall have the right to strike two or less names from
the pool for any reason which shall not be disclosed. The Authority shall
have the right to strike two or less names from the pool for any reason which
shall not be disclosed. The appealing Member and the Authority must strike
names within five business days of the drawing. The right of either party to
strike names shall lapse at 5:00 PM on the fifth day following the drawing.
Notice of names stricken by either party shall be given in writing to the other
party prior to 5:00 PM on the fifth day following the drawing.
(v) The remaining Chief Executives shall be contacted by the Chief Executive
Officer to determine their willingness to serve on the arbitration panel. If
more than five are willing to serve, each name shall be placed in an unmarked
envelope, put in a box, and the Chief Executive Officer shall draw five
envelopes from the box. The individuals whose names are drawn shall be the
arbitration panel and they shall be disclosed in writing to the appealing
Member.
(vi) If only five are willing to serve, they shall be the arbitration panel.
(vii) If fewer than five are willing to serve, the name of each member not drawn in
the previous selection drawing shall be placed in an unmarked envelope, put
in a box, and four envelopes shall be drawn for each arbitration panel position
needed to have a five -member panel. A representative of the appealing
Member may be present at the drawing. The names drawn shall be disclosed
to the appealing Member who may reject, for any reason which shall not be
disclosed, one name for each four names drawn. The Authority may also
reject one name for each four names drawn and shall not disclose the reason.
Names rejected by the appealing Member and the Authority must be rejected
within 48 -hours of the drawing.. The right to reject names shall lapse 48 -hours
following the drawing.
(viii) The Chief Executives of the Members remaining shall be contacted by the
Chief Executive Officer to determine their willingness to serve on the
arbitration panel. The names of those willing to serve shall be placed in
unmarked envelopes, put in a box, and the number necessary to fill out the
arbitration panel shall be drawn by the Chief Executive Officer and disclosed
in writing to the appealing Member. A representative of the appealing
Member may be present at the drawing.
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(ix) This process shall be repeated until five members are obtained for the
arbitration panel.
(x) The arbitration panel members shall be compensated at the rate of $125 per
half-day or portion thereof. If a panel member is required to stay away from
home overnight, lodging shall be paid by the Authority. Necessary meals
shall be provided for all panel members. Mileage costs shall be reimbursed by
the Authority at its standard rate.
(xi) The cost of the arbitration panel shall be borne by the Authority. The cost of
presentation by the appealing Member, including preparation, exhibits,
attorneys, and all other costs of the Member shall be paid by the Member.
(xii) The arbitration panel may request legal counsel that shall be selected by the
Chief Executive Officer and paid for by the Authority. Legal counsel shall
not be the counsel for the Authority that has advised the staff and Executive
Committee. However, counsel for the Authority may participate in or make
the presentation to the arbitration panel on behalf of the Authority, as
requested by the Chief Executive Officer.
(xiii) The parties to the arbitration shall not be governed by formal rules of
evidence.
(xiv) The arbitration panel's decision shall be final and binding on the Member and
the Authority. Decisions of the arbitration panel shall be by majority vote.
(xv) The decision of the arbitration panel shall be written and shall govern the
issue decided but may be referred to by the Authority and future arbitration
panels for precedent.
L. Limitation of Liability
Under no circumstances shall the Authority be liable for consequential damages,
"bad faith" damages, or any sums beyond the amounts due under Section 2 —
Protection Provided, plus interest at the same rate as the Authority earned on
investments for the time period involved.
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