In 2006, a Billings Police officer sued the City and several individual Billings Police Department (BPD) officers alleging various state and federal free speech constitutional violations and a state Safe Place to Work violation. The case was filed in state District Court in Billings. The City's insurance carrier, the Montana Municipal Interlocal Authority (MMIA) provided one defense counsel to represent  the City and another defense counsel to represent the individual BPD officers.The individually named officers were dismissed from the case a short time before trial in mid-2007. The trial occurred in July 2007 with the City as the only remaining defendant.  Four counts of alleged state and federal violations were presented to a jury and resulted in a $1,300,000 jury verdict against the City/BPD.  The MMIA paid the total judgment of $1,600,000 to the plaintiff BPD officer and his attorney, which consisted of the verdict of $1,300,000, attorneys fees of approximately $292,000 and trial costs of approximately $17,000.

The MMIA later made informal demands that the City pay approximately $950,000, asserting that some or most of the four counts that went to trial were not covered by the Memorandum of Coverage document that the MMIA and its member cities operated under at the time. The City declined to pay this amount.  In January 2010, the MMIA filed a Declaratory Judgment petition in Helena District Court seeking the Court's interpretation of the insurance coverage, asking the Court to apportion the verdict and to order the City to pay $950,000. The MMIA petition also requested pre-judgment interest beginning in 2008 and asked for the MMIA's attorneys fees arising from the petition filed in Helena. The case has mainly been dormant since 2010 with periodic informal discussion among the attorneys to determine if a settlement could be reached.

Recently a settlement master suggested an amount to the MMIA and the City that, in his opinion, was a reasonable settlement amount given his assessment of the respective risks that both the MMIA and City bore in proceeding with contesting the MMIA's case filed in Helena. The settlement master suggested $500,000 from the City to settle the coverage dispute and the balance of $1,100,000 would be absorbed by the MMIA.

In a recent litigation strategy session with the Mayor and City Council, the risks and alternatives of the proposed settlement were discussed by City Administrator Tina Volek, retained insurance coverage attorneys Carey Matovich and Jesse Myers of Matovich, Keller and Murphy and City Attorney Brent Brooks. After the discussion, the Mayor and Council requested the settlement be placed on a regular City Council meeting agenda for approval or disapproval of the settlement master's suggested amount of $500,000.

The City Council may:

• Approve the settlement amount of $500,000 to resolve the case and achieve a final dismissal as fully settled on the merits; or
• Disapprove the settlement amount;  or
• Direct staff to proceed with contesting the case through cross-motions for summary judgment before the District Court in Helena.

If settlement of $500,000 is approved, the City would be required to pay this amount to the MMIA. The funds will primarily come from vacancy savings in the Billings Police Department because the Deputy Police Chief position has remained vacant for five fiscal years. The funds were transferred from the department budget to the property and liability fund, which will pay the settlement.

Staff recommends that the City Council approve the settlement proposal and grant authority for the Mayor to execute appropriate settlement and mutual release documents  to complete the disposition of the case.