Hazleton insurer says it’s not liable for legal fees

HAZLETON – The city’s insurance carrier is asking a federal judge to rule it is not responsible for nearly $2.4 million in attorney fees being sought by the plaintiffs who successfully challenged the city’s Illegal Immigration Relief Act.

In an action filed Tuesday in federal court in Scranton, the Scottsdale Insurance Co. claims an exclusion within the city’s policy means it is not accountable for the legal fees, or to continue to represent the city in its appeal of U.S. District Judge James Munley’s July 26 ruling that declared the ordinance unconstitutional.

Scottsdale does not dispute it was responsible to defend the city for the underlying lawsuit. But it maintains it should not have to pay legal fees charged by attorneys the city hired in addition to the attorneys Scottsdale provided.

The court action, if successful, would leave the city on the hook for fees being sought by more than 37 attorneys and paralegals who represented the 14 plaintiffs in the suit, assuming Munley’s ruling is not reversed on appeal.

At issue is a section of the city’s policy that covers public officials for wrongful acts.

Frank Lavery, the attorney for Scottsdale, says the policy covers officials only for a monetary judgment entered against them. It does not cover officials for any costs or fees incurred in an action that seeks to prohibit the city from enforcing an ordinance.

In the immigration case, the plaintiffs did not seek any monetary compensation. The suit’s sole purpose was to attain a court ruling declaring the ordinance unconstitutional and to prevent the city from enacting it. Because the plaintiffs were awarded no money, the case falls within that exclusion, Lavery argues.

Lavery makes a similar claim in arguing Scottsdale is not responsible for legal fees associated with the appeal of Munley’s ruling the city filed with the Third Circuit Court of Appeals.

Reached late Tuesday afternoon, Mayor Lou Barletta said he knew there was some dispute over whether Scottsdale would cover the plaintiff’s attorney fees, should they prevail on that issue. But he did not expect Scottsdale would challenge whether he had to continue to represent the city in its appeal.