Local taxpayers could be on hook for entire $4.6 million judgment vs. DSS
Cherokee County’s insurance company has filed a lawsuit asking the court to absolve it of liability to pay monetary awards that may result from past or future verdicts regarding the use of custody and visitation agreements.
If a judge grants the request, county taxpayers could be on the hook for the entire multimillion-dollar judgment issued by a jury last month, plus attorney fees associated with the case. County taxpayers would also solely cover any future monetary awards that result from the four pending lawsuits regarding the use of custody and visitation agreements.
“We have retained counsel to answer this complaint for declaratory judgment,” County Manager Randy Wiggins said.
The county hired Raleigh-based firm Young Moore & Henderson PA to help navigate the lawsuit, which was filed in Wake County by the N.C. Counties Liability Property Joint Risk Management Agency, which insures 71 counties throughout the state.
The insurance company filed the lawsuit June 4, three weeks after a federal jury issued a combined $4.6 million award to a father and daughter who were separated through the use of a custody and visitation agreement, or CVA.
Brian Hogan of Murphy filed a civil suit against Cherokee County, former Department of Social Services attorney Scott Lindsay and former DSS director Cindy Palmer in April 2018, after a CVA was used to place his daughter in the legal custody of her paternal grandfather. Custody and visitation agreements are not recognized by the state as a legal document or process because it allows minor children to be removed from their parents without court involvement.
In reaching its judgment, a jury determined that Lindsay and Palmer acted in a “grossly negligent manner” in violating Hogan’s and his daughter’s due process rights. Jurors further found that Cherokee County failed to adequately train its employees, resulting in the violation of constitutional rights.
Now the insurance company argues that the county’s policy does not cover the Hogan case because a clause in the agreement precludes coverage for “fraudulent, dishonest or criminal behavior” committed by a “covered person” and damages “arising from the intentional, willful, malicious or criminal conduct.”
Lindsay, Palmer and former DSS supervisor David Alan Hughes have been criminally charged in connection with the use of CVAs. However, the cases have yet to be adjudicated.
The insurance company further argues that Lindsay and Palmer breached their duty to cooperate with attorneys defending the Hogan suit by asserting their Fifth Amendment rights during a series of depositions that took place in July last year. Court documents say Lindsay and Palmer each refused to answer more than 200 questions from Hogan’s lawyers.
“Their refusal to answer almost any question related to the underlying lawsuits resulted in the court instructing the jury that an adverse inference could be drawn against them in the Hogan trial,” the insurance company argues, while asking the court to declare that Lindsay and Palmer are not covered in the Hogan case.
In the event that a judge decides the county and individual parties are covered in regard to the Hogan case, the insurance company asks the court to declare that all five civil suits related to CVAs constitute one “wrongful act.” The request is based on a clause in the policy stating that all claims arising “out of a series of continuous, repeated or interrelated acts” shall be considered as one act.
Declaring that all five lawsuits constitute one act would limit the coverage to a total of $4 million, which includes $2 million of excess liability coverage. It would also relieve the insurance company of any duty to defend the county against the remaining lawsuits after paying toward the judgment of the Hogan case.
The Hogan lawsuit remains subject to post-judgment motions and is not yet final. The county still has the option to appeal.