Opinion ID: 3037685
Heading Depth: 2
Heading Rank: 2

Heading: Hold Harmless Provision

Text: This portion of my separate opinion is joined by Judge Wardlaw, and is, therefore, the majority opinion of the court. The ordinance requires permittees to defend the city, to hold the city harmless from claims arising out of the permittee’s actions,10 and, with exceptions, to provide proof of insurance covering the city for the risks.11 To the extent that the 10 As articulated by the Administrative Instruction: “Each permit for Category 1, 2, and 3 events shall expressly provide that the permittee agrees to defend, protect, indemnify and hold the City, its officers, employees, agents, and volunteers free and harmless from and against any and all claims, damages, expenses, loss of liability of any kind or nature whatsoever resulting from the alleged willful or negligent acts or omissions of permittee, its officers, agents, or employees in connection with the permitted event or activity; and the permit shall expressly provide that the permittee shall, at permittee’s own cost, risk and expense, defend any and all claims and all legal actions that may be commenced or filed against the City, its officers, agents, employees, or volunteers, and that the permittee shall pay any settlement entered into and shall satisfy any judgment that may be rendered against the City, its officers, agents, employees, or volunteers as a result of the alleged willful or negligent acts or omissions of permittee or permittee’s officers, agents, or employees in connection with the uses, events, or activities under the permit.” Administrative Instruction II- 4-4(VII)(15). 11 “Except as otherwise prohibited by law or an exemption is obtained as provided by this Chapter and the implementing regulations, the permittee shall procure and maintain in full force and effect during the term of the permit a policy of insurance from a reliable insurance company authorized to do business in the state, which policy includes the City, its boards, officers, agents, employees, and volunteers as named insureds or addiSANTA MONICA FOOD v. CITY OF SANTA MONICA 6711 insurance and hold harmless provisions of the ordinance apply to expressive activity, they are content and viewpoint neutral. Our dissenting colleague’s concern is that the provisions require indemnification for conduct that is not the permittee’s fault. There are two apparent ways (and doubtless more not so apparent) that such a claim might trigger the requirement. First, a suit could be non-meritorious or frivolous. Second, someone could be hurt by the conduct of an opponent of the demonstration through no fault of the permittee. These possibilities do not undermine the constitutionality of the requirement. Liability insurance policies typically obligate the insurer to defend the insured against covered third party claims even if they are “groundless, false, or fraudulent,” and are typically construed to impose that duty even when they do not use the “groundless, false, or fraudulent” phrase.12 The reason is that anyone seeking to be held harmless needs such defense, and the groundlessness, falseness, or fraudulence of the claims cannot be established until the defense has already been provided. Indemnification, by means of a hold harmless agreement and liability insurance, by users of others’s property, is a common condition for the use of both private and public property. Like liability insurance, it must protect against both well-founded and unfounded claims to be useful. tional named insureds and which provides the coverage that the Risk Manager determines to be necessary and adequate under the circumstances. Proof of insurance shall be submitted to the City prior to issuance of the permit and maintenance of this insurance shall be a condition of the permit.” SMMC §4.68.120. 12 Keeton, Robert E. & Alan I. Widiss, Insurance Law: A Guide to Fundamental Principles, Legal Doctrines and Commercial Practices 1021-22 (Practitioner’s ed. 1988); Gray v. Zurich Ins. Co., 65 Cal. 2d 263, 271-72 (1966). 6712 SANTA MONICA FOOD v. CITY OF SANTA MONICA The administrative instructions set out three categories of events.13 The insurance and hold harmless provisions apply most generally to non-expressive activities not implicating the First Amendment such as games, surfing contests, and races.14 13 “There are three principal categories of community events. Different regulations apply depending on the category. The categories are:
• recreation (e.g., games, arts & crafts activities, reunions, birthday parties, participatory dances) • competition/contests (e.g., surfing contests, sand castle building) • spectator sports (e.g., beach volleyball, hockey, basketball) • athletic events (e.g., races, runs) • circuses, fairs and carnivals (e.g., booths, games, rides and similar amusements) • food-related events (e.g., barbeques, cook-offs, picnics, food distribution, food festivals) • sales/trade shows/business promotions (e.g., crafts shows, antique shows, merchandise sales or exhibits, product launches) • beach/park clean-ups • training activities (e.g., corporate sessions, team-building activities
Events not included within Category 1 above but which require a permit from Building and Safety and/or the Fire Department as detailed in Section VII (4) and (5) of this Administrative Instruction.
Events not included within Categories 1 and 2.” Administrative Instruction II-4-4 (III)(2). 14 “Category 1 events will be required to provide general liability insurance. The City’s Risk Manager will review the Community Event Permit applications and may require additional insurance, such as auto, liquor, or garagekeeper’s liability, if it is deemed necessary.” Administrative Instruction II-4-4 (VII)(14)(a). SANTA MONICA FOOD v. CITY OF SANTA MONICA 6713 Political demonstrations generally do not have to provide insurance “unless there is a specific demonstrable history of personal injury or property damage claims being awarded against the applicant attributable to the applicant’s conduct of previous events in the City that are similar in nature to the proposed event.”15 Political demonstration organizers can even avoid both the hold harmless provision and the insurance provision if they cooperate with the City Manager to design the event “to respond to specific risks, hazards and dangers to the public health and safety identified by the City Manager or his/her designee as being reasonably foreseeable consequences of the permitted event.”16 Thus most demonstration organizers will not have to provide insurance and even those with a destructive history can avoid the insurance requirement if they choose to work with the City Manager to avoid repetition of past injuries or property damage. There is no authority for holding such neutral, commonsense protections against municipal liability unconstitutional. Our dissenting colleague relies on Forsyth County, Georgia v. Nationalist Movement,17 but it is not on point. In Forsyth, the county charged $5 to the Girl Scouts, $25 to a bicycle race, and $100 to the racist demonstrators.18 By contrast, the ordinance in this case merely protects the county from liability in the conventional manner of any property owner, with no discretion for administrators to discriminate by expressive content or viewpoint. Thus, I would affirm the district court judgment in full. 15 Administrative Instruction II-4-4 (VII)(14)(g). 16 Id. 17 Forsyth County, Georgia v. Nationalist Movement, 505 U.S. 123 (1992). 18 Id. at 132. 6714 SANTA MONICA FOOD v. CITY OF SANTA MONICA