Opinion ID: 1355713
Heading Depth: 1
Heading Rank: 1

Heading: authority to enter into agreement

Text: [1] Washington PUD's, as municipal corporations, are limited to those powers expressly granted and to powers necessarily or fairly implied in or incident to the powers expressly granted, and also those essential to the declared objects and purposes of the corporation. Port of Seattle v. State Utils. & Transp. Comm'n, 92 Wn.2d 789, 794-95, 597 P.2d 383 (1979); see Chemical Bank v. WPPSS, 99 Wn.2d 772, 792, 666 P.2d 329 (1983); Tacoma v. Taxpayers, 108 Wn.2d 679, 692, 743 P.2d 793 (1987). Public utility districts are expressly authorized by statute to exercise jointly all powers granted to each individual district, RCW 54.16.200; to sue in any court of competent jurisdiction, RCW 54.16.110; to indemnify their officers and employees against liability claims, RCW 54.16.097; and to purchase liability insurance for officers and employees, RCW 54.16.095, .096; see RCW 36.16.138. These provisions are to be construed liberally in order to effectuate the purposes of RCW Title 54, which deals specifically with public utility districts. RCW 54.44.900. This court's primary objective in interpreting a statute is to ascertain and give effect to the intent of the Legislature. State v. Keller, 98 Wn.2d 725, 728, 657 P.2d 1384 (1983). The intent must be determined primarily from the language of the statute itself; however, if the intent is not clear from the language of the statute, the court may resort to statutory construction. Department of Transp. v. State Employees' Ins. Bd., 97 Wn.2d 454, 458, 645 P.2d 1076 (1982). But `where the language of a statute is clear and unambiguous, there is no room for judicial interpretation.' PUD 1 v. Public Empl. Relations Comm'n, 110 Wn.2d 114, 118, 750 P.2d 1240 (1988) (citing Roza Irrig. Dist. v. State, 80 Wn.2d 633, 635, 497 P.2d 166 (1972)). Ultimately, the court should strive to determine what the statute means. That usually means ascribing to the words of the statute their plain and ordinary meaning. Intent, if ascertainable, may be of assistance, but cannot override an otherwise discernible, plain meaning. North Coast Air Servs., Ltd. v. Grumman Corp., 111 Wn.2d 315, 321, 759 P.2d 405 (1988). In construing a statute, courts may glean legislative intent from a consideration of the legislative history of the statute, as well as from an examination of other statutes dealing with the same subject. Department of Transp. v. State Employees' Ins. Bd., supra at 458. WPUDUS argues that two events in the evolution of statutes empowering public entities to insure and indemnify their employees evidence an intent to authorize such protection only against claims of third parties: the repeal of sovereign immunity and the subsequent enactment of several indemnification statutes. Thus, WPUDUS argues, neither a single PUD nor a group of PUD's acting jointly have the authority to indemnify their officers and employees against direct claims by the PUD or its ratepayers. The sovereign immunity argument begins by pointing out that prior to the abrogation of a municipal corporation's sovereign immunity in 1967, a public entity could not be held liable to a third party for the tortious acts of the entity's employees. Thus, using public funds to purchase insurance or indemnify employees would only benefit the employee and constitute an unconstitutional gift of public moneys. With the repeal of sovereign immunity, public entities faced liability for the tortious conduct of its employees toward third parties. See RCW 4.96.010. Consequently, indemnification against or insurance for these claims equally benefited the state and no longer constituted an unconstitutional gift of public funds. Therefore, WPUDUS asserts, insurance and indemnification for a public official's misconduct should only extend to third party claims. Following the repeal of sovereign immunity, several statutes, including RCW 54.16.097, were enacted relating to the purchase of liability insurance and indemnification. See RCW 35.21.205; 36.16.138; 48.62.040. WPUDUS concludes that since the Legislature enacted these statutes closely following the repeal of sovereign immunity, the Legislature must have intended them to apply only to third party claims against the public entity. While there is some merit to the logic of WPUDUS's theory, there is no legislative history to be found in the House or Senate Journals or in the reports from the Committee on Local Government that indicates an intent to either limit coverage provided by these laws to third party claims or to include claims by the entity itself. For the most part, the language of these statutes is virtually identical throughout and does not expressly acknowledge or prohibit the type of coverage in question. RCW 48.62.040 is somewhat of an exception. RCW 48.62.040 generally authorizes public entities, including PUD's, to individually or collectively purchase liability insurance and/or obtain risk management services. The statute provides, inter alia, that liability insurance shall include but not be limited to coverage for claims arising from the tortious or negligent conduct of the local government entity . .. as a result of which a claim may be made against the local government entity. RCW 48.62.040(2)(a). WPUDUS argues that the last phrase in the above quoted language evidences a clear intent to limit coverage to third party claims. This argument has some logical merit. However, the statute does not purport to be an exclusive definition of liability insurance coverage, and the subsection defining coverage limits its proscriptions to entities organized under RCW 48.62.040. WPUDUS was organized under RCW 54.16.200. Also, the authority granted by RCW 48.62.040 is by its terms additional or alternative to the power granted in RCW 54.16.097, which specifically authorizes the indemnification of officers and employees of public utility districts. There is no language in RCW 54.16.097 purporting to limit coverage to third party claims. [2] We have considered WPUDUS's several remaining arguments on the authority issue and find them unpersuasive. For example, WPUDUS argues that allowing coverage for the claims in question would constitute an unconstitutional gift of public funds. An expenditure of public funds is unconstitutional if it is without consideration and with donative intent. Bellevue v. State, 92 Wn.2d 717, 720, 600 P.2d 1268 (1979); see Brief of Appellant, at 37. The Agreement clearly limits any payment to the good faith rendering of services. A rendering of services constitutes consideration; therefore, this situation is removed from the realm of gifts prohibited by Const. art. 8, § 7. See General Tel. Co. of Northwest, Inc. v. Bothell, 105 Wn.2d 579, 588, 716 P.2d 879 (1986). RCW 54.16.097 is a permissive statute and by its plain meaning allows indemnification of  any action, claim or proceeding against a PUD officer or employee. (Italics ours.) A PUD has the constitutional and statutory power to sue one of its own officers or employees, and it also has the power to indemnify its officers and employees and maintain an effective risk management program. There is no language in the statutory authorization that expressly prohibits indemnification of an officer against a claim by the PUD itself. [3, 4] In this case, it is not clear from either the language of the statutes or their legislative history whether the Legislature intended to allow insurance and indemnification of only third party claims against a PUD. Thus, this court should adopt an interpretation that best advances the objects and purposes of the legislation. Department of Transp. v. State Employees' Ins. Bd., supra at 459. Without regard to who brings a claim against the public officer, the obvious purpose of the statutes in question is to allow protection against loss associated with public officials' good faith efforts. In recent years the volume and size of liability claims against corporate officers, in both public and private sectors, has caused a substantial rise in the cost of adequate protection and has diminished the availability of coverage. See Rynard, The Local Government as Insured or Insurer: Some New Risk Management Alternatives, 20 Urb. Law. 103, 103-04 (1988). Consequently, there is perceived a need to provide increased protection in the form of liability insurance and indemnification for the actions of officers or employees acting within the scope of their duties. In this case, the officer is allegedly responsible for the loss of $1.7 million in district funds. Precluding coverage for indemnification against such a loss as a matter of law will not serve the needs of the public body or its officers and employees. It may make it more difficult for municipal corporations to attract and retain talented individuals and it will discourage those individuals from taking good faith risks that benefit the district and its ratepayers. See Block, Barton & Garfield, Advising Directors on the D&O Insurance Crisis, 14 Sec. Reg. L.J. 130, 143 (1986). Finally, the coverage described in the statute is limited to the good faith exercise of an officer's duties; consequently, there is no possibility that providing coverage will eliminate the threat of personal liability as a deterrent to aberrant behavior. We hold that a public utility district has the requisite authority to enter into a self-insurance agreement allowing the indemnification of its officers and employees against direct claims by the district itself. While such authority is not expressly granted by statute, it is fairly implied and essential to the declared objectives of a municipal corporation. Nowhere is such authority expressly denied.