ROSLYN BOARD MEMBER WIN AGAIN – APPELLATE COURT UPHOLDS RULING THAT BOARD’S INSURANCE CARRIER MUST COVER THE BOARD MEMBERS IN THE $11.2 MILLION DOLLAR SUIT
A New York Appellate Court has upheld a 2007 court decision that requires the New York School Insurance Reciprocal (NYSIR) to defend former Roslyn School Board Members in an $11.2 million dollar lawsuit brought against them by the School District. The underlying lawsuit is an attempt by the School District to blame the former board members for the Roslyn criminal scandal that rocked the community in 2004 and left several district employees, including former Superintendent Frank Tassone, in jail.
While the school board has been successful against those responsible: Tassone, Gluckin, the accountants, and attorneys, and has recovered millions of dollars already, for reasons yet unknown, the new board chose to sue those who had simply donated substantial time and effort to serve as volunteers on the school board. As a reward for their faithful service to their community, they were the targets of an $11.2 million dollar suit, thus jeopardizing their life savings, retirement funds and homes.
To add insult to injury, the schools insurance carrier, NYSIR, refused to defend the former board members in the action brought by the school district despite the fact that the school district pays a hefty premium to NYSIR every year to protect board members from these types of claims.
In 2007, after the former board members sued NYSIR, the Hon. Bruce Cozzens directed NYSIR to reimburse the former board members for the substantial attorneys fees that they have incurred defending the action and to defend them in the action brought by the school district. The former board members relief was short lived however because NYSIR chose to appeal the decision. That appeal left the board members wondering again whether their lives were going to be ruined and also forced them to spend thousands of dollars to defend the appeal and continue to defend themselves in teh action brought by teh school district.
However, on September 15, 2009, the Appellate Division, Second Department affirmed Judge Cozzens decision and again directed NYSIR to defend the board members and reimburse them for the hundreds of thousands in legal fees that they have incurred over the past few years. NYSIR will also now be responsible to pay the future attorneys’ fees of all of the board members.
The decision is important for many reasons concerning this case and future matters involving non-profit boards and actions by school district boards and NYSIR.
This case is one of first impression and the first instance where an insurance carrier will be required to cover an action by a school board against their own former board members. Non-profit board members can now be more assured that the Directors and Officers Insurance Policy that is provided to them will defend actions not only by outside entities but actions against them by the boards themselves.
The decision can be viewed here: