The State Must Indemnify as Well as Defend County Prosecutors Offices’ Employees

State of New Jersey v. County of Ocean, ___ N.J. Super. ___ (App. Div. 2021). This opinion by Judge Mawla involved the question of whether the State was obligated to indemnify Ocean County Prosecutor’s Office (“OCPO”) in a case brought against that office, one of its detectives, and Ocean County. An OCPO detective rear-ended another vehicle, injuring the driver of that vehicle, who then sued the OCPO, the detective and others.

N.J.S.A. 40A:10-3 requires counties to carry insurance against claims for injuries arising from accidents. Ocean County had an excess insurance policy that covered losses over $250,000, with the County self-insuring for losses up to that amount.

The State agreed to defend the case and, at first, said it would also provide indemnification. Later, the State asserted that its obligation to indemnify was secondary to the County’s mandatory obligation, under N.J.S.A. 40A:10-3, to carry insurance. When the County would not agree, the State filed an action for a declaratory judgment. The Law Division dismissed the complaint. The State appealed and the Appellate Division affirmed.

The issue was one of statutory interpretation, so the Appellate Division applied de novo review. The State argued that a provision of the Tort Claims Act (“TCA”), N.J.S.A. 59:10A-5, when read together with the insurance requirement of N.J.S.A. 40A:10-3, required a ruling that the State need not provide indemnification. Judge Mawla disagreed.

N.J.S.A. 59:10A-5 states “[t]he Attorney General may provide for a defense pursuant to this act by an attorney from his own staff or by employing other counsel for this purpose or by asserting the State’s right under any appropriate insurance policy which requires the insurer to provide the defense.” Like the Law Division, the Appellate Division declined to “read N.J.S.A. 59:10A-5 as addressing indemnification.” Though the statute confirms the Attorney General’s power to designate who will provide a defense, its “plain language does not mean that the ability to designate also permits the State to designate who shall bear the costs of indemnity.”

Judge Mawla found that Wright v. State, 169 N.J. 422 (2001), controlled the case. In that case, the Court had “interpret[ed] the defense and indemnification provisions of the TCA to apply to county prosecutorial employees sued on the basis of actions taken in the discharge of their law enforcement duties.” The State noted that Wright had not discussed N.J.S.A. 59:10A-5, but Judge Mawla found that Wright still controlled. The panel found additional support for its conclusion in language of an Attorney General’s task force report that was issued when the TCA was adopted. Thus, the Law Division’s ruling dismissing the State’s complaint was affirmed.