Bankruptcy/Indemnity: City Of Vallejo’s Chapter 9 Bankruptcy Plan Did Not Discharge Compensatory Or Attorney’s Fees Awards Against Individual Police Officers In Excessive Force Case

 

However, Vallejo Likely Owes Statutory Indemnification Duties To Officers For Both Awards.

     The Ninth Circuit in Deocampo v. Potts, No. 14-16192 (9^th Cir. Sept. 8, 2016) (published) confronted an issue under a Chapter 9 municipality bankruptcy plan, harkening to say that more of these issues may be confronted as local governments face economic problems. The specific issue was whether a compensatory verdict and a later attorney’s fees award against individual police officers, who had been defended by the City of Vallejo a trial, were discharged by City’s Chapter 9 bankruptcy plan where no provision provided for an adjustment as it related to the officers. The Ninth Circuit answered “no,” but with a caveat. California Government Code section 825 does mandate indemnification to municipal employees acting “within the scope of their employment,” with the appeals court hinting that the police officers may well have to be indemnified by City given that the verdict/award were post-petition debts under indemnity principles.