May 18, 2005 - Some Maranans are questioning a recent agreement in which the town council decided to pay former Mayor Bobby Sutton Jr.'s legal fees pending his acquittal. But Town Attorney Frank Cassidy, who wrote the agreement, admits he was among the first to question its legality.
That's because, as Cassidy said, and as many have found out, Arizona's statutes aren't very clear whether public officials charged with crimes can be held harmless for their actions.
Most agree that public officials, acting in the scope of their employment, can be held harmless against third-party civil claims, which a town's liability insurance usually covers. However, whether the town can pay the cost of defending someone against criminal charges is not clearly spelled out in the books.
"From my perspective, it would have made my job a lot easier, but it's really not that clear," Cassidy said. "If you do the legal research on indemnification provisions, they don't make a distinction" between civil and criminal cases.
Sutton, 35, and his close acquaintance, Richard "Rick" Westfall, 43, are each charged with one count of conspiracy and one count of attempted extortion in violation of federal law, carrying a maximum penalty of 20 years in prison and a $250,000 fine. Westfall is charged with a third count of making false statements to an FBI agent.
A federal grand jury returned an indictment April 22 alleging Sutton and Westfall agreed to unlawfully obtain money and a lucrative contract for Westfall from Waste Management, the nation's largest trash hauler.
Arizona Revised Statute 9-497 states, "Cities and towns may expend public funds to procure liability insurance covering their officers, agents, and employees employed in governmental or proprietary capacities." However, it appears the town's insurance does not cover criminal charges of conspiracy and attempted extortion.
The town is waiting to hear a response from the Arizona Municipal Risk Retention Pool, but because Sutton faces criminal charges, Cassidy said the town probably would have to dig into its own pockets on this one.
"Based on my conversation with the folks up at the pool, I believe they're going to say that it is not covered," he said.
Jim Gill, assistant vice president of risk management at Southwest Risk Services, the administrator for the Arizona Municipal Risk Retention Pool, would not comment specifically on the circumstances of Sutton's case because the pool is still drafting an official statement. But, generally speaking, he said a town's liability insurance covers civil claims, which in some cases could involve a crime.
"For example, we would cover a driver in a car who ran into somebody," he said. "If that driver ran a red light, they may be subject to criminal penalties for running the red light, but we would cover the civil portion."
Subject to limitations and exclusions, Gill said, the pool provides coverage for payment of "damages" because of a covered "wrongful act." However, damages are defined in the pool's coverage agreement as monetary. The agreement also states the pool will not cover any act that is criminal.
Cassidy said he has done extensive legal research on court cases involving indemnification agreements across the country and, from the cases he's seen, he thinks the town is legally responsible for paying for Sutton's defense. But that's only if he's acquitted, and as long as the town can determine that Sutton acted in his capacity as mayor and in the best interests of the town, he said.
"In my opinion, the town is obligated to cover an official acting in the scope of their employment, and we're obligated to pay all reasonable fees," Cassidy said, citing the town code, which states that the town will indemnify any town officer from and against any liability arising out of his or her service as a town employee.
On that note, council members unanimously voted April 26 in support of the indemnification agreement. Sutton was still mayor at the time, but resigned four days later.
The agreement states the town will pay all "reasonable" costs and attorney fees, though no one has determined what is considered "reasonable." The agreement does not give a limit to how much the town could spend, and many know Sutton's attorney, Michael Piccarreta, to be one of the higher-priced defense lawyers in Arizona.
Piccarreta, a past state bar president and a lawyer for more than 30 years, wouldn't deny he comes with a higher price tag than most attorneys in Arizona, but said, "The fees would be a bargain at twice the cost."
"I've had a fair amount of success in my cases, so my rates are (comparable to) other lawyers of my experience in the state," he said. "The fees will be reasonable. Marana is not going to go broke over their legal bill."
Piccarreta would not discuss his fee rates, but did confirm that he was retained by Sutton during the commencement of the FBI investigations in 2002.
Cassidy said the town would pick up the tab on Sutton's legal bill dating back to when he retained Piccarreta. However, instead of Piccarreta being retained by Sutton, the town code suggests in cases of indemnification that counsel should be provided by the town.
"That is normally the way it would happen," Cassidy agreed. "But on the other hand, normally what would happen is it would be cleared upfront that somebody was acting in the scope (of employment), and then the town will choose counsel. But since, in this case, we don't even know if there is really going to be reimbursement, it's not appropriate for us to choose the counsel."
Marana resident Anna Kline, who lives in Continental Ranch, said she e-mailed town staff and council members when she heard about the agreement, which she strongly opposes.
"I was so upset they would consider paying this man's legal fees when, personally, I thought he did something that was a personal matter not relating to his duties as mayor," she said. "I didn't think he had a right to do that and then expect the town to pay for his actions."
Kline said she was upset that she didn't get a response from town officials. Town records show that all six council members received her e-mail.
"Not a word," Kline said. "I thought that was highly inappropriate. They are supposed to be working for us as a town, and to ignore a serious concern like that does not speak highly, in my opinion, of their respect for the concerns of its citizens."
Kline said she understands the town code gives the council the ability to hold town officers harmless from liabilities that arise out of their actions, but she doesn't think Sutton's dealings with Waste Management were, by any means, town business.
"That's a far reach when he's seemingly trying to protect his friend and then seemingly extorting money," she said. "I don't think the town code is being followed in this respect."
According to the indictment, Sutton allegedly met with Waste Management employees to discuss a lucrative contract for Westfall on several occasions between January and April of 2002. Those meetings, which were secretly recorded by the FBI, took place at various locations, including Omni Tucson National Golf Resort, Waste Management's Ina Road transfer station and even Sutton's home in Continental Ranch. One meeting, on April 2, 2002, took place inside Marana's Development Services Center.
Sutton said he participated in the meetings in the interest of the public safety and claims he was protecting a constituent. Sutton said he and Westfall are being retaliated against for trying to blow the whistle on Waste Management, whose subcontractors were hauling dangerously overweight trash loads to landfills in Pinal and Maricopa counties.
However, according to the Department of Public Safety, the overweight hauling had already ended by the time Sutton became involved in January 2002. A DPS audit found more than 3,000 instances of overweight trucks leaving the Ina Road plant in 2001.
Town officials said they weren't even aware Sutton had involved himself with Waste Management until the FBI served the town with subpoenas in May 2002. Many say Sutton could have brought the matter before the town to review Waste Management's operating permit if public safety was a concern.
Piccarreta defended Sutton's seemingly discreet, off-the-clock business, saying, "I think there is a lot of town business that any public official engages in that is not within nine to five."
Tucson City Manager Mike Hein, who worked as Marana's town manager at the time of the alleged extortion attempt, said neither Sutton nor Westfall ever brought any issues regarding Waste Management to his attention before the FBI got involved.
"The FBI has other things to do, so if they pursued this for the past three years, I have to wonder if some of it's valid," Kline said.
Kline said she wasn't happy with how quickly the town called a special meeting to pick up Sutton's legal fees. Within minutes after the indictment was handed down, April 22, town officials had already decided to hold the meeting on April 26. The public was not notified of the meeting until about 24 hours prior.
After a brief meeting with Cassidy behind closed doors, council members voted 6-0 in favor of the agreement, which was passed as an emergency measure, making it effective immediately and unable to be challenged by voters.
Cassidy said if Sutton is acquitted he can submit requests for payment and then the town can make a determination whether his actions were in his scope as mayor. He would not comment whether he personally thought Sutton was doing his job.
"The mayor represents to the town that he participated in the meetings and discussions that are the subject of the WM matter in the scope of his position as mayor," the indemnification read in part.
Council members each made a personal statement in support of Sutton before they voted in favor of paying his legal bill. Some said they planned to contribute their own money to Sutton's defense.
A press release that was drafted April 22, the day of the indictment, but was never made public, shows all six council members making a joint statement in support of Sutton. Jessica Ziegler, the town's community relations coordinator, said the statement was never sent out because it would have required a special meeting and a council vote, which didn't happen.
A retired administrative law judge and former city attorney who now lives in Marana said he thinks the council's decision to pay Sutton's legal fees should be rescinded because it's outside the intent of Arizona law. He said state laws do not grant the town authority to use taxpayers' money for a public official's criminal defense.
The judge, who requested anonymity for this story, said after reviewing all applicable laws, that paying Sutton's legal fees is a far-fetched idea, even by Marana's town code, which he thinks is intended to protect public officials from third-party civil claims.
Cassidy disagreed, saying nowhere is there a clearly distinguished difference between the town's ability to pay the costs of a civil and criminal defense.
Despite the fuzzy Arizona laws, Cassidy said case law from other states allows municipalities to pick up the legal tab associated with defending public officials in criminal matters.
As long as the activity occurred within the scope of a public official's employment, a municipality has an obligation to pay for that person's defense, criminal or civil, Cassidy said. Unfortunately, there have been no cases ruled in Arizona that set such a legal precedent.
Cassidy cited a 1988 Michigan case in which a court found the city of Pontiac abused its discretion in refusing to reimburse a city commissioner for legal expenses incurred during his successful defense of conspiracy and gambling charges. The court ruled that the commissioner acted reasonably in meeting with gambling racketeers, one of whom was an undercover police officer.
John Paladini, Glendale's deputy city attorney, said his office conducted substantial legal research last year when several Glendale officials came under investigation by the county attorney's office for allegedly altering city documents. The city received grand jury subpoenas for a number of city documents, Paladini said, at which point the city retained outside counsel.
Turning to Glendale's city charter, which offers a similar indemnification clause as that found in Marana's town code, Paladini said the city came to the conclusion that it could indemnify once indictments were handed down, though the city would not be obligated to do so.
Instead, such an action would require a council vote, but the council was the subject of the indictments, so it never made that vote, he said.
"It's discretionary. We never determined it was mandatory," he said. "And the city council would, itself, have to vote on it so it was never paid."
A trial court judge threw out the indictments several months after they were handed down. At that point, the city picked up the tab for the outside counsel, Paladini said. But the county has since decided to appeal the decision, and the accused officials could be asked to reimburse the city if charges are reinstated, he said.
"If it's a criminal act, then by very definition it's outside the scope of your work duties," he said. "If that were to occur, the city would have to go back and look again."
Pending an acquittal, Paladini said he thinks Marana could legally pay Sutton's legal fees under the same circumstances, as long as he was acting as mayor, but it would be the town's call.
Sutton and Westfall both pleaded not guilty May 5 in U.S. District Court. The case is now scheduled for trial June 28 in Tucson.
"This case is not going to resolve until next year," said Piccarreta, adding he'll be happy to release all billing statements if and when Sutton is acquitted.