The URL can be used to link to this page

California Joint Powers Insurance Authority (CJPIA) - FY2021-067 MEMORANDUM OF COVERAGE LIABILITY PROGRAM Issued to the City of Rancho Palos Verdes EFFECTIVE JULY 1, 2020 - JULY 1, 2021 MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 MEMORANDUM OF COVERAGE LIABILITY PROGRAM ADMINISTERED BY THE CALIFORNIA JOINT POWERS INSURANCE AUTHORITY MEMBER: Rancho Palos Verdes MAILING ADDRESS: 30940 Hawthorne Boulevard Rancho Palos Verdes, CA 90275-5351 PROTECTION LIMITS: Primary layer: $30,000,000 PROTECTION PERIOD: From July 1, 2020 at 12:01 a.m. Pacific Time until July 1, 2021 at 12:01 a.m. Pacific Time. ENDORSEMENT(S): This Memorandum and any endorsements thereto are a description of the terms and conditions of the Program through which certain specified and limited self -insured risks of liability are administered by the Authority and shared by its Members. This Memorandum is not an insurance policy. As provided in Section 990.8 of the California Government Code and appellate court cases of Orange County Water District v. Association of California Water Agencies JPIA (1997) and City of South El Monte v. Southern California Joint Powers Insurance Authority (1995), the pooling of self-insured claims or losses among the Members of the Authority shall not be considered insurance nor be subject to regulation under the Insurance Code. California JPIA President MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 TABLE OF CONTENTS I. INTRODUCTION ________________________________________________________ 1 II. PROTECTION PROVIDED ________________________________________________ 1 A. Payments on Behalf of Protected Parties ___________________________________ 1 B. Defense and Settlement ________________________________________________ 2 C. Protection Limit _______________________________________________________ 3 D. Statutory Limitations ___________________________________________________ 4 E. Territorial Limitation ____________________________________________________ 4 F. Chief Executive Separation Payment ______________________________________ 4 III. DEFINITIONS ___________________________________________________________ 5 IV. EXCLUSIONS _________________________________________________________ 15 V. CONDITIONS AND RESPONSIBILITIES _____________________________________ 24 A. Inspection and Audit __________________________________________________ 24 B. Severability of Interest _________________________________________________ 24 C. Protected Party’s Duties in the Event of Occurrence or Claim __________________ 24 D. Other Protection _____________________________________________________ 25 E. Termination or Amendment _____________________________________________ 25 F. Changes to Memorandum ______________________________________________ 26 G. Subrogation and Recovery _____________________________________________ 26 H. Assignment _________________________________________________________ 26 I. Joint Powers Agreement _______________________________________________ 27 J. Appeal of Disputes ___________________________________________________ 27 K. Arbitration __________________________________________________________ 28 L. Limitation of Liability __________________________________________________ 30 MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 1 of 30 July 1, 2020 – July 1, 2021 I. INTRODUCTION This Memorandum of Coverage (hereinafter Memorandum) is a description of the terms and conditions of the Liability Program (hereinafter Program) through which certain self- insured risks of liability are administered by the California Joint Powers Insurance Authority (hereinafter Authority) and shared by its Members pursuant to the Joint Powers Agreement creating the Authority under the provisions of Section 6500 et seq. of the Government Code. As provided in Section 990.8 of the Government Code, pooling of losses in this Program is not insurance. The sole duty of the Authority is to administer the Program adopted by the Members. The Authority can indemnify only Claims or losses, which are pooled under the terms of this Memorandum and the Joint Powers Agreement. There is no transfer of risk from the Member or any Protected Party to the Authority nor assumption of risk by the Authority. The provisions of the Program are subject to and subordinated to the Joint Powers Agreement or any action taken by the Executive Committee or the Board of Directors in connection with the Program. This Program has been adopted pursuant to action taken by the Executive Committee, and is subject to any amendment, modification or extension by the Executive Committee or the Board of Directors. The terms of this Memorandum shall be construed in an evenhanded fashion in accordance with the principles of California contract law. If the langu age of this Memorandum is alleged to be ambiguous or unclear, the issue of how the protection should apply shall be resolved in a manner most consistent with the relevant terms of this Memorandum without regard to authorship of the language and without any presumption of arbitrary interpretation or construction in favor of either the Protected Party or the Authority. Any controversy or dispute arising out of or related to an interpretation or breach of this Memorandum shall be settled in accordance with the appeals procedures as set forth in this Memorandum. Throughout this Memorandum, words and phrases that appear in bold print are defined in Section III. DEFINITIONS. II. PROTECTION PROVIDED A. Payments on Behalf of Protected Parties – Excess Liability Program – please see Endorsement Subject to all provisions of this Memorandum, the Authority will cause the Program to pay on behalf of the Protected Party all sums that the Protected Party shall become legally obligated to pay as Damages by reason of Tort Liability imposed by law, or the Tort Liability of others assumed in a Protected Contract, because of: 1. Bodily Injury or Property Damage, including Automobile Liability 2. Personal Injury; 3. Public Officials Errors and Omissions; MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 2 of 30 July 1, 2020 – July 1, 2021 4. Broadcast/Publication Injury; 5. Employment Practices Injury; or 6. Employee Benefit Administration Liability caused by an Occurrence during the Protection Period, to which this Memorandum applies. Coverage provided under this Memorandum is funded through Member contributions for a pooled layer of coverage, and backed by reinsurance purchased by the Authority on behalf of its Members for higher layers of coverage, per Government Code section 990.8(d). In the event of failure by the reinsurer to pay or reimburse for Damages or Defense Costs within the reinsured layer of coverage, due to insolvency, the maximum Protection Limit will be not more than the pooled layer of coverage, provided that this limitation shall not relieve any reinsurer of its obligations under its reinsurance agreement, and shall not relieve the Authority of its coverage obligations if reinsurance coverage is established and is collectible. In the event of a failure by the reinsurer to pay or reimburse for Damages or Defense Costs within the reinsured layer of coverage, due to the application of an exclusion in the reinsurance agreement, no coverage shall apply under this Memorandum within that layer. B. Defense and Settlement – Excess Liability Program – please see Endorsement The Authority, at the shared expense of its Members, and out of funds of the Program deposited or obligated to be deposited by its Members, shall investigate, negotiate, settle, or Defend, at the Authority’s sole discretion, any Claim which has been tendered to the Authority and which in the sole opinion of the Authority is encompassed by this Program. The Authority shall control selection of defense counsel. Defense Costs incurred by the Protected Party prior to the tender of the Claim, as required by Section V. CONDITIONS AND RESPONSIBILITIES, to the Authority are the sole obligation of the Protected Party. The date of the tender of the Claim shall be the date written notice of said Claim is received at the Authority’s offices (or it’s designated Claims Administrator). The obligation of the Authority as described above shall cease to apply after the Protection Limit has been exhausted by any combination of payments hereunder for judgments, settlements, or Defense Costs, or if the Authority tenders the Protection Limit on behalf of any Protected Party. For purposes of excess insurance or reinsurance, any Defense Costs incurred prior to the tender of the Protection Limit shall be deducted from the Protection Limit that is tendered. With respect to any Claim or part thereof which has been tendered to the Authority and over which the Authority assumes full or partial responsibility or charge of the settlement or Defense, the Authority shall, if applicable, cause the Program to pay: 1. All expenses incurred by the Authority on behalf of a Protected Party; 2. Costs taxed against a Protected Party in the Claim; and MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 3 of 30 July 1, 2020 – July 1, 2021 3. Other reasonable expenses incurred by a Protected Party at the Authority’s request to assist the Authority in the investigation or Defense of the Claim; but this shall not include the office expenses of the Protected Party, the salaries of Employees or officials of the Protected Party, nor expenses of any claims administrator engaged by the Protected Party. With respect to a Claim for which the Authority has determined that only a portion is encompassed by this Program, the Authority shall cause the Program to fund any Defense to the Claim against the Member and any settlement or final judgment of that Claim, subject to the reservation by the Authority of the right to recover from the Member any amounts paid by the Authority for such settlement or final judgment which are paid to claimants for Claims, or portions thereof, not encompassed by the Program. With respect to a Claim for which the Authority has determined that no portion is encompassed by this Program, the Claim shall be referred, in its entirety, back to the Protected Party. With respect to a Claim for which the Authority, its Employee, or an Executive Committee member is a defendant or the claimant, special counsel shall be assigned to monitor the handling of the case by the Authority. The payment of Defense Costs will reduce the Protection Limit under this Program. C. Protection Limit The Protection Limit shown on the Cover Page and the rules below determine the most the Program will pay, inclusive of Defense Costs, regardless of the number of: 1. Protected Parties; 2. Claims made; or 3. Persons or organizations that sustain injuries or Damages. The Protection Limit stated on the Cover Page is the most the Program will pay per Member for the sum of Damages, Defense Costs and expenses as included in Section B. Defense and Settlement under any or all or any combination of Bodily Injury, Property Damage, Personal Injury, Public Officials Errors and Omissions, Broadcast/Publication Injury, Employment Practices Injury, Employee Benefit Administration Injury, or Chief Executive Separation Payment arising out of any one Occurrence. For the purpose of determining the Protection Limit all Bodily Injury, Property Damage, Personal Injury, Public Officials Errors and Omissions, Broadcast/Publication Injury, Employment Practices Injury, Employee Benefit Administration Liability, or Chief Executive Separation Payment arising out of exposure to substantially the same general condition(s) shall be considered as arising out of one Occurrence. All protection shall be deemed to arise from a single Occurrence where the underlying cause is continuous or repeated exposure to the same generally harmful conditions, such as a breach or breaches of security, malware, virus, hacking, or similar cyber -related events. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 4 of 30 July 1, 2020 – July 1, 2021 Any actual or alleged loss of use of tangible property not physically injured or destroyed shall be deemed to occur at the time of the Occurrence that caused such loss of use. Any other injury or damage occurring or alleged to have occurre d over more than one Protection Period shall be deemed to have occurred during the Protection Period when the Occurrence began. For an Additional Contribution, Tort Liability may be assumed in a Protected Contract on behalf of a Railroad, and the Protection Limit for such assumed Tort Liability shall be $2,000,000 per occurrence and in the aggregate. For purposes of this coverage, the Additional Contribution shall be determined based upon the number of railroad crossings for which a Member seeks coverage. D. Statutory Limitations Notwithstanding Sections II.A. Payments on Behalf of Protected Parties and II.B. Defense and Settlement above, the defense and/or indemnity protections afforded by this agreement to a past or present elected or appointed official or Employee of a Member are not broader than the Member’s own duty to defend and indemnify its official or Employee under California Government Code sections 825, et seq. and 995, et seq. All immunities, defenses, rights, and privileges of the Member under the Government Code apply to the Program as well, including any defense that the official or Employee acted outside the course and scope of employment or acted with fraud, corruption or actual malice, or any defense that the action or proceeding or type of damage sought is not the type for which the Member is obligated to provide defense and/or indemnity. The defense and/or indemnity protections are also subject to all the terms, conditions, and Exclusions of this Memorandum and do not apply if not covered by this Memorandum, even if an obligation to defend and/or indemnify would exist under the Government Code. E. Territorial Limitation This Memorandum applies to Claims arising out of Occurrences during the Protection Period, anywhere in the world, that are filed in the state or federal courts of the United States of America. F. Chief Executive Separation Payment – Excess Liability Program – please see Endorsement This Program will also pay a Chief Executive Separation Payment to an eligible Chief Executive who is separated from employment involuntarily, by the governing body of the Member. A Chief Executive that is forced to resign in lieu of termination will also be eligible for the Chief Executive Separation Payment. A Chief Executive that is subjected to a Termination for Cause, as defined in this Memorandum, shall not be eligible for the Chief Executive Separation Payment, nor will an interim or acting Chief Executive. The Authority at its sole discretion shall determine eligibility for the Chief Executive Separation Payment. Conditions of eligibility require the separated Chief Executive to place the Authority on notice of intent to be considered for the Chief Executive Separation Payment within 60 MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 5 of 30 July 1, 2020 – July 1, 2021 days of the date of separation. The Chief Executive will be required to complete and submit a Waiver to the Authority, within 60 days of the date of separation. The Chief Executive will further be required to submit a Certification to the Authority within 60 days following the Waiting Period. Failure to complete the Waiver or Certification shall render the Chief Executive ineligible for the Chief Executive Separation Payment. The Authority will compute the proper payment, and payment shall commence within 30 days following the submission of the first Certification. For a qualifying Chief Executive who has applied for, but not yet received benefits from a public retirement system, the Authority will require the Chief Executive to provide written proof, from the provider, of the amount of public retirement benefit to be paid, prior to calculating and paying the Chief Executive Separation Payment. Payments will be made in arrears where necessary. The Chief Executive Separation Payment shall not be considered “unemployment insurance,” nor shall it be considered a “severance” payment. The Chief Executive Separation Payment can only be waived by the Chief Executive if it is specifically noted, by name, within any separation or employment agreement entered into with the Member. III. DEFINITIONS – Excess Liability Program – please see Endorsement for additional definitions Additional Contribution means an assessment charged to a Member for the cost or additional exposure associated with the Member’s participation in an optional liability protection available through this Memorandum. Administration under Employee Benefits Administration Liability means: A. Giving counsel to employees with respect to the Employee Benefits Programs; B. Interpreting the Employee Benefits Programs; C. Handling of records in connection with the Employee Benefits Programs; or D. Effecting enrollment, termination, or cancellation of employees under the Employee Benefits Programs, provided all such acts are authorized by the Member. Aircraft means any vehicle designed to transport people or property through the air but does not include Small Unmanned Aircraft, as defined in 14 Code of Federal Regulations, Section 107.3. Airport means any locality either on land or water which is adopted for the landing and taking off of Aircraft, including all land, water, buildings, structures, equipment or other improvements necessary or convenient in the establishment and operation of an Airport. Authority means the California Joint Powers Insurance Authority. Automobile means a land motor vehicle, trailer, or semi-trailer. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 6 of 30 July 1, 2020 – July 1, 2021 Automobile Liability means Tort Liability for Bodily Injury or Property Damage, arising from the use of an Automobile by a person defined in the Protected Party definition, Sections B., E. or F. Bodily Injury means bodily injury, sickness, or disease sustained by any person, including death resulting from any of these at any time. Broadcast/Publication Injury means injury caused by or arising out of: A. Any form of defamation or other tort related to disparagement or harm to the character, reputation or feelings of any na tural person or organization including but not limited to libel, slander, product disparagement, trade libel, infliction of emotional distress, outrage, or outrageous conduct; B. Any form of invasion of, infringement of, or interference with rights of privac y or publicity; including but not limited to false light, public disclosure of private facts, intrusion, and commercial appropriation of name or likeness; C. Infringement of copyright or trademark; D. Plagiarism or piracy or misappropriation of ideas under implied contract; E. Unauthorized use of names, trade names, trademarks, service marks, titles, formats, ideas, characters, character names, characterizations, performances, plots, musical compositions, slogans, program material, or any other similar material; or F. Denial of access to broadcast facilities based upon application of judgment or standards relating to the acceptability of material for public broadcast; committed in the course of the Protected Party’s broadcast or publication activities. Certification means a signed statement by a Chief Executive that he or she is entitled to the Chief Executive Separation Payment because he or she is unemployed or is employed but receiving Compensation that is lower than he or she was earning at the time of the Occurrence. The initial executed Certification is a form provided by the Authority and must be received within 60 days following the Waiting Period. Chief Executive means the governing body-appointed chief administrative officer of a Protected Party whether called city manager, chief administrative officer, general manager or other title designating the highest appointed official of the governmental entity. Chief Executive Separation Payment means a payment that shall be paid once a month, in arrears, for a time period not to exceed six months, following the Waiting Period. The payment shall equal the amount of the Chief Executive’s salary at the time of the separation of employment Occurrence, plus payment of the Medical Benefit, less the total amount of Compensation being received after the separation of employment Occurrence and any other payments made to the Chief Executive, by the member, during the payment period. The term ‘salary’ shall be calculated in the same manner as ‘pensionable compensation’ as defined by Government Code section 7522.34, and applicable related regulations. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 7 of 30 July 1, 2020 – July 1, 2021 Claim means a notice, demand, or Suit against a Protected Party to recover Damages. Claim does not include an administrative claim filed with the Equal Opportunity Employment Commission, the California Department of Fair Employment and Housing, Public Employment Relations Board or other similar state or federal administrative agency. Compensation for purposes of computation of the Chief Executive Separation Payment means: A. Wages or salary earned as an employee of a new employer, subsequent to separation, B. Payments from a defined benefit retirement plan commencing subsequent to separation for which benefits were earned while employed by the Member, C. Unemployment insurance, and D. Income earned from self-employment or from work or activities as an independent contractor, consultant, or in a similar capacity subsequent to separation. Compensation does not include Social Security, Medicare or disability benefits. Dam means a structure described by California Water Code sections 6002 through 6004. Damages means compensation in money recovered by a party for loss or detriment it has suffered through the acts of a Protected Party. Damages does not include defense of Claims, fines, or any punitive, exemplary or multiplied damages or non-monetary relief or redress or injunctive relief, nor does it include attorney fees or costs awarded to the prevailing party in a Claim or Suit, except where such attorney fees or costs are attributable to a claim for compensatory damages covered by this Memorandum. Defense Costs means all fees and expenses incurred in connection with the adjustment, investigation, defense, and appeal of a Claim covered hereunder, including attorney fees, court costs, premiums for appeal bonds, and interest on judgments accruing after the entry of judgment, and also shall include the costs of any claims administrator or defense counsel assigned by the Authority to respond to any Claim on behalf of the Authority. Defense Costs shall not include the office expenses of the Protected Party, nor the salaries of employees or officials of the Protected Party, nor expenses of any claims administrator engaged by the Protected Party. Defense Costs also do not include any fee or expense relating to coverage issues between the Authority and any Protected Party. Discrimination means injury caused by or arising out of: A. Unlawful discrimination because of race, sex, color, age, religion, or national origin, or membership in any similar legally protected class; or B. Violation of the discrimination prohibitions of the Americans with Disabilities Act of 1990, any rules or regulations promulgated thereunder and amendments thereto or similar provisions of any federal, state, or local statutory law or common law. Employee means any person falling within the definition of “employee” under section 810.2 of the Government Code. That section provides: “Employee includes an officer…employee, MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 8 of 30 July 1, 2020 – July 1, 2021 or servant, whether or not compensated, but does not include an independent contractor.” Employee also includes any volunteer designated by the Member to perform specific functions in the course and scope of authorized activities under the direction and control of the Member. Employee Benefit Administration Liability means liability for injury or damage caused by or arising out of any negligent act, error or omission of the Protected Party in the Administration of the Member’s Employee Benefits Programs. Employee Benefits Program means group life insurance or self-insurance, group medical, dental or vision-care insurance or self-insurance, pension plans, retirement plans, deferred compensation plans, workers’ compensation, unemployment insurance, social benefits, disability benefits, and other similar employee benefits. Employment Practices Injury means injury arising out of the following offenses: A. Wrongful dismissal, discharge, or termination of employment; B. Breach of any oral or written employment contract or quasi -employment contract; C. Employment-related coercion or misrepresentation; D. Violation of employment discrimination laws; E. Workplace sexual or other harassment; F. Wrongful failure to employ or promote; G. Wrongful discipline, negligent evaluation, or wrongful demotion; H. Wrongful deprivation of a career opportunity; or I. Employment-related: 1. Invasion of privacy, 2. Defamation, or 3. Wrongful infliction of emotional distress. Fungi means any type or form of fungus, including mold or mildew and any mycotoxins, spores, scents, or byproducts produced or released by fungi. Hostile Fire means a fire that becomes uncontrollable and breaks out from where it is intended to be. Levee means a permanent embankment intentionally constructed for the purpose of preventing overflow of a watercourse or body of water. Medical Benefit means the cost of all benefits to which a Chief Executive is entitled under the Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA). The Chief Executive may provide proof of medical coverage from an alternate provider, not to exceed the cost of coverage through COBRA. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 9 of 30 July 1, 2020 – July 1, 2021 Member means the entity, including all of its departments and constituent agencies, that is a signatory to the Joint Powers Agreement creating the Authority as may be amended from time to time, which has adopted a resolution to participate in the Program, and whose name appears on the Cover Page of this Memorandum. Member includes any other agency for which the Member’s governing board or council acts as the governing board, and also includes any commissions, agencies, districts, authorities, successor agencies, boards, or similar entities coming under the Member’s sole direction and control. Member shall include any other agency authorized by the Authority’s Executive Committee or Board of Directors. Memorandum means this Memorandum of Coverage – Primary Liability Program authorized by the Joint Powers Agreement of the Authority specifying the terms and conditions of the Program through which certain specified and limited self-insured risks of liability are administered by the Authority and shared by its Members. Nuclear Material means “source material,” “special nuclear material,” or “by-product material” as those terms are given meaning in the Atomic Energy Act of 1954 or any law amendatory thereto. Occurrence means: A. With respect to Bodily Injury or Property Damage, an accident, including continuous or repeated exposure to conditions, that first occurs during the Protection Period and that results in Bodily Injury or Property Damage neither expected nor intended from the standpoint of the Protected Party; B. With respect to Public Officials Errors and Omissions, actual or alleged conduct described in the definition of Public Officials Errors and Omissions during the Protection Period; C. With respect to Employee Benefits Administration Liability, actual or alleged conduct described in the definition of Employee Benefits Administration Liability during the Protection Period; D. With respect to Personal Injury, Broadcast/Publication Injury, and Employment Practices Liability, an offense described in the definitions of those terms; or E. With respect to Chief Executive Separation Payment, injury arising out of: 1. Dismissal, discharge, resignation in lieu of termination or termination of the employment of a Chief Executive; or 2. Failure to renew an employment contract which results in termination of the employment of a Chief Executive for which liability on the part of a Protected Party can be settled through the acceptance by the Chief Executive of a Chief Executive Separation Payment in exchange for a Waiver and Certification. F. All claims based on or arising out of Harassment or similar conduct (including molestation or sexual abuse) by an Employee, or more than one Employee MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 10 of 30 July 1, 2020 – July 1, 2021 acting in concert, will be considered arising out of one Occurrence and shall be deeming to have been committed at the time of the first of such acts or alleged acts, regardless of the number of: 1. Protected Parties; 2. Claims made; or 3. persons or organizations that sustain injuries or Damages. If a series of wrongful acts committed by one Employee, or more than one Employee acting in concert, takes place over more than one Protection Period, the wrongful acts will be deemed to have been committed during the first Protection Period and only the Protection Limit for that Protection Period shall apply. Personal Injury means injury, other than Bodily Injury, Property Damage or Public Officials Errors and Omissions, resulting from one or more of the following offenses: A. False arrest, detention, or imprisonment; B. The use of force for the purpose of protecting persons or property; C. Malicious prosecution or abuse of process; D. Wrongful entry by any employee of the Member into a room, dwelling, or other similar premises that a person occupies; E. Wrongful eviction by any employee of the Member of a person from a room, dwelling, or other similar premises that such person occupies; F. The publication or utterance of a libel or slander, including statements that disparage a person’s or organization’s goods, products, or services; G. A publication or utterance that violates a person’s right of privacy; H. Interference with an existing or prospective economic advantage, contract, or agreement; I. Discrimination; J. Violation of civil rights; or K. Infliction of emotional distress. Pollutants/Hazardous Materials includes without limitation: A. Any flammable or explosive substances, radioactive materials, a sbestos, poly- chlorinated biphenyls, chemicals, substances known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances, or related materials which are regulated by or under any federal, state, or local environmental law; MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 11 of 30 July 1, 2020 – July 1, 2021 B. Any material identified as hazardous in Sections 66261.10 through 66261.126 of Title 22 of the California Code of Regulations, as amended from time to time (collectively); C. Any solid, liquid, gaseous or thermal irritant or contaminant, includ ing smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste. The term “waste” includes materials to be recycled, reconditioned, or reclaimed; or D. Fungi and bacteria of any kind, unless caused by an otherwise covered Occurrence. Program means the California Joint Powers Insurance Authority Primary Liability Protection Program described by this Memorandum and the Joint Powers Agreement of the Members creating the Authority. The Program is a fund created by the Members for the purpose of pooling self-in sured losses. Property Damage means: A. Physical injury to or destruction of tangible property which occurs during the Protection Period, including the loss of use thereof at any time resulting there from; or B. Loss of use of tangible property that has not been physically injured or destroyed provided such loss of use is caused by an Occurrence during the Protection Period. Protected Contract means a written agreement that satisfies all of the following: A. The agreement pertains to the Member’s operations and by the contract terms the Member assumes the Tort Liability of another to pay damages because of Bodily Injury or Property Damage to a third person or organization; B. The agreement is entered into prior to the Bodily Injury or Property Damage for which a Claim is made; and C. The agreement, including its value, is reported by the Member and approved by the Authority through issuance of an evidence of coverage letter prior to the Bodily Injury or Property Damage and the value is added to the Member’s annual payroll for use in any retrospective deposit or annual contribution computation. A Protected Contract may cover an architect, engineer, or surveyor for his or her role as a Public Official, except for the application of Sections B.1. and B.2. below. Protected Contracts may apply to contract public works directors, building officials, planning directors, city managers, Chief Executives, city attorneys, city prosecutors, redevelopment directors, or other contracted Public Officials for occurrences arising out of their official duties, but this coverage applies only to the named contract Public Official and does not extend to other individuals within the contractor’s firm. A Protected Contract does not include any part of any contract or agreement: MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 12 of 30 July 1, 2020 – July 1, 2021 A. That indemnifies any person or organization for injury or damages caused by or arising out of the ownership, operation, maintenance or use of any Aircraft, Airport or Watercraft; B. That indemnifies an architect, engineer, or surveyor. This exclusion does not apply in the instance where an individual is under an exclusive contract as a contract Public Official solely for the benefit of the Member (i.e., no work is performed by the person for any other person or entity), for injury or damage arising out of: 1. Preparing, approving, or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications; or 2. Giving or failing to give directions or instructions, if that is the primary cause of the injury or damage; C. Under which the Protected Party, if an architect, engineer, or surveyor, assumes liability for injury or damage arising out of the Protected Party’s rendering or failing to render professional services, including those listed in Section B. above and supervisory, inspection, or engineering services; or D. That indemnifies any person or organization for damages by fire, explosion, or water damage to premises rented or loaned to the Member. Limited Protected Contract means a written agreement, contract or permit in which: A. The Member assumes the Tort Liability of another to pay damages because of Bodily Injury or Property Damage to a third party in one of the following: 1. Easements or License Agreements; 2. Leases of Real or Personal Property; 3. Encroachment Permits; 4. Special Events Sponsored by the Member; or 5. Use of Facilities, Equipment, real or personal property by the Member; B. The Member assumes the Tort Liability of another to pay damages because of Bodily Injury or Property Damage to a third party for an activity not named in Section A. directly above, and upon its review of the agreement, Authority staff has determined at its sole discretion that any risks assume d in the agreement do not significantly increase the Member's risk exposure, and an Evidence of Coverage letter has been issued by the Authority; or C. The Member is obligated to provide evidence of coverage for a third party to participate in a funding program administered by another government or evidence of coverage required by bond indentures entered into by the Member if Authority staff has determined in its sole discretion that any risks assumed in the agreement do not significantly increase the Member's risk exposure, and an Evidence of Coverage letter has been issued by the Authority; MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 13 of 30 July 1, 2020 – July 1, 2021 and which is entered into prior to the Bodily Injury or Property Damage for which a Claim is made. A Limited Protected Contract does not include any part of any contract or agreement that indemnifies any person or organization for injury or damages caused by the sole negligence of such person or organization, or that cannot be included in a Protected Contract. A Limited Protected Contract also does not include any part of a contract or agreement that indemnifies the owner or operator of a Railroad. Protected Party means: A. The Member named on the Cover Page; B. Persons who are, or were, elected or appointed officials or Employees of the Member, whether or not compensated, while acting within the scope of their duties or employment as such, including while acting on outside committees, commissions, or boards at the direction of the Member, except that the protection so provided does not apply to Bodily Injury to another official or employee of the Member in the course of and arising out of his or her duties to or employment by the same Member, nor does it apply to other individuals within the contract appointed official’s firm or organization, but only to the named appointed official. C. Any nonprofit California corporation or unincorporated association under written contract, approved by the Member’s governing board or council, to perform specified functions under the Member’s direction and control. The corporation or unincorporated association is a Protected Party only for Occurrences arising out of the functions described in the contract. For the purposes of this Section C., direction and control means the Authority of the Member to be involved in decision making and to overturn decisions; D. Any person or entity identified as an additional Protected Party in a letter certifying such additional Protected Party status issued by the Authority, for Bodily Injury or Property Damage during the time period identified in the letter; if a particular activity is identified in the letter, the person or entity is a Protected Party only for Occurrences arising out of the described activity. Additional Protected Party status will apply only where required by the terms of a written agreement; E. Any person while using an Automobile owned, hired, or leased by a Member, and any person or organization legally responsible for the use thereof, provided the use is with the express permission of the Member, and only for Bodily Injury and Property Damage. This protection does not apply to: 1. Any person or organization, or any agent or employee thereof, other than the member, engaged in selling, repairing, servicing, delivering, testing, road testing, parking or storing, Automobiles, with respect to any Occurrence arising out of any such occupation or activity; MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 14 of 30 July 1, 2020 – July 1, 2021 2. With respect to any hired automobile, to the owner or a lessee thereof, other than the Member, or to any agent or employee of such owner or lessee; or 3. Any person or organization, or to any agent or employee thereof, engaged in a business of operating buses or other Automobiles for the transport of members of the public unless that business is owned by the Member and operated by its employees. 4. This Memorandum does not provide Underinsured or Uninsured Motorist coverage. F. The Authority, its officers and employees while acting in the course and scope of their duties or employment. No person or entity is a Protected Party with respect to the conduct of any current or past partnership, joint venture or joint powers authority (including any separate entity created pursuant to a joint powers agreement). However, for any person who is an official or Employee of a Member, who participates in the activities of a partnership, joint venture, or joint powers authority and is acting for or on behalf of the Member at the time of the Occurrence, protection is afforded by this Memorandum. Such coverage shall be in excess of, and shall not contribute with, any collectible insurance, self-insurance or other coverage provided to the other joint powers authority, agency or entity. Protection Period means the time period shown on the Cover Page of this Memorandum. Public Officials Errors and Omissions means any act, error, omission, misstatement, misleading statement, neglect, or breach of duty by any Protected Party in the discharge of that individual’s duties for the Member; or any matter claimed against any Protected Party solely by reason of the individual being or having been an employee of the Member. Public Officials Errors and Omissions does not include Bodily Injury, Property Damage, Personal Injury, Broadcast/Publication Injury, or Employment Practices Injury. Radioactive Contamination Injury means Bodily Injury or Property Damage caused by or arising from ionizing radiations or contamination by radioactive material. Railroad means a commercial railway as described by the California Public Utilities Code, Section 229. Railroad includes street railroad as described by the California Public Utilities Code, Section 231. Railroad does not include amusement railroad rides that do not cross public streets. Suit means a civil proceeding in which a Protected Party is named as a defendant or cross defendant, or an arbitration proceeding or alternative-dispute resolution proceeding to which a Protected Party submits with the Authority’s written consent. Termination for Cause means dismissal, discharge, termination of employment, or failure to renew a contract for the reasons stated in Califor nia Government Code section 7522.72(a) relating to conviction for conduct arising out of or in the performance of official duties, in pursuit of office or employment, or in connection with obtaining salary, disability retirement, service retirement or other benefits. This also includes dismissal, discharge, termination of MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 15 of 30 July 1, 2020 – July 1, 2021 employment, or failure to renew a contract of the employment of a Chief Executive because the Chief Executive has been convicted of robbery, bribery, extortion, embezzlement, fraud, grand larceny, burglary, arson, a felony violation of a state or federal law regulating a controlled substance (felony drug conviction), murder, rape, kidnapping, perjury, assault with intent to kill, or any felony involving abuse or misuse of the Chief Executive’s position to obtain illegal personal gain. In the event that charges for any of the offenses referred to in t his paragraph are brought and pending at the time of termination, the Authority will be authorized to defer determination of eligibility for Chief Executive Separation Payment until the outcome of criminal proceedings. Tort Liability means civil liability that would be imposed by law in the absence of any agreement or contract. Waiting Period means a period of time after the termination of employment Occurrence equal to the greater of (1) six months or (2) the number of months of salary received by the Chief Executive as a severance payment from the Member, regardless of whether the severance payment is made in lump sum or in multiple payments. Waiver means a full and complete relinquishment by a Chief Executive of any and all rights to sue a Protected Party for any Benefit, compensation, injury, or damages, known or unknown, past, present or future, arising out of the employment of, termination of the employment of, or failure to employ the Chief Executive. The Waiver is a form provided by the Authority and must be signed and returned to the Authority within 60 days following the termination of employment. Waiver does not mean any waiver and release agreement signed by the Chief Executive directly with the member, during the separation process. Watercraft means a vessel, 26 feet or more in length, designed to transport persons or property in, on, or through water. IV. EXCLUSIONS – Excess Liability Program – please see Endorsement for additional definitions This Memorandum, including any obligation to defend or to pay Defense Costs, does not apply to: A. Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out of the ownership, maintenance, use or operation of any Watercraft, Aircraft, or Airport or any air show events sponsored or controlled by the Protected Party or conducted on property owned by the Protected Party. Protection does apply to use of an Aircraft or Watercraft, if the Aircraft or Watercraft is not owned in whole or in part by the Member and the Member exercises no part in the servicing or maintenance of the Aircraft or Watercraft. However, this limited protection does not apply to: 1. Loss, loss of use of, or damage to the Aircraft or Watercraft; 2. Use of any Aircraft or Watercraft for hire or reward; or MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 16 of 30 July 1, 2020 – July 1, 2021 3. Public Officials Errors and Omissions coverage. B. Any Claim, obligation or alleged obligation for which a Protected Party or any insurance company as his/her/its insurer may be held liable under any workers’ compensation, unemployment compensation or disability benefits law, or under any similar law. C. Any Claim, liability, alleged liability, loss, cost, or expense for Bodily Injury to: 1. An employee of the Protected Party arising out of and in the course of employment by the Protected Party; or 2. The spouse, child, parent, brother, or sister of that employee as a consequence of Section 1. above. “Employee” for purposes of this Exclusion C. shall mean a person deemed to be an employee under Labor Code Sections 3352 and 3600, et seq. This Exclusion C. applies whether the Protected Party may be liable as an employer or in any other capacity, and to any obligation to share damages with or repay someone else who must pay damages because of the injury. However, this Exclusion C. does not apply to liability assumed in a Protected Contract or Limited Protected Contract. D. Injury to or destruction of: 1. Property owned by the Protected Party; 2. Property rented to or leased to the Protected Party where it has assumed liability under any contract for damage to or destruction of such property unless the Protected Party would have been liable in the absence of such assumption of liability; or 3. Property in the care, custody, or control of any Protected Party. E. Any Claim, liability, alleged liability, loss, cost, or expense caused by, arising out of or in any way connected with the operation of the principles of eminent domain, condemnation proceedings, or inverse condemnation, by whatever name called, whether such liability accrues directly against the Protected Party or by virtue of any agreement entered into by or on behalf of the Protected Party. This Exclusion E. shall not apply to liability, loss, cost or expense arising from property damage caused by earth movement, subsidence of land, flooding not caused by the failure of a Dam or Levee, or sewer backup, even though a legal theory upon which a claimant seeks recovery is the principle of inve rse condemnation. This Exclusion E. shall not apply when the Claim alleges damages arising out of temporary physical measures taken by the Member for public safety reasons in an effort to prevent or reduce a loss. F. Any Claim, liability, alleged liability, loss, cost, or expense arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release, escape, or any other forms of exposure to or the presence of Pollutants/Hazardous MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 17 of 30 July 1, 2020 – July 1, 2021 Materials including any Claim, liability, alleged liability, loss, cost or expense directly or indirectly caused by or arising out of any: 1. Request, demand, or order that any Protected Party or others test for, monitor, clean up, remove, contain, treat, detoxify, or neutraliz e, or in any way respond to, or assess the effects of Pollutants/Hazardous Materials; 2. Claim by or on behalf of a governmental authority or any other entity or person for costs of or damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, or neutralizing, or in any way responding to, or assessing the effects of Pollutants/Hazardous Materials; or 3. Actions or steps taken to mitigate damages or to relocate persons, property or business as a result of Pollutants/Hazardous Materials. 4. Claim or Suit brought under the Clean Water Act, including state or federal enforcement actions under 33 U.S. Code sections 1319, et seq.; citizen Claim or Suit brought under sections 1365, et seq.; or state enforcement actions brought under the California Water Code sections 13385, et seq.; or a Claim or Suit brought under any similar law relating to discharge permit violations. EXCEPTION TO EXCLUSION, PROTECTION FOR CERTAIN ACCIDENTAL POLLUTION INJURIES. However, this Exclusion F. does not apply to Bodily Injury or Property Damage arising out of or caused by any actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of Pollutants/Hazardous Materials if all of the following: 1. It was directly caused by Hostile Fire, explosion, lightning, windstorm, vandalism or malicious mischief or collision, overturning or upset of a motor vehicle or railroad vehicle; 2. It was accidental and was neither expected nor intended by the Protected Party; 3. It was instantaneous and was demonstrable as having commenced at a specific time and date during the term of this Memorandum; 4. Its commencement became known to the Protected Party within seven days; 5. Its commencement was reported in writing to the Authority within twenty days of becoming known to the Protected Party; and 6. Reasonable efforts were expended by the Protected Party to correct or terminate the discharge, dispersal, seepage, migration, release, or escape of Pollutants/Hazardous Materials. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 18 of 30 July 1, 2020 – July 1, 2021 Nothing contained in this EXCEPTION TO EXCLUSION, PROTECTION FOR CERTAIN ACCIDENTAL POLLUTION INJURIES shall operate to provide any protection or obligation to defend or pay Defense Costs with respect to: 1. Any site or location used by others on the Protected Party’s behalf for the handling, storage, disposal, dumping, processing, or treatment of waste material. This Exclusion F. applies whether or not the action by others was known to the Protected Party; 2. Any clean-up costs mandated by the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and any similar laws or statutes; 3. Clean up, removal, containment, treatment, detoxification or neutralization of Pollutants/Hazardous Materials situated on premises the Protected Party currently owns, rents or occupies; or 4. Any Claim, liability, alleged liability, loss, cost, or expense based upon or arising out of Personal Injury or Public Officials Errors and Omissions. G. Any Claim, liability, alleged liability, loss, cost, or expense directly or indirectly based on or arising out of the hazardous properties of Nuclear Material. However, this Exclusion G. does not apply to Radioactive Contamination Injury. H. Any Claim, liability, alleged liability, loss, cost, or expense directly or indirectly caused by any complete or partial failure, interruption or surge in the member's supply of water, electrical power, gas or fuel, unless such failure, interruption or surge results from sudden and accidental physical destruction of tangible property which is used in the generation or transmission of the supply. I. Any Claim, liability, alleged liability, loss, cost, or expense arising out of the partial or complete structural failure of a Dam or Levee. J. Any Claim, liability, alleged liability, loss, cost, or expense caused by, or arising out of, or in connection with the operation of any hospital, clinic (including a mobile clinic), or established health-care facility owned or operated by the Protected Party, but protection does apply to liability arising out of the rendering of emergency medical aid by paramedics, emergency medical technicians, or other Protected Parties who are not acting in the course of their employment by a hospital, clinic, or established health-care facility. Protection also applies for liability arising out of the operation of any hospital, clinic (including a mobile clinic) or established health care facility, owned and operated by the Protected Party for animal care and control purposes. K. Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out of or in connection with the ownership, maintenance, use, or operation by the Protected Party of any Railroad. However, this Exclusion K shall not apply to MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 19 of 30 July 1, 2020 – July 1, 2021 Member maintenance of its own property, such as streets, sidewalks or open areas, located at, near, or crossing Railroad property. L. Any Claim, liability, alleged liability, loss, cost, or expense caused by, based upon or arising out of the Employee Retirement Income Security Act of 1974, Public Law 93-406, or any amendment or addition thereto, or any statute or common law rule which imposes fiduciary duties and responsibilities with respect to employee benefits or retirement plans; however, this Exclusion L. does not apply to liability protected under Employee Benefit Administration Liability. M. Any Claim, liability, or alleged liability for punitive or exemplary damages, fines, penalties or other damages imposed primarily for the sake of example and by way of punishing the Protected Party, including liability of a Member to defend or pay damages where the governing body thereof has elected to provide a defense or pay damages for a Claim, action or judgment for punitive or exemplary damages. N. Any Claim, liability, alleged liability, loss, cost, or expense caused by the intentional conduct of a Protected Party with willful and conscious disregard of the rights or safety of other or with malice. However, where the Protected Party did not authorize, ratify, participate in, consent to or have knowledge of such conduct by its past or present Employee, elected or appointed official or volunteer and the claim against the Protected Party is based solely on its vicarious liability arising from its relationship with such Employee, elected or appointed official or volunteer, this Exclusion N. does not apply to that Protected Party. O. Any Claim, liability, alleged liability, loss, cost, or expense caused by or arising out of any violation of state or federal antitrust or restraint -of-trade laws. P. Any Claim, liability, alleged liability, loss, cost, or expense arising out of 1. The adoption or administrative application of any ordinance, resolution or regulation; 2. The approval or disapproval of any land-use entitlement including but not limited to general plan amendments, zoning amendments, permits, tract maps, development agreements, owner -participation agreements, or disposition-and-development agreements; 3. The approval or disapproval of any rent control ordinance, outdoor advertising ordinance, or adult bookstore ordinance; or 4. The approval or disapproval of the operation of any cannabis dispensary, business, cultivator, or manufacturer; or any ordinances governing that activity and any and all enforcement efforts. 5. The decision by a Member with respect to obtaining water, electrical power, gas or fuel, or other utilities, including decisions relating to the quality thereof; or allocating such water, electrical powe r, gas or fuel, or other utilities, among the users thereof. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 20 of 30 July 1, 2020 – July 1, 2021 This Exclusion P. shall not apply to the physical enforcement of an ordinance, resolution or regulation, such as Tort Liability arising from an Occurrence in the act of delivering a fine, citation, warning, notice or inspection. Q. Any Claim, liability, alleged liability, loss, cost, or expense including Tort Liability: 1. Arising out of or as a consequence of an actual or alleged breach of any contract or agreement; 2. For any amount actually or allegedly due under the terms of any contract or agreement; or 3. Arising out of or as a consequence of the failure, refusal, or inability of a Protected Party or anyone acting on behalf of a Protected Party to enter into or renew any contract or agreement. However, this Exclusion Q. shall not apply to Tort Liability imposed by law for Damages caused by, arising out of, or as a consequence of failure or delay by a Protected Party or anyone acting on behalf of a Protected Party to fully perform any duties or obligations under any contract or agreement. As used in this Exclusion Q., the term “contract or agreement” shall include but not be limited to a Protected Contract or Limited Protected Contract. R. Any Claim, liability, alleged liability, loss, cost, or expense for declaratory, injunctive, equitable or other relief, writs of mandate or prohibition or other prerogative writs, or other relief not seeking Damages. This includes any expense or cost incurred by a Protected Party arising from the cost of reasonable accommodation of any disabled person, including any Employee. S. Any Claim, liability, alleged liability, loss, cost, or expense for Personal Injury or Broadcast/Publication Injury directly or indirectly caused by or arising out of any: 1. Oral or written publication of material, if done by or at the direction of the Protected Party with knowledge of its falsity; 2. Oral or written publication of material whose first publication took place before the beginning of the Protection Period; or 3. Act, omission, or offense committed by a Protected Party with actual malice. T. Any liability for which the Protected Party is obligated to pay damages by reason of liability assumed in a contract or agreement. This Exclusion T. does not apply to liability for Bodily Injury or Property Damage: 1. Assumed in a contract or agreement that is a Protected Contract or Limited Protected Contract; or 2. That the Protected Party would have independent of a written contract or agreement. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 21 of 30 July 1, 2020 – July 1, 2021 U. Any Claim by a Member against a Protected Party, except that this Section U. shall not apply to a Claim brought against the Authority. V. Any Claim by a Member against another Member; or by any present or former Member(s) of any legislative body of the Member against any present or former Member(s) of any legislative body of the Member. W. Any Claim, liability, alleged liability, loss, cost, or expense based upon or a rising out of: 1. Loss of, loss of use of, injury to, destruction of, diminution of value of, disappearance of, or costs of recovery of any money or securities, or any financial loss or default; 2. Refunds of taxes, fees, or assessments; 3. The issuance, management of proceeds or repayment of bonds, notes or other debt instruments by any Member or any agent acting on behalf of such Member; or 4. The purchase, transfer, or sale of any securities by any Member or agent acting on behalf of such Member. X. Any Claim, liability, alleged liability, loss, cost, or expense for Public Officials Errors and Omissions Liability based upon or arising out of: 1. Liability of any Protected Party arising out of estimates of probable costs or cost estimates being exceeded or for faulty preparation of bid specifications or plans including liability for mechanic's lien claims, stop notice claims, change order claims, site differential claims, or similar claims for the value of services or materials provided; this Exclusion X. extends to such claims, however denominated, including claims of breach of oral or written contract, third party beneficiary claims, quantum meruit claims, and/or open account claims; 2. Any Protected Party obtaining remuneration or financial gain to which the Protected Party is or was not legally entitled; 3. Liability assumed by a Protected Party in a contract or agreement, but this Exclusion X. does not apply to liability for Damages that the Protected Party would have independent of the contract or agreement; or 4. Willful violation of penal code or ordinance committed by or with the knowledge or consent of any Protected Party. Y. Under Employment Practices Injury, any Claim, liability, alleged liability, loss, cost, or expense that: 1. Constitutes benefits due or to become due or the equivalent value of such benefits, including but not limited to perquisites, fringe benefits, MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 22 of 30 July 1, 2020 – July 1, 2021 payments in connection with an employee benefits plan, service, disability or industrial disability retirement benefits, severance pay or any other payment other than salary or wages to or for the benefit of an Employee arising out of the employment relationship; 2. Is representative of back salary either unpaid in whole or part or paid at an improper rate to an Employee by the Member; 3. Is based upon, arises from, or is in consequence of the employment reinstatement of the claimant by the Member or the continued employment of the claimant; 4. Is based upon, arises from, or is a consequence of an Occurrence that began prior to this Memorandum's Protection Period; 5. Constitutes front pay, future damages or other future economic relief or the equivalent thereof, if the Member is ordered to reinstate the Employee pursuant to a judgment or other final adjudication, but fails to do so; 6. Is in the form of paid administrative leave; or 7. Is based upon, arises from or is in consequence of an actual or alleged violation of the responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, the Occupational Safety and Health Act, rules or regulations promulgated there under and amendments thereto or similar provisions of any federal, state, or local statutory law or common law. However, with respect to the Exclusion Y., Sections 1. through 7. immediately above, no fact pertaining to or knowledge possessed by any Protected Party shall be imputed to any other Protected Party to determine if protection is available under this Memorandum. Z. Any Claim, liability, alleged liability, loss, cost, or expense for Employee Benefit Administration Liability based upon or arising out of: 1. Any dishonest, fraudulent, criminal or malicious act, libel, slander, discrimination, or humiliation; 2. Failure of performance of contract by an insurer; 3. Failure of any investment plan to perform as represented by a Protected Party; 4. Advice given by a Protected Party to an Employee to participate or not participate in subscription plans; or MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 23 of 30 July 1, 2020 – July 1, 2021 5. The inability of any Employee Benefits Program to meet its obligations due to insolvency or inadequacy of funding. 6. A determination by the Member or its staff that an individual is an independent contractor rather than an Employee, or an Employee rather than an independent contractor, and any consequen t decision whether to enroll the person in an Employee Benefits Program and/or whether to withhold payroll taxes for or on account of that person AA. Any Claim, liability, alleged liability, loss, cost or expense falling within the Protection Provided terms of the "Memorandum of Coverage – Cyber Liability Program” issued by the Authority, "Privacy Regulatory Claims Coverage" or "Security Breach Response Coverage." BB. Any Claim arising from or related to any uninsured motorist or underinsured motorist law and to any sums the Member may be legally entitled to, to recover as Damages from the owner or operator of an uninsured or underinsured Automobile because of Bodily Injury or Property Damage caused by an Occurrence and arising out of the ownership, maintenance or use of such Automobile. Use includes operations and loading or unloading. CC. Asbestos – any Claim, caused by, or arising out of: 1. Inhaling, ingesting or physical exposure to asbestos or goods or products containing asbestos; 2. The use of asbestos in construction or manufacturing any good, product or structure; 3. The removal of asbestos from any good, product or structure; 4. The manufacture, sale, transportation, storage or disposal of asbestos or goods or products containing asbestos; or 5. Investigation or defense of any loss, injury or Damage at any cost, fine or penalty or for any expense of Claim related to any of the above. DD. Criminal Acts – any Claim, arising out of or involving willful violation of a penal statute or ordinance committed by the Protected Party or with the Protected Party’s consent or knowledge. This Exclusion DD. shall not apply until it has been judicially established in fact that the Protected Party did commit such criminal act or willful violation. EE. Landfill – any Claim, arising out of the ownership, operation, maintenance, or control of any permanent landfill site or facility. Landfill includes any site for permanent storage accumulation, burial, compost, sludge, or any other process for reducing or disposing of waste. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 24 of 30 July 1, 2020 – July 1, 2021 V. CONDITIONS AND RESPONSIBILITIES – Excess Liability Program – please see Endorsement for additional definitions A. Inspection and Audit The Authority shall be permitted but not obligated to inspect the Protected Party’s property and operations at any time. Neither the Authority’s right to make inspections nor the making thereof nor any report hereon shall constitute an undertaking, on behalf of or for the benefit of the Protected Party or others, to determine or warrant that such property or operations are safe or healthful, or are in compliance with any law, rule or regulations. The Authority may examine and audit the Protected Party’s books and records at any time during the Protection Period and extensions thereof and within three years after the final termination of this Program, as far as they relate to the subject matter of this Memorandum. B. Severability of Interest The term Protected Party is used severally and not collectively, and the protection afforded applies to each Protected Party against whom a Claim is made as if a separate Memorandum were issued to it, but the inclusion herein of more than one Protected Party shall not operate to increase the per Member Protection Limit. C. Protected Party’s Duties in the Event of Occurrence or Claim 1. In the event of any Occurrence, written notice containing particulars sufficient to identify the Protected Party and also reasonably obtainable information with respect to the time, place, and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the Protected Party to the Authority's Claims Administrator as soon as practicable. 2. If a Claim is made against a Protected Party, the Protected Party shall immediately forward to the Authority's Claims Administrator every demand, notice, summons or other process received by the Protected Party or the Protected Party’s representative. 3. The Authority's Claims Administrator will review the Claim, undertake whatever investigation is indicated, and take appropriate action, depending on the circumstances. A Claim may be returned to claimant as "insufficient," if it does not contain minimum and essential information about the incident or the identity of the claimant. A Claim may also be returned as "late," if the prescribed time for filin g has been exceeded. The Claims Administrator may request that the Member reject the Claim, or take no action until further notice, or such actions may be taken by the Claims Administrator if claims handling authority has been delegated to the Authority by the Member. 4. The Protected Party shall cooperate with the Authority and, upon the Authority's request, assist in making settlements, in the conduct of Claims, attending hearings and trials, securing and giving evidence, MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 25 of 30 July 1, 2020 – July 1, 2021 obtaining the attendance of witnesses and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the Protected Party because of injury or damage with respect to which protection, including any Defense obligation, is afforded under this Memorandum; and the Protected Party shall not, except at the Protected Party’s own cost, voluntarily make any payment, assume any obligation or incur any expense. No Claim shall be settled without the prior written consent of the Authority, and the Authority shall not be required to contribute to any settlement to which it has not consented. The Protected Party shall not take any action whatsoever, subsequent to an Occurrence or Claim that could increase the liability exposure of, or jeopardize the program or Authority in any way. D. Other Protection If collectible insurance or any other coverage or protection with any insurer, any permissibly self-insured general employer, joint powers insurance authority or any other source is available to the Protected Party covering a loss also protected hereunder (whether on a primary, excess or contingent basis), the protection hereunder (including any Defense obligation) shall be in excess of, and shall not contribute with, such insurance or other coverage or protection, provided that this clause does not apply with respect to any insurance purchased by a Protected Party specifically to be in excess of this Memorandum. Under no circumstances shall the protection afforded by this Program be considered primary, pro rata, concurrent or co-existent with such insurance, coverage, or other protection, unless agreed to by the Member through a written agreement approved by the Authority through the issuance of an evidence of coverage letter prior to a loss. Protection Provided under this Memorandum of a Claim, liability, alleged liability, loss, cost or expense also falling within the coverage terms of the Memorandum of Coverage - Cyber Liability issued by the Authority, "Privacy Liability (including employee liability)", "Security Liability", and/or "Multimedia Liability", shall be on an excess and non-contributory basis except that if coverage exists under this Memorandum, it shall apply to the Retention amount in the Memorandum of Coverage - Cyber Liability. E. Termination or Amendment This Memorandum may be terminated or amended at any time in accordance with the Joint Powers Agreement and Bylaws of the Authority. The Executive Committee may adopt exclusions of coverage, copayments, member retain ed limits or deductibles for actions or omissions of a Member that are deemed to be a risk to the program. Such exclusions, copayments, member retained limits or deductibles may be imposed immediately upon adoption by the Executive Committee or as a conse quence of a Member’s failure to adhere to an approved Performance Improvement Plan as defined in the Healthy Member Protocol. The member will be given an opportunity to formally appeal the intended action before the Executive Committee if such a request is made within 14 days from the date the Notice of MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 26 of 30 July 1, 2020 – July 1, 2021 Intent is issued. The Executive Committee will hear any appeal from the member and then take action to either enforce the Notice of Intent or provide additional direction to the Chief Executive Officer. F. Changes to Memorandum Notice to any agent or knowledge possessed by any agent of the Authority or by any other person shall not effect a waiver of or a change in any part of this Memorandum, nor shall the terms of this Memorandum be waived or changed, except by a written addendum issued by the Authority to form a part of this Memorandum. G. Subrogation and Recovery The Authority shall reserve the right to subrogate for any payments made hereunder and to assume the Protected Party’s recovery rights. The Protected Party shall do nothing after loss to prejudice such rights and shall do everything necessary to secure such rights. The Protected Party may waive subrogation rights, but only through written agreement executed before the Occurrence giving rise to the loss. The Authority shall have standing to seek subrogation recovery in its own nam e or in the name of the Protected Party, and the Protected Party shall cooperate with and assist the Authority in pursuing such recovery, including assigning its right to recover subrogated amounts, and if necessary executing a written agreement to effect such assignment. Any amount so recovered shall be apportioned as follows: 1. The Authority shall be reimbursed to the extent of all payment under this Memorandum. Any remaining balance shall be applied to reimburse the Protected Party; 2. The expenses of such recovery proceedings shall be apportioned in the ratio of respective recoveries. If there is no recovery in proceedings conducted solely by the Authority, the Authority shall bear the expenses thereof. H. Assignment Assignment of interest under this Memorandum shall not bind the Authority until its consent is endorsed hereon; if, however, the Member shall be adjudged bankrupt or insolvent, such protection and Defense obligations as are afforded by this Memorandum shall apply (a) to Member’s legal representative, as the Member, but only while acting within the scope of said representative’s duties as such, and (b) with respect to the property of the Member, to the person having proper temporary custody thereof, as a Protected Party, but only until the appointment and qualification of a legal representative. The Member shall not assign, transfer, or pledge all or any portion of the Member’s rights or interests under this Memorandum, and the Authority shall not be liable to any person or entity claiming any such rights by virtue of any reported assignment, transfer, or pledge thereof. The Authority’s denial of a defense shall not relieve the Member from complying with the provisions of this paragraph. Further, any such assignment, transfer, or pledge shall relieve the Authority of all duties, obligations and coverage provided under this MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 27 of 30 July 1, 2020 – July 1, 2021 Memorandum to the Member with respect to the Claim in which the rights were assigned, transferred, or pledged. I. Joint Powers Agreement The provisions of this Memorandum are subject to and subordinate to the terms and provisions of the Joint Powers Agreement creating the Authority, and in the event of any conflict between the terms and provisions of said Joint Powers Agreement and this Memorandum, the terms and provisions of the Joint Powers Agreement shall control. J. Appeal of Disputes No party is entitled to appeal or arbitrate claims under this Memorandum other than the Member. Specifically, Employees are not intended to be third party beneficiaries of this agreement and shall have no right to bring a n action against the Authority for a declaration of rights to protection under this Memorandum. The sole remedy of any Employee shall be the Employee’s right to defense or indemnity against the employing Member under the provisions of the California Government Code. Any disputes concerning coverage, protection, Defense obligations, or procedures of the Program, as interpreted by the Authority’s staff, shall be appealed to the Authority’s Executive Committee in accordance with the following procedures. 1. A written notice that a Claim is not covered by the Memorandum will normally be provided to the Member by the Claims Administrator. A Member may request any determination of a lack of coverage made by the Claims Administrator to be reviewed by the Chief Executive Officer. Such a request shall be in writing and must be made within 90 days of the date of the written notice from the Claims Administrator. 2. Upon request, the Chief Executive Officer shall review a determination of a lack of coverage made by the Claims Administrator or Authority staff and shall send to the Member a written determination of coverage. 3. If a Member disagrees with the coverage determination by the Chief Executive Officer, the Member may appeal the decision to the Appeals Committee. The Appeals Committee consists of the Executive Committee and the chairs of the Managers and Finance Officers Committees. Appeals must be in writing within 90 days of the date of the Chief Executive Officers written decision. The appeal request must state why the Member disagrees with the denial, and the Member should present any information that may have a bearing on the ultimate determination of coverage. 4. The appeal request shall be presented by Authority staff to the Appeals Committee, on a regularly scheduled Executive Committee meeting day, allowing time for sufficient review and agenda deadlines. Staff shall notify the Member in advance of the meeting at which its appeal will be presented. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 28 of 30 July 1, 2020 – July 1, 2021 5. If the Member would like to personally address the Appeals Committee, the Member or the Member's representative may attend the meeting and speak to the issue. 6. The Appeals Committee may refer the appeal to the Coverage Committee and consider the recommendation of the Coverage Committee during its deliberation on the appeal. The Appeals Committee's decision is final. Authority staff will notify the Member of the Appeals Committee's decision in writing. 7. Following a final determination regarding a Claim, consideration of the decision may be reopened at the request of the Member if circumstances change as follows: (1) a new and distinct Claim arising out of the prior Occurrence is presented to the Member, or (2) new and distinct causes of action are added to the Claim. If the new Claim or causes of action are reasonably thought by the Member to be covered, the Appeals Committee will reconsider the issue, in accordance with the procedure in this Section J. Appeal of Disputes, upon request. Any request for such reconsideration must be in writing within 90 days of the notice to the Member of the new Claim or cause of action. If a Member disputes a coverage issue relating to the application or scope of an exclusion, then, during the course of the administrative and arbitration proceedings provided herein, only upon the request of the Member, the Authority shall defend the Claim against the Member and have the right to control any settlement of that Claim, subject to the right of the Authority to recover from the Member any amounts paid out by the Authority for such defense or settlement which are finally determined by the Appeals Committee, or as a result of the Binding Arbitration Process, not to be owed by the Authority under the Program. If the Member does not elect to request such a defense, Defense Costs incurred during the coverage appeal shall be at the sole cost and expense of the Member. K. Arbitration If the Member has followed the coverage appeals procedure ou tlined in Section V.J. Appeal of Disputes and disagrees with the final determination of the Appeals Committee, the Member may request consideration of the coverage issue through the Authority’s Binding Arbitration Process. The Arbitration Process shall be as follows: 1. Following a decision by the Appeals Committee, the appealing Member shall notify the Chief Executive Officer in writing, within 30 days of the Appeals Committee's final decision, that it wishes to participate in Binding Arbitration and shall submit a non-refundable $1,000 arbitration appeal fee. The written notice shall specify the grounds for the arbitration. MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 29 of 30 July 1, 2020 – July 1, 2021 2. Following payment of the arbitration appeals fee, the name of each Member, other than the appealing Member and the Members represented on the Appeals Committee, shall be placed in an unmarked envelope. Each envelope shall be placed in a box and eleven envelopes shall be drawn by the Chief Executive Officer. A representative of the appealing Member may be present at the drawing. 3. The Chief Executives of the eleven Members shall be the pool of potential arbitrators. The eleven Members and the names of their Chief Executives shall be given in writing to the appealing Member. 4. The appealing Member shall have the right to strike two or less names from the pool for any reason which shall not be disclosed. The Authority shall have the right to strike two or less names from the pool for any reason which shall not be disclosed. The appealing Member and the Authority must strike names within five business days of the drawing. The right of either party to strike names shall lapse at 5:00 PM on the fifth day following the drawing. Notice of names stricken by either party shall be given in writing to the other party prior to 5:00 PM on the fifth day following the drawing. 5. The remaining Chief Executives shall be contacted by the Chief Executive Officer to determine their willingness to serve on the arbitration panel. If more than five are willing to serve, each name shall be placed in an unmarked envelope, put in a box, and the Chief Executive Officer shall draw five envelopes from the box. The individuals whose names are drawn shall be the arbitration panel and they shall be disclosed in writing to the appealing Member. 6. If only five are willing to serve, they shall be the arbitration panel. 7. If fewer than five are willing to serve, the name of each member not drawn in the previous selection drawing shall be placed in an unmarked envelope, put in a box, and four envelopes shall be drawn for each arbitration panel position needed to have a five-member panel. A representative of the appealing Member may be present at the drawing. The names drawn shall be disclosed to the appealing Member who may reject, for any reason which shall not be disclosed, one nam e for each four names drawn. The Authority may also reject one name for each four names drawn and shall not disclose the reason. Names rejected by the appealing Member and the Authority must be rejected within 48- hours of the drawing. The right to reject names shall lapse 48-hours following the drawing. 8. The Chief Executives of the Members remaining shall be contacted by the Chief Executive Officer to determine their willingness to serve on the arbitration panel. The names of those willing to serve shall be placed in MEMORANDUM OF COVERAGE: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Memorandum of Coverage Liability Program Page 30 of 30 July 1, 2020 – July 1, 2021 unmarked envelopes, put in a box, and the number necessary to fill out the arbitration panel shall be drawn by the Chief Executive Officer and disclosed in writing to the appealing Member. A representative of the appealing Member may be present at the drawing. 9. This process shall be repeated until five members are obtained for the arbitration panel. 10. The arbitration panel members shall be compensated at the rate of $125 per half-day or portion thereof. If a panel member is required to stay away from home overnight, lodging shall be paid by the Authority. Necessary meals shall be provided for all panel members. Mileage costs shall be reimbursed by the Authority at its standard rate. 11. The cost of the arbitration panel shall be borne by the Authority. The cost of presentation by the appealing Member, including preparation, exhibits, attorneys, and all other costs of the Member shall be paid by the Member. 12. The arbitration panel may request legal counsel that shall be selected by the Chief Executive Officer and paid for by the Authority. Legal counsel shall not be the counsel for the Authority that has advised the staff and Executive Committee. However, counsel for the Authority may participate in or make the presentation to the arbitration panel on behalf of the Authority, as requested by the Chief Executive Officer. 13. The parties to the arbitration shall not be governed by formal rules of evidence. 14. The arbitration panel's decision shall be final and binding on the Member and the Authority. Decisions of the arbitration panel shall be by majority vote. 15. The decision of the arbitration panel shall be written and shall govern the issue decided but may be referred to by the Authority and future arbitration panels for precedent. L. Limitation of Liability Under no circumstances shall the Authority be liable for consequential damages, “bad faith” damages, or any sums beyond the amounts due under Section II. PROTECTION PROVIDED, plus interest at the same rate as the Authority earned on investments for the time period involved. ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 1 of 2 July 1, 2020 – July 1, 2021 Liability Coverage Program Endorsement 1 I. ENDORSEMENT The Liability Program Memorandum of Coverage is amended for members of the Primary and Excess Liability Programs. This Endorsement constitutes an amendment to the coverage found in the 2020 -2021 Liability Memorandum of Coverage for members of the Primary and Excess Liability Programs as follows: II. PROTECTION PROVIDED C. Protection Limit Notwithstanding what is stated in the Cover Page, a Sublimit of $1,000,000 (one million dollars) per Occurrence applies to any claim arising out of Organic Pathogens. The Sublimit is the most the Authority will pay for the total of Damages and Defense Costs arising out of or related to: ORGANIC PATHOGENS 1. All liability or expense arising out of any actual, alleged or threatened infectious, pathogenic, toxic or other harmful properties of any Organic Pathogen, including exposure to any Organic Pathogen; and 2. Any loss, cost or expense arising out of any: a) request, demand, order or statutory or regulatory requirement that any Protected Party or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of any Organic Pathogen, b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of any Organic Pathogen, or 3. All liability or expense arising out of any actual or alleged failure by a Protected Party to properly quarantine those affected by an Organic Pathogen. ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 2 of 2 July 1, 2020 – July 1, 2021 This Endorsement does not apply to Bodily Injury caused by any Organic Pathogen in or on any food or beverages sold, distributed, served or handled by the Protected Party. DEFINITION ORGANIC PATHOGEN “Organic Pathogen” means any: 1. Viruses or other pathogens (whether or not a microorganism); or 2. Colony or group of any of the foregoing. ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 1 of 9 July 1, 2020 – July 1, 2021 Liability Coverage Program Endorsement 2 This Endorsement is issued to: Member Name Member Retained Limit Alhambra $750,000 Azusa $250,000 Commerce $250,000 Hemet $250,000 Irwindale $150,000 La Verne $250,000 Pacific Grove $150,000 San Luis Obispo $500,000 Stanton $100,000 Vista $150,000 West Covina $1,000,000 West Hollywood $250,000 ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 2 of 9 July 1, 2020 – July 1, 2021 I. ENDORSEMENT The Liability Program Memorandum of Coverage is amended for the listed participants in the Excess Liability Program. This Endorsement constitutes an amendment to the coverage found in the 2020 -2021 Liability Memorandum of Coverage for members of the Excess Liability Program as follows: II. PROTECTION PROVIDED A. Payments on Behalf of Protected Parties Subject to all provisions of this Memorandum, the Authority will cause the Program to pay on behalf of the Protected Party all sums above the Member Retained Limit that the Protected Party shall become legally obligated to pay as Damages by reason of Tort Liability imposed by law, or the Tort Liability of others assumed in a Protected Contract, because of: 1. Bodily Injury or Property Damage, including Automobile Liability 2. Personal Injury; 3. Public Officials Errors and Omissions; 4. Broadcast/Publication Injury; 5. Employment Practices Injury; or 6. Employee Benefit Administration Liability caused by an Occurrence during the Protection Period, to which this Memorandum applies. B. Defense and Settlement The Authority shall have no duty to assume charge of investigation or defense of any Claim. However, the Authority shall have the right to assume control of the negotiation, investigation, defense, appeal, or settlement of any Claim which the Authority determines, in its sole discretion, to have a reasonable possibility of resulting in a total of Damages and Defense Costs in excess of the applicable Member Retained Limit. The Member and Protected Parties shall fully cooperate in all matters pertaining to such Claim or proceeding. If the Authority assumes control of the handling of a Claim, the Member and Protected Parties shall be obligated to pay, at the direction of the Authority, any sum as it is incurred, necessary for Defense Costs for the settlement of a Claim or to satisfy liability imposed by law, up to the applicable Member Retained Limit. No Claim shall be settled for an amount in excess of the Member Retained Limit without the prior written consent of the Authority, and the Authority shall not be required to contribute to any settlement to which it has not consented. With regard to Claims that are determined by the Authority to have a reasonable possibility of exceeding the Member Retained Limit, the Authority shall, from the point of such determination, have sole ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 3 of 9 July 1, 2020 – July 1, 2021 settlement authority, control selection of defense counsel, Claims investigation and Claims handling. For Claims which have not yet been determined by the Authority to have a reasonable possibility of exceeding the Member Retained Limit, or for which the Authority determines, in its sole discretion, should continue to be managed entirely within the Member Retained Limit, a collaborative approach is utilized in which the Member: 1. Retains settlement authority, except in cases of death or serious injury, or any Claim type listed in Section VI. CONDITIONS AND RESPONSIBILITIES of the Addendum (claims with catastrophic potential); 2. Retains the right to select defense counsel, from the Authority’s pre- approved defense panel; 3. Receives professional analysis and recommendations on matters such as defense strategy, and other key decisions throughout the claims handling process; 4. Receives regular and frequent communication regarding Claims as they develop; 5. Retains the ability to tailor participation and level of engagement to its preferences; 6. Is required to establish and maintain a trust account for liability claim payments; 7. Is required to use the Authority-designated Claims Administrator; 8. Is encouraged to provide input and guidance concerning procedural preferences for claims handling; 9. Is not permitted to self-administer Claims. C. Reduction of Limits All covered Claim payments for Damages or Defense Costs, which fall within the Member Retained Limit, will reduce the Protection Limit under this Program. D. Partial Coverage And Pre-Tender Fees With respect to a Claim for which the Authority has determined that only a portion is encompassed by this Program, the Authority shall cause the Program to fund any defense of the Claim against the Member and any settlement or final judgment of that Claim above the Member Retained Limit, subject to the reservation by the Authority of the right to recover from the Member any amounts paid by the Authority for such settlement, Defense Costs, or final judgment paid to claimants for Claims, or portions thereof, not encompassed by the Program. ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 4 of 9 July 1, 2020 – July 1, 2021 Expenses incurred prior to the reporting of a Claim, including but not limited to legal fees, Defense Costs and all expenses related to Claim investigation are not covered under this Memorandum, unless such expenses are approved by the Authority in writing. E. Chief Executive Separation Payment This Program will also pay a Chief Executive Separation Payment to an eligible Chief Executive who is separated from employment involuntarily, by the governing body of the Member. A Chief Executive that is forced to resign in lieu of termination will also be eligible for the Chief Executive Separation Payment. The Member Retained Limit shall not be assessed to this coverage. A Chief Executive that is subjected to a Termination for Cause, as defined in this Memorandum, shall not be eligible for the Chief Executive Separation Payment, nor will an interim or acting Chief Executive. The Authority at its sole discretion shall determine eligibility for the Chief Executive Separation Payment. III. MEMBER RETAINED LIMIT A. General Rules The Member Retained Limit shall be applied to the aggregate of all covered Claims arising from an Occurrence as defined in this Memorandum. The Member Retained Limit shall be reduced by both the payment of Damages and Defense Costs. The following general rules apply to Claims within the Member Retained Limit: 1. The Member Retained Limit shall not be impaired by any Claim brought against a Member which is not covered under this Memorandum. 2. The Member agrees not to insure or otherwise reinsure the Member Retained Limit without the Authority’s written permission. 3. This Memorandum will not drop down to assume or satisfy the financial obligations of the Member for Damages or Defense Costs within the Member Retained Limit. The Member Retained Limit can be satisfied only through payments for Damages and Defense Costs actually paid by the Member, to which the Authority has agreed. 4. The Member agrees that in the event of a judgment, settlement, or any Claim payment (including Defense Costs), in excess of the Member Retained Limit, all outstanding amounts within the Member Retained Limit will be due and payable to the Authority upon demand. Such payment must be made before the Authority pays, tenders, or deposits in court, any part of said judgment, settlement, or de fense expenditure. Failure of the Member to comply with this provision will not invalidate the Memorandum, but in the event of such failure, the Authority will be liable only to the extent that it would have otherwise been liable had the Member complied with this provision. ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 5 of 9 July 1, 2020 – July 1, 2021 B. Reserving Policy With regard to the case reserves of individual Claims within the Member Retained Limit, the Authority-designated Claims Administrator, with oversight from Authority staff, shall determine reserve amounts as necessary an d appropriate, in a manner consistent with the Authority’s reserving policy, using reasonable estimates of probable liability exposure, based on facts and circumstances relevant to individual Claims. The Authority-designated Claims Administrator and Authority staff shall inform the Member of large reserve changes and provide the Member with an opportunity to give input concerning the establishment of reserve estimates for large Claims, however the Member’s sole recourse for disputing reserve estimates is to appeal in writing to the Executive Committee. The Executive Committee shall make a determination by majority vote, and the Executive Committee’s determination shall be final and binding. C. Total Incurred Claim Value Trigger Total incurred Claim values, which include actual Claim payments as well as reserves for defense, indemnity, and expenses shall serve as the basis for the Authority determining whether a Claim has a reasonable possibility of exceeding the Member Retained Limit, and therefore trigger the Authority’s control of settlement and disposition of the Claim. At such time as the total incurred value of a Claim exceeds the Member Retained Limit, settlement authority and control of the Claim shall transfer from the Member, and become the sole responsibility of the Authority. D. Transfer Of Settlement Authority Upon transfer of settlement authority from the Member to the Authority as described in Section III.C. Total Incurred Claim Value Trigger of the Addendum, the Authority’s control of settlement and disposition of the Claim is inclusive of the Member Retained Limit; meaning, the Member is required to contribute up to the full amount, if necessary, of its Member Retained Limit in order to pay for Damages and Defense Costs, as those payments become due. The Member shall be notified by the Authority of the transfer of settlement authority from the Member to the Authority. E. Trust Account For Claim Payments The Member agrees to establish and maintain a trust account with a financi al institution for the purpose of paying for Claims, Damages, Defense Costs, and any other covered claims expense within the Member Retained Limit. The Member further agrees to: 1. Grant appropriate authorization to the Authority-designated Claims Administrator to issue checks and/or other methods of payment as necessary; 2. Use the trust account exclusively for liability claim payments covered under this Program; 3. Issue all claim payments through the trust account, meaning: no liability claim payments are to be made or disbursed from other accounts, or ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 6 of 9 July 1, 2020 – July 1, 2021 from any other source without first providing written notice to the Authority; 4. Take reasonable steps to ensure that the trust account is adequately funded so that claim payments can be made without delay, as they become due; 5. In the event that funds in the trust account are inadequate to pay for claim expenses as they become due, the Member shall be notified and required to deposit the necessary funds. If a lack of funding in the Member’s trust account results in a delay in the payment of a settlement, judgment, or any other authorized Claim expense, which subsequently results in fees or penalties, the Member will be solely financially responsible for any and all such costs, arising from the late payment; 6. Provide read-only access for on-line banking to the Authority, to facilitate claim payment reconciliations, and other data management needs of the Authority. F. Authority-Designated Claims Administrator The Member agrees to exclusively utilize the Claims Administrator that has been approved and designated by the Authority, and to report all Claims, regardless of whether the estimated Damages fall within or exceed the Member Retained Limit. Self-administration of Claims under this Memorandum is not permitted. The Authority agrees to take reasonable and appropriate steps to ensure that the designated Claims Administrator is periodically evaluated, and either meets or exceeds performance standards for claims handling and customer service, based on industry best practices. The Authority further agrees to provide appropriate oversight, regulate adjuster caseloads, and ensure that claims administration fees remain fair and equitable. IV. DEFINITIONS A. Member Retained Limit means the amount per Occurrence stated on the cover page that the Member retains as its self-insurance. The Member Retained Limit includes both Damages and Defense Costs. For the purpose of settlement authority determination, the Member Retained Limit includes actual claim payments, and case reserves. B. Protection Limit means the sum of the Member Retained Limit and the Pooled Retained Limit, above which a Claim is tendered to the Program’s excess or reinsurance carriers. V. EXCLUSIONS A. Earth Movement – Any Claim of property damage directly or indirectly arising out of, caused by, resulting from, contributed to or aggravated by the settling, sinking, ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 7 of 9 July 1, 2020 – July 1, 2021 slipping, falling away, caving in, shifting, eroding, mud flow, rising, tilting, or any other subsidence or movement of land. 1. Any Claim, liability, alleged liability, loss, cost, or expense caused by, arising out of or in any way connected with the operation of the principles of eminent domain, condemnation proceedings, or inverse condemnation, by whatever name called, whether such liability accrues directly against the Protected Party or by virtue of any agreement entered into by or on behalf of the Protected Party. This Exclusion A. shall not apply to liability, loss, cost or expense arising from property damage caused by, flooding not caused by the failure of a Dam or Levee, or sewer backup, even though a legal theory upon which a claimant seeks recovery is the principle of inverse condemnation. This Exclusion A shall not apply when the Claim alleges damages arising out of temporary physical measures taken by the Member for public safety reasons in an effort to prevent or reduce a loss. VI. CONDITIONS AND RESPONSIBILITIES A. Authority’s Rights And Duties In The Event Of A Claim For any Claim that has exceeded the Member Retained Limit, or has been determined by the Authority to have a reasonable possibility of exceeding the Member Retained Limit, the following rights and duties apply: 1. The Authority shall have the right and the duty to defend any Claim against the Member seeking Damages on account of such injury as is covered in this Memorandum, after the Claim has exceeded the Member Retained Limit, even if the allegations of the Claim are groundless, false, or fraudulent. 2. The Authority shall conduct the defense of any Claim in the Member’s name and recover in the Member’s name for the Member’s benefit any Claim for Damages or otherwise, against any third party, and the Authority shall have full discretion in the handling of any Claim. 3. The Authority shall have the right to control the litigation and select defense counsel. In the event that there is a coverage reservation of rights between the Authority and the Member, the Authority shall retain its right to select defense counsel and control the defense of the Claim, without waiving its right to pay only those Damages which are covered under the terms of this Memorandum. 4. The Authority has the right, but not the duty, to appeal any judgment. B. Authority’s Right To Control Claims With Catastrophic Potential The Authority reserves the right at its sole discretion to exercise exclusive settlement authority and control over the disposition of certain Claim types, deemed by the nature of the ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 8 of 9 July 1, 2020 – July 1, 2021 allegations to automatically have catastrophic potential. The Authority may, at its sole discretion, exercise this right, commencing at the time the Claim is reported, or at any time during the Claim evaluation process, regardless of whether the Claim falls within or exceeds the Member Retained Limit based solely on established reserves. The Claim types deemed to automatically have catastrophic potential are: 1. Any Claim involving death or serious injury, including but not limited to: spinal cord damage, brain damage, paralysis, loss of limbs, loss of sight or hearing, multiple fractures, damage to major organs, and serious burns; 2. Any Claim involving a proposed or certified class action; 3. Any Claim naming the Authority; 4. Any Claim involving environmental damage or injury with catastrophic potential, including those involving contamination, pollution, toxic chemicals, nuclear, radiation, lead, fungus, mold or asbestos; 5. Any Claim involving terrorism or suspected terrorism; 6. Any Claim alleging sexual misconduct of any type, including rape, abuse, assault, or molestation; 7. Any Claim alleging a civil rights violation with potential for an award of substantial attorney fees. C. Defense Counsel Selection Within the Member Retained Limit, Members retain the right to select defense counsel from the Authority’s pre-approved defense panel. Should the Member desire to retain defense counsel not on the Authority’s pre-approved defense panel, at the Authority’s sole discretion, said counsel may be retained subject to the following provisions: 1. Member selected defense counsel must comply with all Authority litigation guidelines, including reporting requirements, preparation of a written litigation management plan, and litigation budget. The negotiated hourly rate for billing must also be equal to, or less than the Authority’s standard rate applied to the Authority’s pre-approved defense panel. In the event that the hourly rate charged by Member selected defense counsel is greater than the Authority’s standard rate, the Member will be solely financially responsible for the difference, and the difference in cost shall not be considered a covered expense under the Program. 2. Member selected defense counsel must furnish any and all information related to the Claim that is requested by the Authority, and cooperate with any counsel selected by the Authority to monitor or participate in the defense of the Claim. ENDORSEMENT: LIABILITY PROGRAM July 1, 2020 – July 1, 2021 Endorsement Liability Program Page 9 of 9 July 1, 2020 – July 1, 2021 3. If the Authority defends a Protected Party under a reservation of rights, defense counsel will be required to maintain records pertinent to the loss adjustment expenses. These records may be subject to inspection and audit by the Authority, and they may be used to determine the allocation of any loss adjustment expenses for which the Protected Party may be solely responsible, including defense of an allegation not covered by this Memorandum. 4. This Program does not pay for legal fees incurred by general counsel, supplemental counsel, or secondary counsel unless approved in writing by the Authority.