Matter of Michael Khader v City of Yonkers, et al.
Attorneys and Parties
Brief Summary
Municipal law and public-employee defense/indemnification under Public Officers Law § 18 [statute providing defense and indemnification for officers and employees of public entities, including a duty to defend in certain civil actions arising from acts within the scope of employment, except when the action or proceeding is brought by or at the behest of the public entity; also allows private counsel at the entity’s expense when a conflict prevents representation by the entity’s counsel].
The Supreme Court annulled the City’s determination and declared the City must pay Khader’s attorneys’ fees for the Inspector General’s investigation, directing Corporation Counsel to forward a proposed fee contract to the City Council.
The order requiring the City to pay Khader’s attorneys’ fees and to process a contract for such payment.
Because the Inspector General’s investigation was initiated at the behest of the City (Khader’s public employer), Public Officers Law § 18(3)(a) excluded the City’s duty to provide a defense; the City’s determination thus had a rational basis and was not arbitrary and capricious under CPLR 7803(3) [standard of review for agency determinations: arbitrary and capricious, error of law, or abuse of discretion]. Additionally, no valid contract to pay fees existed under the Yonkers City Charter procedure.
Background
In May 2021, a majority of the Yonkers City Council asked the City’s Inspector General to investigate alleged ethical misconduct and a hostile work environment by Michael Khader, then City Council President. The Inspector General issued a subpoena duces tecum. Khader sought representation from Corporation Counsel Matthew Gallagher, who declined due to a conflict but initially stated Khader was entitled "for now" to private counsel under Public Officers Law § 18(3)(b). When Khader’s counsel threatened a special proceeding to quash the subpoena, Gallagher advised such action was outside any authorized defense and that Public Officers Law § 18(3)(a) did not apply to proceedings brought by or at the behest of the City. Khader’s first petition to quash was granted without prejudice; a second, substantively similar subpoena was issued, and the court denied the second petition and compelled compliance on March 11, 2022. On May 12, 2022, Gallagher determined the City would not pay Khader’s legal costs related to the investigation. Khader commenced a hybrid CPLR article 78 proceeding and declaratory action (the court later converted a breach of contract claim under CPLR 103(c) [permits conversion to the proper form of proceeding]).
Lower Court Decision
The Supreme Court (Westchester County) held the article 78 proceeding timely under CPLR 217(1) [four-month statute of limitations for article 78], annulled the City’s May 12, 2022 determination, declared the City obligated to pay Khader’s attorneys’ fees related to the Inspector General’s investigation, and directed Corporation Counsel to forward a proposed contract for payment to the City Council.
Appellate Division Reversal
The Appellate Division reversed on the law, denied the petition, dismissed the proceeding, and remitted for entry of an amended judgment declaring the City is not obligated to pay the fees. The court held Public Officers Law § 18(3)(a) barred any duty to defend where the proceeding was brought at the City’s behest and found the City’s determination rational and not arbitrary or capricious. It further held no valid contract existed because, as required by Yonkers City Charter Art. XIII, § C13-2(D) [procedure for retaining outside counsel when Public Officers Law § 18 applies], Corporation Counsel never forwarded a proposed contract and the City Council never approved one.
Legal Significance
Clarifies that Public Officers Law § 18 does not obligate a municipality to defend or reimburse a public employee for legal fees stemming from an internal investigation initiated at the municipality’s behest, even where the entity’s counsel has a conflict. It also underscores that municipal payment of private counsel requires strict adherence to charter-mandated contracting procedures and approvals; informal statements or preliminary authorizations do not create enforceable obligations.
A municipality has no duty under Public Officers Law § 18 to fund an employee’s defense in a proceeding initiated by the municipality (e.g., an Inspector General investigation), and fee reimbursement requires compliance with the city charter’s formal contract approval process.