title
RESOLUTION - INDEMNIFICATION (B)
A Resolution of the City of Gainesville, Florida, relating to contractual indemnification by the city; and providing an immediate effective date.
recommendation
The City Commission adopt the proposed resolution.
explanation
The City of Gainesville frequently enters into contractual relationships that may vary from purchase orders to multimillion dollar contracts to interlocal agreements. As a practice, the City generally requires other contracting parties to indemnify the City for the negligence both of the contractor and the City. In the past, some parties have refused to indemnify the City for the actions or inactions of the City, and instead ask the City to indemnify them for the actions of the City, its contractors, or third parties. The City can then decide whether to do business with that entity.
In the past, the City has usually refused to indemnify other parties for several reasons, including that the City is entitled to sovereign immunity under the Florida Constitution. Indemnification could be interpreted as a contractual waiver of that sovereign immunity. Additionally, Article VII of the Florida Constitution prohibits a City from pledging its credit to another entity. Indemnification could be viewed as a pledge of the City's credit.
Several months ago, the Florida Supreme Court considered whether a local government can raise the sovereign immunity defense (either the limitations on liability amounts or the liability itself) when the local government waived the sovereign immunity in contract by agreeing to indemnify a private party. Previously, the Attorney General had opined that a local entity could not agree to indemnify by contract a private party, nor could it alter the state'e waiver of sovereign immunity beyond the monetary limits established in section 768.28, Florida Statutes. While the Attorney General's opinion was only persuasive and not binding, the Florida Supreme Court case effectively overturned the position of the Attorney General, and concluded that a local government can contract away its sovereign immunity.
In response to this case, some cities and counties have developed a formal position for the government. One approach is to simply decline to indemnify third parties under all circumstances. We recognize that this approach, in some cases, is not practical. There are times when some exclusive vendors (consultants, experts, exclusive suppliers) will simply choose to not do business with the City.
The City Attorney's Office has developed a resolution for adoption by the City Commission patterned after the approach taken by Hillsborough County. The Resolution formally adopts the general policy that indemnification by the City is not permitted, but allows flexibility by Charter Officers in exigent circumstances.