Some COD trustees may have to pay if Breuder prevails
A recent letter from the law firm that oversees the College of DuPage's insurance policy warns that former board chairwoman Kathy Hamilton and three trustees could be left on their own to pay damages if former President Robert Breuder prevails in a wrongful termination suit against them.
The 14-page letter from attorney John D. Hackett of Cassiday Schade, LLP, came days before Hamilton's abrupt resignation Dec. 13 for undisclosed personal reasons. Breuder sued Hamilton and her three allies on the board as individuals in addition to naming the COD board.
The law firm said the COD board will be covered under its insurance policy with the Illinois Community College Risk Management Consortium, a risk pool of state community colleges including Harper College in Palatine and Oakton Community College in Des Plaines. It also spelled out the consortium's right to deny portions of coverage to the board and to the four individually named defendants for a host of reasons, including if the trustees are found to have been acting outside the scope of their elected roles.
Suburban attorneys versed in insurance law say it's common for insurers to send letters specifying coverage when faced with a lawsuit, but the strong wording makes this case different.
"Threatening to pull coverage if they think that the behavior involved in the case is outside the parameters of the insurance policy, that's not an unusual letter from an insurance company," said Shawn Collins, a Naperville-based attorney and partner at The Collins Law Firm.
However, he said, "whenever there's a serious challenge to the availability of insurance you have to be concerned. You have to take that seriously. (In this case), there is more incentive for an insurance company to claim that there's no coverage here. You're talking about a lawsuit that demands money in the millions of dollars."
According to terms of the coverage, the insurance policy could cover a maximum of $4.9 million of each insurance claim made against the college or the trustees in this case. However, the letter notes, insurance coverage could be denied "for liability related to statements or acts that were not within the scope of their duties as members of the board ... or employees of the college." It also details coverage exclusions if those covered by the policy were found to be "gaining ... any personal profit or advantage to which they were not legally entitled."
A majority of the trustees named in the suit did not responded to requests for comment, but Trustee Charles Bernstein said he wasn't "concerned at all" about the letter suggesting some insurance coverage could be denied.
"I certainly tried to do my best, and I don't think I did act outside of my role (as a trustee)," he said. Cassiday Schade attorneys also did not return calls seeking comment.
Breuder filed the suit in federal court less than 24 hours after he was fired in October. The board's 4-1 vote to fire Breuder voided the school's $763,000 severance package with him, a package approved by the previous board and staunchly opposed by Hamilton and her allies. Those allies include trustees Bernstein, Deanne Mazzochi and Frank Napolitano, all of whom were named defendants.
The lawsuit claims the four decided to terminate Breuder "based solely on their personal interests and political agendas."
Hamilton and her supporters, the suit claims, ran a "malicious and wrongful scheme" that "maliciously tarnished Dr. Breuder's professional reputation" while "trampling on his contractual and constitutional rights."
Hamilton has refused to comment about Breuder's lawsuit. Instead, COD issued a statement saying the board "stands by its action to terminate the employment of Dr. Breuder. It denies the baseless allegations in his lawsuit."
Because the trustees are elected, and therefore inherently political, Collins says it could be hard for the insurer to claim actions were outside the scope of their duties. However, he said, it's a clear warning that the consortium could seek to limit any payouts on behalf of the board and individual trustees.
At the moment, the letter is just a warning to trustees. If an insurance company is going to deny coverage, it must file what is called a declaratory judgment with the court, said Matthew McBride, an Arlington Heights-based attorney.
"From the insurance company's perspective they're trying to reserve all the rights they can," McBride said.
The trustees named in the Breuder suit have until Jan. 11 to respond to the legal complaint. The Cassiday Schade letter notes they are all represented by their "attorneys of choice."