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Municipalities Can Be Held Liable for the Actions (and Words) of Their Officials

August 22, 2017
Publications

by Dana Chilson

Much like a business corporation, a municipality can only act through its employees. A municipal official may inadvertently (or advertently) make representations regarding municipality business, leading to unintended consequences. Municipalities must keep in mind that their agents and employees, including township supervisors and other officials, can bind municipalities to agreements and subject them to liability for breach of contractual obligations.

The Pennsylvania Commonwealth Court decision of Pezzano v. Towamencin Township recently addressed whether a Township can incur contractual liability stemming from the actions of municipal supervisors. In Pezzano, Towamencin Township entered into a confidential separation agreement with an employee, Kevin Pezzano. The terms of the agreement specified that neither Pezzano nor the Township would divulge any information to a third party about the agreement. The Township Board of Supervisors approved the agreement by a vote of 3-2, and the Township’s solicitor signed the agreement. A few days later, the dissenting supervisors, David Mosseo and Harold Wilson, provided statements to a local newspaper. The newspaper published an article which quoted Mosseo and Wilson as saying the Township terminated Pezzano for cause.

In response, Pezzano filed numerous claims against Mosseo and Wilson, individually, as well as a breach of contract claim against the Township. The trial court found that Mosseo and Wilson were entitled to official immunity because they acted within the scope of their authority as township officials and dismissed the claims against them. The trial court likewise dismissed the claim against the Township because, since Mosseo and Wilson were not parties to the agreement with Pezzano, their actions could not constitute a breach on the part of the Township.

On appeal, the Commonwealth Court disagreed and ruled that the Township could be held liable for breach of contract because Supervisors Mosseo and Wilson were agents of the Township. Consequently, even though an agent of a municipality, such as a township supervisor, may not be personally liable for his or her actions, the municipality itself may still be held liable if its agent breaches an obligation of the municipality.

Pezzano leaves us with some important takeaways. When a municipality is bound to a contract, it will be held vicariously liable for actions by its agents, servants, and employees which amount to a breach of its contractual obligations.  Individuals authorized to act on behalf of a municipality, such as a supervisor, mayor, council member, or manager, will be considered agents if their actions are within the scope of their authority. Accordingly, municipal officials must act and choose their words carefully. To avoid potential problems, officials should keep abreast of their municipality’s contractual and other legal obligations, and think carefully before making statements regarding the municipality.

Liability arising from the actions of officials is only one example of the issues faced by municipalities and other local government organizations. The Public Sector Group at McNees Wallace & Nurick can assist solicitors and municipal officials in navigating the unique legal issues that face governmental entities of all sizes.

The author extends a special thanks to summer associate Logan Hetherington for assisting in preparing this article