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November 29, 2012 (Special Meeting) Page 1304
<br />Koch: I didn't point this out for the benefit of the clerk, but there is a
<br />statute that requires her to specifically record each person's vote. And if
<br />she doesn't do so correctly, she forfeits her office. Seriously, no, that
<br />liability only runs to those who vote to approve the bond, if that bond turns
<br />out to have an issue (inaudible). And that's the reason for that other
<br />statute.
<br />Burrage: Is that not true with any bond that we approve?
<br />Koch: I believe that is the law. Yes, sir.
<br />Burrage: Whether it be the sheriff's department or the register of deeds or
<br />whatever.
<br />Koch: Yes, sir.
<br />Poole: Any other legal questions of Rich?
<br />White: Yes, what is the timeframe of liability? And what I mean by that is
<br />if a cause of action takes place in - on December the 5 th - if everything's
<br />approved, if cause of action takes place December 5, 2012 that is the
<br />responsibility of these five members of the commission.
<br />Koch: That is correct. As I read the statute, and some of the annotations
<br />related to it, it would be those who voted for the bond whether he's still in
<br />office or not. I'm anticipating that was really the (inaudible) of your
<br />question.
<br />(Multiple people speaking)
<br />Koch: Sir?
<br />White: It's in perpetuity, is that if the event took place on December 5,
<br />2012 and is not discovered until 2019, the five - whoever voted for that bond
<br />- is responsible or could be responsible in 2019 for the error that took
<br />place in 2012.
<br />Koch: Subject to any statute of limitations or statute of repose that would
<br />put a time limit on it, and I'm not exactly sure what those would be under
<br />that - that situation.
<br />White: I mean, cause we're talking about real property for the most part and
<br />if it's purchased during the next four years, it may not be sold for 10, 15,
<br />25 or 30 years down the road and the defect would not be known, potentially,
<br />until then. Right?
<br />Koch: Conceivably, yes.
<br />White: The $50,000, is that for all occurrences that take place in the four
<br />years or each individual occurrence over the next four years?
<br />Koch: That might be a better question for Mr. Harris because he's our
<br />resident insurance expert, but my understanding is that it's for each
<br />occurrence.
<br />White: So-
<br />Koch: It's not a cumulative type of situation. The statutes, and I run
<br />across that just looking for some other things, but I think that is correct.
<br />It's for each occurrence until the bond is revoked or until the bond expires.
<br />White: And so we are, those who vote in favor, are stepping in the shoes of
<br />the surety for whatever errors that take place up to $50,000 for each
<br />occurrence.
<br />Koch: That would be correct.
<br />White: And that is-
<br />Koch: If the bond is, if there becomes an issue with the bond.
<br />White: I understand. And that's joint and several liability.
<br />Koch: Statute doesn't say that, but I would believe that under the law it
<br />would be joint and several liability. Which I know Mr. White knows this, but
<br />for the benefit of the other members of the commission means that if for
<br />example, three or four or five voted to approve the bond, that if there turns
<br />out to be a problem with it for which there is a liability of $50,000, just
<br />to pick a number, that the surety - or excuse me - the party who suffered the
<br />loss could collect 50 out of one, 10 out of each of you, 25 out of two and
<br />nothing out of the others - whatever they were able to so do. That's what
<br />the concept of joint and several liability means. It's not just divided
<br />equal, it's the individual potential exposure of any one commissioner who
<br />voted for it would be for whatever the total loss was if the others weren't
<br />able to respond and pay some share.
<br />White: If Western Insurance Company - or the bonding company - goes off the
<br />bond, what is the recourse of the commissioners at that time?
<br />Koch: If they go off the bond as in they revoke it?
<br />White: They find defect in the application or they get more information and
<br />say we're not going to bond it for the balance of the four years. Or well -
<br />it's four years, so it doesn't matter, once it's approved it's for four
<br />years, but if they find information out that makes them concerned and they go
<br />off the bond, what happens then?
<br />Koch: In that instance then there would presumably be some effort to secure
<br />a replacement bond for the balance of the term. If that was not able to be
<br />accomplished, then I believe the statutes say that if no other type of
<br />bonding mechanism can be put in place, because a surety bond is only one of
<br />the statutory options: a cash bond, a property bond, individual sureties
<br />that aside from a corporate surety are also options; but if none, if a bond
<br />can't be in place, because the statute requires there be a bond and if there
<br />isn't a replacement bond in place then my understanding of the statutes is
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