Small town, big problem: Lawsuits, police cost Oakley its insurance

[Dave]

My biggest question here is why does a town with 300 residents need a reserve police force of 100? Seems a bit much to me and obviously to others as well.

OAKLEY, MI — Just 300 people live within the square-mile border of the village of Oakley. 

Today, the small community in southern Saginaw County has a big problem.

The village, its officials and its police chief are the target of a number of lawsuits, primarily filed by owners of the Family Tavern of Oakley.

The tavern owners are questioning, among other things, the village police department's need to have a reserve officer force of nearly 100 volunteers, who are allowed to carry weapons.

The controversy and mounting legal costs have gotten the attention of the village's insurance provider, the Michigan Municipal League. It plans to drop Oakley's policy when it expires July 1.

The policy covers the police department, village officials, vehicles, the Village Hall and more from civil claims, property damage and other liability. A new policy could cost Oakley upwards of $100,000 a year, nearly 10 times the current rate.

Village President Doug Shindorf says he understands why Oakley's insurer wants to part ways with the community.

"It's been over $180,000 to defend these cases," Shindorf said. "They can't afford it. This is a pool for all the villages."

Small town, big issues

Oakley, incorporated in 1887, is located on M-52 about 30 miles southwest of the city of Saginaw.

The village is a collection of buildings including the town hall, three churches, two bars, a hair salon, convenience store and a few other businesses. Grain elevators at Frutchey Bean Co. are visible near the center of town.

One of the village's biggest events is an annual motorcycle run hosted by the Oakley Family Tavern.

Dennis Bitterman

Dennis and Shannon Bitterman own the tavern. Dennis Bitterman has been a village trustee since 2012. That hasn't stopped him and his wife from taking legal action against the community.

Shannon Bitterman takes issue with the way the police department is run and points to enforcement during the bike run as a main concern.

"We can't tell an officer from a reservist," she said. "They dress in a police-like uniform and report to the police. We don't know who they are. Others are in plain clothes."

One lawsuit filed by Dennis Bitterman and a Family Tavern staff member alleges police harassment and intimidation. Another is based on a Freedom of Information Act request to disclose information about the Oakley police reservists.

Oakley Chief of Police Robert Reznick says his police department's operation isn't the problem.

"It's not about sides or us against them, it's about what's right," Reznick said. "And what's going on with them is not right, and it hasn't been."

The police department is funded almost entirely by donations, many given by the reservists. The donations have kept the village flush with cash and paid for many amenities it could not otherwise afford, supporters say.

Insurance trouble

In January, The Michigan Municipal League informed the village that its insurance policy will not be renewed on July 1.

The decision is based on frequency of claims and also "the Village of Oakley Police Department’s lack of cooperation and commitment with MML Liability and Property Pool risk management efforts," according to the League.

Mike Forster is the administrator of the Municipal League's insurance pool. He said about 400 government authorities take advantage of the insurance offered by the nonprofit self-insurance program that's owned, operated and governed by its member communities.

Soon, Oakley will drop from that list.

"The decision to not renew coverage with a community is not taken lightly," Forster said via email. "It is unusual for the Michigan Municipal League Liability & Property Pool to take this action, but it is not unique."

Here's what the Municipal League had to tell Oakley about its decision to drop its insurance coverage:
 

The decision to non-renew the Village of Oakley was an underwriting decision based on the Village’s claim frequency and the Village of Oakley Police Department’s lack of cooperation and commitment with MML Liability & Property Pool risk management efforts.
 

Since 7-1-2010, the Village has incurred seven claims and the Pool has incurred $4.51 for every dollar of premium paid to the Pool. Five of these claims occurred in policy year 2012 and four of the five were under the coverage of Public Officials Liability (wrongful acts).

Oakley Chief of Police Robert Reznick

Regarding the claim of a lack of cooperation by the police department, Chief Reznick said, "I don't know what they are talking about."

"We never had an audit or a phone call from them," he said.

Shindorf agrees that the league did not say anything about police department issues until the village received a non-renewal notice.

"We've been with the Michigan Municipal League all these years, and they never said anything about the police department," he said.

However, the league warned the village about the number of lawsuits in the past, Shindorf said.

Lawsuits filed by the Bittermans since 2010 include:

• Family Tavern of Oakley owner Dennis Bitterman and its staff member Aileen Gengler alleging harassment and police intimidation from Chief of Police Rob Reznick.
• Shannon Bitterman filed a lawsuit regarding a Freedom of Information Act (FOIA) request made to the village and a subsequent denial from the village. The FOIA request was made to receive an audio recording of a village council meeting and disclosure of contact information for each member of the Oakley Police Reservists.
• Shannon Bitterman filed a lawsuit claiming the Police Board Committee members held secret “breakfast” meetings at undisclosed locations. The suit also alleges other violations of the open meetings act by the village. 
• Shannon Bitterman filed a lawsuit claiming Clerk Cheryl Bolf altered council meeting minutes. 
• Dennis Bitterman and Shannon Bitterman filed a lawsuit against the village regarding a dispute about a road in the village and ownership of a pond.
  

Shindorf points to one of the lawsuits against the village that alleges the police committee, a panel formed to investigate complaints against the chief, had secret breakfast meetings. He argues the case has no merit, "but it's going to cost thousands to fight."

Shannon Bitterman

Shannon Bitterman said she had no other choice than to take legal action against the village. 

"We spent a good year and a half trying to avoid a lawsuit," she said. "We took a spanking from the police department. For a year and a half we begged the village council to let (Reznick) go. They didn't want to because he was bringing in so much money."

She said the other issues followed her complaints against Reznick. 

"We would not be here today if he was let go."

Village budget impact

A rough figure of what the village paid per year for insurance coverage is $11,365, according to the Municipal League.

Over four years, the village would have incurred estimated insurance costs of about $205,000, based on the $4.51 multiplier. The league could not confirm that amount.

Village of Oakley trustees talked about loss of insurance coverage at their March 11, 2014, meeting. The village's contract for insurance through the Michigan Municipal League will expire July 1, 2014, and will not be renewed, according to a notice sent to the Village of Oakley Jan. 22. Brad Devereaux | Mlive.com

Today, Shindorf said the village is searching for a new insurance provider.

"Other insurance companies will take us on," he said.

But an insurance policy from outside the league is "going to cost the village more, there's no doubt about it," he said.

Clerk Bolf said during the March 11 village board meeting that an estimate from one agency came in at $108,000.

Board member Francis Koski said he does not believe the village will be able to find an insurance plan through another agency. He complained that he and board member Dennis Bitterman were not notified that the town would lose its insurance until weeks after other board members and that it was not brought up at the February board meeting, though some village officials were aware.

Shindorf said this is the first time the village has had a problem of this magnitude in the 37 years he has been on the board.

Village President Douglas Shindorf

He said one possibility is that the town could pay for lawsuits out of the village's general fund budget.

"The village has to defend against them," he said. "The only difference is the village would counter-sue for court costs."

That is something the current insurance carrier, Meadowbrook Insurance, through the Michigan Municipal League, does not do, Shindorf said.

"We've also thought of everybody resigning and giving the village back to the township," he said, but that's not an option he wants to pursue. "I'm not going to fail the people of the village."

http://www.mlive.com/news/saginaw/index.ssf/2014/03/small_town_big_...

[Willy]

If I lived in Oakley, I would be embarrassed about what's going on and the money that is being wasted.