Tacoma's liability insurance carrier says the city might not be covered for judgments or settlements in the David Brame shootings, according to one of the city's attorneys.
"What they're saying is there may or may not be insurance coverage, and that's a very, very important issue," said Tim Gosselin, one of the attorneys defending the city in the $75 million wrongful death claim against it.
In a three-page letter to the city, TIG Insurance Co. listed a number of reasons that coverage under the $5 million policy might be denied.
•Injuries that result from "willful violation" of the law that was committed by or with the consent of the insured.
•And "public officials' errors or omissions for any claim or suit ... arising in whole or in part out of the willful violation of a penal code or ordinance committed by or with the knowledge or consent of any insured or fraud, dishonesty or bad faith of any insured."
A lawyer for the insurance company said the letter was routine and does not mean city's coverage is in jeopardy.
The claim was filed June 9 by the family of Crystal Brame, who died a week after she was shot by her husband, Tacoma Police Chief David Brame, in the midst of a contentious divorce.
David Brame, using his department-issued handgun, committed suicide after shooting Crystal on April 26. The deadly drama unfolded within sight of the couple's two children, Haley, 8, and David Jr., 5.
The Tacoma City Council unanimously denied the wrongful death claim Aug. 5 and authorized its attorneys - Gosselin and other members of the Tacoma law firm of Burgess Fitzer - to begin settlement talks.
If a settlement were reached, it likely would be paid in part by the city's $3 million self-insurance fund and then by its $5 million liability insurance policy, depending on the agreed amount. Any amount over $8 million would again fall to the city, though Tacoma has only about $1 million in its insurance reserve fund, city officials have said.
But the letter from TIG Insurance Co. on behalf of the city's carrier, Clarendon America Insurance Co., serves notice on the city that provisions in the policy might keep the company from having to pay, Gosselin said.
Frank Steeves, an attorney for Napa, Calif.-based TIG, however, called the letter a routine insurance company tool to preserve its rights while the facts of the case are investigated.
"It would be wrong to say that coverage is in danger, because it's not," said Steeves, chairman for litigation and risk management at the Milwaukee law firm of von Briesen & Roper.
Steeves said so-called "reservations of rights" letters simply give the insurance company time to learn more about the case before deciding whether to make a payout or to deny coverage because provisions of the policy were violated.
Such a letter spells out what provisions the company thinks could be in question, based on the information it has at the time, he explained.
"The City of Tacoma may never hear of it again," Steeves added. "The norm is it's treated as regular coverage and it's paid." Though insurance companies have a responsibility to act in good faith, Gosselin worries "the fact they've reserved the right to opt out could give them the incentive" to find and use a loophole.
He's also concerned about a paragraph in the insurance company's letter saying the company would consider the policy violated if the city or any of its employees talked about the case publicly, made any admissions "or cast blame on any past or present City of Tacoma employee" without getting an OK to do so from the city's attorneys.
"I'm not sure why Clarendon put that in," Gosselin said. "I'm not sure it's an accurate statement. It should be for us to advise our client on that."
Gosselin said the city would do what the insurance policy requires - and that includes the company's involvement in any settlement decision.
The paragraph concerning comments about the Brame case worries City Manager Jim Walton.
"They're saying that if we talk very publicly about this without consulting our attorney, we run the risk of losing our coverage," he said.
"It very well could affect employees talking in the press, and expressing their thoughts and ideas could be problematic," he added.
"But we continue to be open and cooperative to the investigative process."
At the time the council denied the claim, Mayor Bill Baarsma said the city wants to avoid a lengthy lawsuit.
"We've experienced a tremendous amount of tragedy and no purpose would be served by spending millions of dollars on a lawsuit," he said. Providing for the Brame children would be a far better use of any money the city might spend in court, Baarsma said.
But city officials also have said they're concerned about how Tacoma might pay a large settlement or court award. Worried about looming budget cuts and rising insurance costs, the city reduced its liability coverage from $20 million to $5 million a year ago.
Paul Luvera, the attorney for Crystal Brame's family, has said the case is less about money than it is about learning how David Brame, a man with a rape allegation in his past, could be promoted to police chief and why city officials ignored warnings that he might be dangerous.
"Dangling money in front of the family by the city is to me offensive unless it includes full disclosure" of the facts in the case, Luvera said earlier this month.
A settlement also would require what he called "a realistic and genuine program by the city to ensure that this does not happen again."
Kris Sherman: 253-597-8659