No Duty to Defend in Employer‑Initiated Inspector General Investigations under New York Public Officers Law § 18: Commentary on Matter of Khader v. City of Yonkers

No Duty to Defend in Employer‑Initiated Inspector General Investigations under New York Public Officers Law § 18:
Commentary on Matter of Khader v. City of Yonkers, 2025 NY Slip Op 06321 (2d Dep’t)

I. Introduction

The Appellate Division, Second Department’s decision in Matter of Khader v. City of Yonkers clarifies an important and recurring issue in New York public-sector law: when a municipality must pay for the legal defense of one of its own officials under Public Officers Law § 18.

The case arises from an internal ethics and workplace-conduct investigation initiated by the Yonkers City Council against its own Council President (Michael Khader) and conducted by the City’s Inspector General. The core dispute is whether the City of Yonkers was obligated to:

  • defend Khader in connection with the Inspector General’s investigation, and
  • reimburse him for the attorneys’ fees he incurred, including in related proceedings to quash subpoenas.

The Second Department reversed the Supreme Court, Westchester County, and held that:

  • the City had no duty under Public Officers Law § 18 to provide a defense or reimburse attorneys’ fees for an investigation brought at the behest of the public employer itself, and
  • no enforceable contract for fee reimbursement came into existence because the procedural requirements of the Yonkers City Charter were never satisfied.

In doing so, the court confirmed and extended the principle that an internal investigation or proceeding triggered by governing officials of the public entity is treated, for purposes of § 18, as a civil proceeding brought “by or at the behest” of the employer, thereby excluding it from the statute’s defense and indemnification regime. The opinion also reinforces strict rules on when municipalities can be bound to pay for outside counsel.

II. Background and Procedural History

A. The Underlying Investigation

In May 2021, a majority of the Yonkers City Council asked the City’s Inspector General to investigate allegations that:

  • Michael Khader, then the Council President, had engaged in ethical misconduct, and
  • he had created a hostile work environment.

In response, the Inspector General opened a formal investigation and, in June 2021, issued a subpoena duces tecum to Khader, seeking production of specified documents.

B. Request for Defense under Public Officers Law § 18

On June 9, 2021, Khader requested that Matthew Gallagher, the Corporation Counsel for the City of Yonkers, provide him with legal representation in connection with the Inspector General’s investigation.

Gallagher responded that:

  • he could not personally represent Khader due to a conflict of interest, but
  • he had determined “for now” that Khader was entitled to representation by private counsel of his choice under Public Officers Law § 18(3)(b).

Khader thereafter retained private counsel.

C. Efforts to Quash the Inspector General’s Subpoenas

Khader’s counsel:

  • asked the Inspector General to withdraw the subpoena, and
  • notified Gallagher that if it were not withdrawn, Khader would commence a CPLR Article 78 special proceeding to quash it.

On June 15, 2021, Gallagher advised that:

  • any special proceeding to quash the subpoena would fall outside the scope of representation he had authorized, and
  • the costs of such a proceeding would be Khader’s own responsibility.

On July 1, 2021, Gallagher further clarified his position:

  • Public Officers Law § 18(3)(a) excludes from coverage civil actions or proceedings brought “by or at the behest” of the public entity employer;
  • the Inspector General was acting on behalf of the City in the investigation; and
  • in any event, prosecuting a proceeding (i.e., filing a petition seeking affirmative relief against the City) would not fall within the statute’s duty to provide a “defense.”

Notwithstanding this position:

  • Khader commenced a special proceeding to quash the first subpoena; the Supreme Court quashed it without prejudice.
  • The Inspector General then issued a substantively similar second subpoena.
  • Khader filed a second proceeding to quash; in a March 11, 2022 order, the Supreme Court denied the petition and granted the Inspector General’s cross-motion to compel compliance.

D. Denial of Attorneys’ Fees and the Hybrid Proceeding

After the second subpoena proceeding, Khader’s counsel sought reimbursement of attorneys’ fees. On May 12, 2022, Gallagher formally notified counsel that, in light of Public Officers Law § 18(3)(a):

  • any legal costs incurred in connection with the Inspector General’s investigation (and related proceedings) would be Khader’s own expense.

Khader then commenced a hybrid matter:

  • a proceeding under CPLR Article 78 to review Gallagher’s May 12, 2022 determination; and
  • an action seeking, among other things:
    • declaratory relief that the City was obligated to pay his attorneys’ fees, and
    • damages for breach of contract.

He sued:

  • the City of Yonkers, and
  • Gallagher in his official capacity as Corporation Counsel.

E. Supreme Court: Conversion and Judgment for Khader

In an order dated March 24, 2023, the Supreme Court, Westchester County:

  • converted the breach-of-contract cause of action into an additional CPLR Article 78 claim (pursuant to CPLR 103(c)), and
  • effectively treated all key issues as reviewable administrative determinations.

Then, in a judgment dated July 5, 2023, the court:

  • in effect granted the petition,
  • annulled Gallagher’s May 12, 2022 determination,
  • declared that the City was obligated to pay Khader’s attorneys’ fees incurred in connection with the Inspector General’s investigation, and
  • directed Gallagher to forward a proposed contract for payment of those fees to the City Council.

The City and Gallagher appealed.

F. The Appeal to the Second Department

On appeal, the City and Gallagher challenged:

  • timeliness of the Article 78 proceeding, and
  • the merits of the Supreme Court’s determination that the City was obligated to pay fees under Public Officers Law § 18 or by contract.

The Second Department:

  • rejected the timeliness defense, but
  • reversed on the merits and dismissed the proceeding.

III. Summary of the Opinion

The Second Department’s holdings can be summarized as follows:

1. Timeliness under CPLR 217(1)

The Article 78 proceeding was brought within the applicable four-month statute of limitations. The limitations period began with the May 12, 2022 determination definitively stating that the City would not pay any attorneys’ fees related to the Inspector General’s investigation. Khader filed his petition within four months of that date.

2. Application of Public Officers Law § 18

Public Officers Law § 18, where adopted by a public entity, generally obligates the entity to:

  • provide a legal defense, and
  • indemnify against certain judgments

for its officers and employees for actions taken within the scope of their duties. However, there is a key statutory exception:

“[T]he duty to provide for a defense shall not arise where such civil action or proceeding is brought by or at the behest of the public entity employing such employee.” (Public Officers Law § 18(3)(a))

The court held that:

  • the Inspector General’s investigation was commenced at the behest of Khader’s employer (the City of Yonkers, acting through the City Council); and therefore
  • the City had no duty under § 18 to provide or fund a defense for Khader in that investigation.

Accordingly, the determination that Khader was not entitled to reimbursement of attorneys’ fees had a rational basis and was not arbitrary or capricious.

3. No Contractual Right to Attorneys’ Fees

Khader also argued that:

  • Gallagher’s initial communication effectively authorized him to retain private counsel at City expense, thereby forming a binding contract for reimbursement.

The court rejected this theory. It held that:

  • New York law strictly limits municipal liability for attorneys’ fees to situations where counsel is retained pursuant to statutory authority, and
  • the Yonkers City Charter establishes specific procedures that must be followed before a binding contract for outside counsel can arise.

Under Yonkers City Charter Art. XIII, § C13-2(D):

“[a]ny city officer or employee entitled to counsel pursuant to Public Officers Law § 18, shall inform the corporation counsel of the counsel who will represent the officer or employee. The corporation counsel shall forward to the City Council a proposed contract for such counsel and the Mayor shall submit a budget transfer to fund the proposed contract. If approved by the City Council, the corporation counsel shall enter into the contract with the officer’s or employee’s counsel.”

Here, it was undisputed that:

  • the Corporation Counsel never forwarded a proposed contract to the City Council, and
  • the City Council never approved any contract for Khader’s outside counsel.

Therefore, no valid contract for the payment of attorneys’ fees was formed, and there could be no breach of contract.

4. Disposition

The Second Department:

  • reversed the Supreme Court’s judgment,
  • denied the petition and dismissed the proceeding, and
  • remitted the matter to the Supreme Court for entry of an amended judgment declaring that the City of Yonkers is not obligated to pay Khader’s attorneys’ fees in connection with the Inspector General’s investigation.

IV. Detailed Analysis

A. CPLR Article 78 Timeliness and Accrual

CPLR 217(1) imposes a four-month statute of limitations on Article 78 proceedings, running from the time the administrative “determination to be reviewed becomes final and binding upon the petitioner.” The City argued that the proceeding was time-barred, presumably on the theory that Gallagher’s earlier communications in June–July 2021 constituted the relevant determination.

The court rejected this, expressly citing:

  • Matter of McCrory v Village of Mamaroneck Bd. of Trustees, 230 AD3d 786, 789; and
  • Matter of Andrews v Incorporated Vil. of Freeport, 221 AD3d 809, 811.

Those cases stand for the proposition that:

  • a limitations period generally runs from a clear, final, and definitive determination that has an impact on the petitioner and
  • prior informal or tentative communications do not necessarily trigger the statute of limitations.

Applying that framework, the Second Department held that:

  • the operative determination was the written communication of May 12, 2022, in which Gallagher definitively informed counsel that the City would not pay any legal costs related to the investigation, and
  • Khader filed his petition within four months of that date, so the proceeding was timely.

While timeliness was resolved in Khader’s favor, it set the stage for the central substantive question: was the denial of fees lawful and rational under Public Officers Law § 18?

B. Public Officers Law § 18: Structure and Policy

Public Officers Law § 18 provides a standardized defense and indemnification scheme for officers and employees of public entities (municipalities, school districts, etc.) that choose to adopt it. At a high level, § 18:

  • authorizes a public entity to defend and indemnify employees sued or proceeded against for acts within the scope of their public duties;
  • prescribes how a defense is provided (including by corporation counsel or designated counsel); and
  • addresses conflict-of-interest and reimbursement for private counsel in certain circumstances.

Three subsections are central here:

  • § 18(3)(a) – General duty to defend and key exclusion;
  • § 18(3)(b) – Right to private counsel where the public entity’s own counsel has a conflict of interest;
  • § 18(2) – Applicability where the municipality has formally adopted the statute.

1. Duty to Defend: § 18(3)(a)

Section 18(3)(a) provides, in substance, that:

  • a public entity must provide for the defense of an employee in any civil action or proceeding arising from acts within the scope of employment, except where the action or proceeding:
    • is brought “by or at the behest” of the public entity itself.

This exception reflects a clear policy choice: the statute is designed primarily to protect employees from outsider claims—not to fund legal conflict between an employee and the employer itself.

2. Conflict and Private Counsel: § 18(3)(b)

Section 18(3)(b) provides that:

  • if the public entity’s chief legal officer (e.g., corporation counsel) cannot defend the employee due to a conflict of interest, the employee is entitled to select private counsel, and
  • the public entity must pay reasonable attorneys’ fees and litigation expenses for that counsel.

But critically, § 18(3)(b) applies only if the underlying duty to defend under § 18(3)(a) is triggered in the first place. If the case falls within an exception to the duty (such as the “brought by or at the behest” clause), there is no baseline duty to defend—and thus no corollary duty to pay for private counsel, even if the public entity’s own counsel would otherwise have a conflict.

3. “Brought by or at the Behest” of the Employer

The phrase “brought by or at the behest of” the public entity is central to Khader’s case. It covers:

  • actions directly initiated by the public entity (e.g., disciplinary lawsuits), and
  • proceedings initiated by or through a body or officer acting for the entity at the entity’s direction or request.

In Matter of Barkan v Roslyn Union Free School Dist., 67 AD3d 61 (2d Dep’t 2009), the Second Department held that a disciplinary proceeding initiated by a school district against its employee was a proceeding “brought by or at the behest” of the employer, and therefore excluded from § 18’s defense obligation. Khader builds on this reasoning to encompass investigations by a municipal Inspector General prompted by the City Council.

C. Application to Khader: Investigation at the Employer’s Behest

The Second Department’s decisive move was to characterize the Inspector General’s investigation as:

  • a “civil action or proceeding,”
  • “brought by or at the behest” of Khader’s public employer, the City of Yonkers.

The opinion largely relies on the textual structure of § 18 and on Barkan:

“Here, the Inspector General commenced the investigation into the petitioner at the behest [of] the petitioner’s employer, and therefore, the City had no duty to provide the petitioner with a legal defense in relation to the Inspector General’s investigation (see id. § 18[3][a]; Matter of Barkan v Roslyn Union Free School Dist., 67 AD3d 61, 65).”

Key implications:

  • The majority’s formal request to the Inspector General is treated as the City acting in its institutional capacity.
  • The Inspector General’s acts in conducting the investigation are regarded as actions on behalf of the City itself.
  • The issuance of subpoenas as part of that investigation is considered part of a “civil … proceeding” within the meaning of § 18(3)(a).

Thus, the threshold duty to defend never arose because the matter fit squarely within the statutory exclusion. Consequently:

  • Gallagher’s later refusal to pay any attorneys’ fees had a rational basis in the statutory text, and
  • the Supreme Court erred by effectively rewriting § 18 to cover employer-initiated internal investigations.

D. Standard of Review under CPLR Article 78

Article 78 review of an administrative determination such as Gallagher’s May 12 decision to deny fee reimbursement is sharply limited. Under CPLR 7803(3), courts examine whether the determination:

  • was made in violation of lawful procedure,
  • was affected by an error of law, or
  • was arbitrary and capricious or an abuse of discretion.

The Second Department cites:

  • Matter of Lemma v Nassau County Police Officer Indem. Bd., 31 NY3d 523, 528, and
  • Matter of Peckham v Calogero, 12 NY3d 424, 431, including the oft-quoted formulation that a determination is arbitrary and capricious when taken “without sound basis in reason or regard to the facts.”

Applying that framework, the court held that:

  • Gallagher’s determination was not arbitrary and capricious because it was directly anchored in the statutory language of Public Officers Law § 18(3)(a) and in precedents like Barkan.

Put differently, once the court concluded—as a matter of statutory interpretation—that the investigation was brought at the employer’s behest, Gallagher’s refusal to pay fees was not only rational but effectively required by law.

E. Breach of Contract Theory and Municipal Contracting Rules

Khader attempted to recast the dispute as one of contract, arguing that:

  • Gallagher’s early written indication that Khader was “entitled” to representation by counsel of his choice under § 18(3)(b)
  • constituted, or at least led to, an enforceable agreement that the City would pay private counsel’s fees.

The Second Department rejected this argument based on two intertwined strands of New York law:

  1. the rule that public funds cannot be used to pay attorneys representing a municipal officer absent statutory authorization, and
  2. the strict enforcement of municipal charter procedures for contracting.

1. Statutory Authority for Public Payment of Lawyers

The court quotes and applies:

  • Moffatt v Christ, 74 AD2d 635, 635:
    “It is well settled that an attorney may not be compensated with public funds for services rendered a municipal officer unless the attorney has been retained in accordance with statutory authority.”
  • Corning v Village of Laurel Hollow, 48 NY2d 348, 351:
    • which likewise emphasizes that municipal authority to hire and pay attorneys with public funds must be grounded in statute or properly enacted local law.

Here, the only relevant statutory authority for fee payment was Public Officers Law § 18, as implemented through the Yonkers City Charter. Since the investigation fell within the statutory exclusion in § 18(3)(a), Khader was not “entitled to counsel pursuant to Public Officers Law § 18” in the first place. That undercuts even the premise of his Charter-based argument.

2. Yonkers City Charter § C13-2(D): Procedure as a Condition Precedent

Even assuming arguendo that § 18 could apply, the Charter makes clear that no contract arises until specific steps are taken:

  1. The officer or employee informs Corporation Counsel of the chosen attorney;
  2. Corporation Counsel forwards a proposed contract to the City Council;
  3. The Mayor submits a budget transfer to fund the proposed contract;
  4. The City Council approves the contract; and only then
  5. Corporation Counsel enters into the contract with the attorney.

In Khader’s case:

  • Corporation Counsel never forwarded a proposed contract to the City Council, and
  • the City Council never approved any such contract.

Therefore, the statutory and charter prerequisites to a binding obligation were never satisfied.

3. Atane and the Non-Formation of Municipal Contracts

The court cites Matter of Atane Engrs., Architects & Land Surveyors, D.P.C. v Nassau County, 227 AD3d 708, 710–711, for a familiar principle in New York municipal law:

  • parties dealing with a municipality are charged with knowledge of legal limitations on municipal power;
  • no contract arises unless the municipality complies with the formal procedures set forth in law or charter (often including legislative approval and/or written execution by authorized officials);
  • equitable doctrines such as estoppel or reliance generally cannot be invoked to enforce unauthorized or improperly formed municipal contracts.

Applying those principles here:

  • Khader’s counsel could not reasonably rely on an informal or preliminary communication by Corporation Counsel as creating an enforceable obligation to pay fees;
  • without City Council approval and a formal contract as required by § C13-2(D), there simply was no contract—hence, no breach.

The court’s reasoning underscores a broader message: formalism matters in municipal contracting, especially when public funds and legal fees are at stake.

F. Other Precedents Cited and Their Role

1. Matter of Lemma v Nassau County Police Officer Indem. Bd., 31 NY3d 523 (2018)

Lemma involved a police officer seeking indemnification from a county indemnification board. The Court of Appeals held that:

  • the board’s interpretation of the indemnification statute and its denial of coverage are reviewed under a deferential standard: whether its determination is arbitrary and capricious or affected by an error of law.

The citation to Lemma in Khader reinforces that defense/indemnification decisions made by municipal authorities under statutory schemes like § 18 are subject to the same deferential review—they are not to be second-guessed by courts unless contrary to law or irrational.

2. Matter of Peckham v Calogero, 12 NY3d 424 (2009), &
Matter of Murphy v New York State Div. of Hous. & Community Renewal, 21 NY3d 649 (2013)

Both cases articulate the classic “arbitrary and capricious” standard in the administrative-law context:

A determination is arbitrary and capricious when it is taken “without sound basis in reason or regard to the facts.”

The Second Department uses these cases to frame its review of Gallagher’s decision. Because the decision was clearly anchored in § 18(3)(a) and in the recognized characterization of employer-initiated proceedings under Barkan, it easily passed this test.

3. Matter of Barkan v Roslyn Union Free School Dist., 67 AD3d 61 (2d Dep’t 2009)

Barkan is the most closely analogous substantive precedent. There, the Second Department held that:

  • a school district employee subject to a disciplinary proceeding initiated by the district was not entitled to defense and indemnification under Public Officers Law § 18(3)(a), because the proceeding was “brought by or at the behest” of the employer.

The Khader court:

  • relied on Barkan to interpret the “brought by or at the behest” language similarly in the municipal-Inspector-General context, and
  • cited Barkan (67 AD3d at 63, 65) to confirm that Gallagher’s interpretation of § 18(3)(a) was legally sound and not arbitrary.

Khader thus confirms that Barkan’s reasoning applies beyond classic disciplinary hearings to other institutionally authorized investigative mechanisms, such as inspector general inquiries.

4. Moffatt v Christ, 74 AD2d 635 (2d Dep’t 1980) &
Corning v Village of Laurel Hollow, 48 NY2d 348 (1979)

These cases establish the bedrock principle that:

  • public funds may not be used to compensate attorneys representing municipal officials unless there is express statutory or charter authority for such representation, and
  • municipalities cannot be bound by informal assurances or practices that are inconsistent with or not authorized by statute.

In Khader, they serve to:

  • dispel any notion that Gallagher’s preliminary statement could, standing alone, obligate the City to pay attorneys’ fees, and
  • reinforce the primacy of Public Officers Law § 18 and the Yonkers City Charter as the exclusive sources of authority for such payments.

5. Matter of Atane Engrs., Architects & Land Surveyors, D.P.C. v Nassau County, 227 AD3d 708 (2d Dep’t 2023)

Atane reaffirmed that:

  • contractors dealing with a county are charged with knowledge of the statutory and charter procedures governing county contracts, and
  • no enforceable contract exists where those procedures (such as legislative approval) were not followed, regardless of any informal commitments by county officials.

In Khader, Atane is invoked to:

  • support the conclusion that no contract arose in the absence of the City Council’s formal approval under the Charter, and
  • show consistency with broader Second Department jurisprudence on municipal contract formation.

6. Lanza v Wagner, 11 NY2d 317 (1962)

Finally, Lanza stands for a procedural principle:

  • in declaratory judgment actions, appellate courts should ensure that the ultimate judgment actually declares the parties’ rights, rather than merely dismissing the complaint or petition.

Thus, once the Second Department decided against Khader on the merits, it remitted the matter so that the Supreme Court could enter an amended judgment explicitly declaring that:

  • the City of Yonkers is not obligated to pay Khader’s attorneys’ fees incurred in connection with the Inspector General’s investigation.

V. Simplifying Key Legal Concepts

For clarity, several technical legal concepts that appear in the opinion are explained below.

1. CPLR Article 78 Proceeding

An Article 78 proceeding is a special New York procedure used to challenge actions of governmental bodies or officers. Common uses include:

  • reviewing administrative determinations (e.g., agency decisions, board rulings),
  • compelling an officer to perform a duty (mandamus), or
  • prohibiting an agency from acting beyond its authority (prohibition).

In Khader, Article 78 was used to challenge the Corporation Counsel’s determination not to pay attorneys’ fees.

2. Standard of Review: “Arbitrary and Capricious”

When courts review agency determinations under Article 78, they typically do not reweigh evidence or substitute their own judgment. Instead, they ask:

  • Did the agency follow lawful procedures?
  • Did the agency misinterpret or misapply the law?
  • Was the decision “arbitrary and capricious”—that is, made without a rational basis, with no connection to the facts or governing statute?

If there is a reasonable basis grounded in law and fact, the determination is upheld, even if the court might have resolved the issue differently in the first instance.

3. Statute of Limitations (CPLR 217(1))

A statute of limitations sets a deadline for bringing a legal challenge. For Article 78:

  • the period is generally four months, and
  • it begins when the challenged determination is “final and binding” and has an impact on the petitioner.

In Khader, the relevant “final and binding” determination was the May 12, 2022 letter refusing to pay fees.

4. Public Officers Law § 18 vs. General Municipal Liability

Public Officers Law § 18 is a statutory scheme that:

  • allows—but does not require—municipalities and other public entities to provide defense and indemnification to their officers and employees,
  • once adopted, obligates the entity to provide a defense in certain circumstances, and
  • spells out specific exceptions, including proceedings brought by the entity itself.

It operates alongside other indemnification provisions (e.g., in the General Municipal Law or local laws), but when a municipality has adopted § 18, its terms govern the scope of the duty to defend employees in their official capacities.

5. “Brought by or at the Behest of” the Public Employer

This phrase, from § 18(3)(a), refers to proceedings that:

  • are initiated (brought) directly by the public employer—such as disciplinary charges, or
  • are initiated at the employer’s request (at its “behest”), including actions taken by subordinate officers (like an Inspector General) in response to a directive or formal request from the governing body.

In such cases, the employer is not obliged under § 18 to also fund the employee’s defense.

6. Subpoena Duces Tecum

A subpoena duces tecum is a legal document that orders a person to produce documents, records, or other tangible evidence to an authority—such as a court, grand jury, or investigative agency—often as part of an investigation.

7. Conflict of Interest and Independent Counsel

A conflict of interest arises when:

  • the same lawyer (such as a corporation counsel) would be simultaneously representing clients whose interests are adverse in a material way.

Under Public Officers Law § 18(3)(b), if a conflict prevents the public entity’s own lawyer from defending an employee, the employee may choose private counsel—but only if § 18(3)(a) would otherwise require the entity to provide a defense at all.

8. Municipal Contracting Formalities

Unlike private parties, municipalities:

  • can only enter into contracts in the manner and form authorized by statute, charter, or local law,
  • often require legislative body approval (e.g., City Council), and
  • are not bound by informal promises or unauthorized commitments by individual officials.

Parties dealing with a municipality are deemed to know these constraints; they cannot rely on apparent authority or equitable estoppel to enforce contracts formed in contravention of statutory or charter formalities.

VI. Impact and Broader Significance

A. Clarifying the Scope of Public Officers Law § 18

Khader adds important clarity regarding the application of Public Officers Law § 18 in the context of internal investigations:

  • Investigations conducted by an Inspector General at the request of the governing body (City Council) are treated as proceedings “brought by or at the behest” of the public employer.
  • As a result, employees subject to such investigations have no statutory right under § 18 to:
    • a publicly funded legal defense, or
    • reimbursement of attorneys’ fees, even if they retain private counsel.

This has practical consequences for:

  • Public officials and employees who may face internal probes and must understand that self-funded counsel may be necessary where the investigation is initiated by their employer; and
  • Municipal attorneys who need to give clear, accurate, and cautious advisories about the availability (or not) of § 18 coverage in internal matters.

B. Internal Accountability Mechanisms vs. Indemnification

By confirming that employer-initiated investigations are outside the defense obligation, Khader supports:

  • the independence and robustness of internal oversight mechanisms (such as inspector general offices),
  • without requiring the public fisc to underwrite legal resistance by officials under investigation.

Municipalities can thus pursue internal ethics and misconduct investigations without being deterred by the prospect of subsidizing both sides of the conflict.

C. Lessons for Municipal Officials and Counsel

The case also sends a cautionary message on communications by municipal counsel:

  • Preliminary or tentative statements (“for now you are entitled to representation”) can create expectations in officials and their counsel.
  • However, such communications cannot override statutory exclusions or Charter requirements, and cannot on their own form binding obligations to pay fees.

Corporation counsels would be well advised to:

  • clearly identify any preliminary assessments as conditional and subject to further legal review;
  • explicitly reference statutory limitations, such as the “brought by or at the behest” language of § 18(3)(a); and
  • ensure that no representation is made that could be misconstrued as a final commitment in the absence of required Council or legislative approval.

D. Consequences for Outside Counsel Representing Public Officials

Outside attorneys approached by public officials in similar circumstances should:

  • request and carefully review any written authorization for payment by the municipality;
  • verify whether the relevant public entity has adopted Public Officers Law § 18 and how it is implemented in local charters or codes;
  • insist on seeing formal legislative approvals and fully executed contracts where charter provisions (like Yonkers’s § C13-2(D)) make those approvals conditions precedent to payment; and
  • understand that, absent such formalities, the risk of non-payment by the municipality is substantial.

Moffatt, Corning, Atane, and now Khader all emphasize that municipal contracting is a highly formalized realm where traditional contract doctrines like apparent authority and estoppel are largely inapplicable.

E. Potential Influence on Future Litigation

Future disputes involving:

  • internal ethics investigations,
  • inspector general inquiries, or
  • disciplinary and oversight processes initiated by municipal governing bodies

are likely to:

  • cite Khader (alongside Barkan) for the proposition that these are employer-initiated proceedings outside the scope of § 18’s duty to defend;
  • rely on Khader to resist claims for fee reimbursement under § 18 or under alleged “contracts” that were never formally executed pursuant to charter rules.

The decision therefore reinforces a bright-line rule:

When the public employer itself triggers an investigation or proceeding against an employee, Public Officers Law § 18 does not require the employer to provide or pay for the employee’s defense.

VII. Conclusion

Matter of Khader v. City of Yonkers is a significant reaffirmation and extension of New York’s law on defense and indemnification of public officials.

Substantively, it holds that:

  • an Inspector General’s investigation, commenced at the request of a City Council majority, is a civil proceeding “brought by or at the behest” of the public employer for purposes of Public Officers Law § 18(3)(a);
  • such a proceeding falls squarely within the statutory exclusion from the duty to defend;
  • therefore, the public entity has no obligation under § 18 to provide a legal defense or reimburse attorneys’ fees;
  • and no contractual obligation to pay fees can arise unless the procedures and approvals prescribed by the governing municipal charter are strictly followed.

Procedurally, the case:

  • illustrates correct application of the Article 78 statute of limitations,
  • applies the deferential arbitrary-and-capricious standard to a fee-denial determination, and
  • reinforces the requirement—set out in Lanza v Wagner—that declaratory judgments must expressly state the legal rights of the parties.

In the broader legal landscape, Khader:

  • confirms the vitality of Barkan’s interpretation of § 18’s “brought by or at the behest” language,
  • underscores that municipal indemnification schemes do not extend to internal, employer-initiated accountability processes, and
  • emphasizes the necessity of scrupulous adherence to municipal contracting formalities before public funds can be committed to pay private attorneys.

For municipalities, inspectors general, corporation counsels, and public officials alike, Khader provides a clear blueprint: internal investigations triggered by governing bodies are outside the protective umbrella of Public Officers Law § 18, and any payment of legal fees for officials in those investigations must rest on carefully followed statutory and charter authority—not on informal assurances or expectations.

Case Details

Year: 2025
Court: Appellate Division of the Supreme Court, New York

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