Paul Connors

(sent this to Tom Sent from my iPhone Begin forwarded message:

Although the e-mail came from Kyle, | believe the advice was relayed to us fram the State Emergency Operations Center through our liaison, Louis Burgess. Dan Hanrahan Director Office of State Aid and School Finance Customer Service is a priority at the Michigan Department of Education — helping Michigan schools, families, and communities improve the achievement and well-being of ALL our children. MICHIGAN Education

Sent from my iPhone Begin forwarded message:

ATTOO002.htm; ERP terms and conditions.pdf; ATTO0003.htm; Michigan Emergency Manager Act.pdf; ATTO0004.htm Sounds like Darnell having trouble getting coverage going forward due to Flint water Sent from my iPhone Begin forwarded message:

Sounds like a local government issue?

Has anyone responded to Dave and Steve with the information as to who they should contact at the City of Flint regarding this claim denial by the insurance carrier? | just got off the phone with them and they have not heard back from anyone yet. Both Dave and Steve want to be sure that the city is notified and pursues other insurance coverage, if available. Also, they said if we or John Clark can come up with a goad reason to go back to the carrier that denied this claim with a solid argument as to why the claim should not be denied, they are more than willing to have this conversation with the carrier. They reiterated that they represent the policyholder not the carrier and would be more than happy to have that conversation. Although, coming up with an argument to use might be a bit difficult as professional liability coverage normally does not cover pollutants, but | know attorneys can be creative. xxxEND_PAGE:treasury01_b26_3730_4111_118 On another note, they did inform me that they are expecting a carrier to provide them with a quote for extending Darnell’s professional liability coverage. They are hoping to have that number by tomorrow and will relay that to us as soon as they receive it.

Good Monday to you, The carrier has reviewed the complaint from Melisa Mays et. al against the coverage and has prepared this written response. The claim is being denied, Pursuant to the Policy, any Claim alleging, based upon, arising out of, or attributable to the actual, alleged or threatened discharge or release of Pollutants is excluded from coverage. Professional Liability coverage generally does not provide coverage for bodily injury or pollution. Those coverage’s are usually provided through the general liability policy of the entity. This denial letter needs to be provided to the City of Flint for notification to the general liability carrier and/or any pollution liability carrier. How do we get this request to the correct person at the City of Flint? John Clark has been notified of the carrier response. Darnell is not happy about the denial. As you know, we are working on the renewal for this Friday. Please let us know who to contact at Flint. David N. Sheeran, CPA | Executive Vice President 1 xxxEND_PAGE:treasury01_b26_3730_4111_100 [o] 248. 204.8544 [c] 248.361.0084 [f] 248.869.6045 26255 American Drive, Southfield MI 48034 MEADOWBROOK aa. INSURANCE AGENCY rAAY DIVISION OF KEADOWBROOK INSURANCE GROUP™ ~~" The Information contained in this message is privileged and confidential. It is intended only to be read by the individual or entity named above or their designee. Unless you are the named addressee or an authorized designee, you may not copy or use it, or disclose it to anyone else. If the reader of this message is not the intended recipient, you are on notice that any distribution of this message, in any form, is strictly prohibited. If you receive this message in error, please immediately notify the sender and delete or destroy any copy of this message. xxxEND_PAGE:treasury01_b26_3730_4111_101 ACE North American 201 - 479-6363 telephone Professional Risk Claims 201 - 356-5100 = main * P.O. Box 5105 201 - 356-5294 fax Le Scranton. PA 18505-0518 bran [email protected] WW. Brian Lovell Claims Specialist December 4, 2015 VIA EMAIL AND CERTIFIED MAIL Mr. Darnell Early PO Box 70141 Lansing, MI 48908 CC: Mr. John Clark, Esq. Jelark@gmhlaw com Re: Insured: Darnell Early ACE Policy No.: G27158766 002 Claimant: Melisa Mays ¢¢. a/ Claim No: Y15J0640574 Dear Mr. Clark: This letter is to acknowledge receipt of recent correspondence, whereby ACE North American Claims (hereinafter “ACE”) on behalf of Westchester Fire Insurance Company (hereinafter “Company”), was advised of the November 13, 2015 purported class action complaint (“Complaint”) filed by Melisa Mays; Michael Mays individually and on behalf of three minor, Michael Mays; Jacqueline Pemberton; Keith John Pemberton; Elnora Carthan; and Rhonda Kelso; (“Plaintiffs”) seeking damages against Darnell Early (“Insured”). A claim file has been established under the Policy, with the assigned claim number of J¥15]0640574 (hereinafter “Claim”). Please refer to this claim number on all future correspondence regarding this matter. The purpose of this letter is to advise you that based upon a review of the materials provided to ACE, we have determined that the Policy does not provide coverage for this Claim, and thus, the Company has no obligation to either defend or indemnify the Insured. If you have not done so already, we strongly urge you to immediately notify any other insurance carrier of this Claim that may provide the Insured with coverage in this matter. SUMMARY OF THE CLAIM Please understand that ACE, on behalf of the Company, has not made any determination as to the validity of the above-referenced matter, nor do we assert that any liability exists. We reference the allegations herein only to describe the matter submitted for coverage. One of the ALE Group af lasurance & Rewmsurence Companes xxxEND_PAGE:treasury01_b26_3730_4111_102 et e Based upon the information received to date, it is ACE’s understanding that Melissa Mays and her farnily; the Pemberton Family; Elnora Carthan; and the Kelso family lived in Flint Michigan, and allegedly were unaware of the toxic nature of the tap water supplied by Flint between April 18, 2014 and fall of 2014. Each family and Ms. Carthan allege having sustained high levels of lead and copper in their bloodstreams, brains, bones and other organs; skin lesions and hair loss; chemical induced hypertension; autoimmune disorder; neurological disorders such as “brain fog” and memory loss; and depression, anxiety and post-traumatic stress disorder. Each family and Ms. Carthan also allege property damage as a result of the toxic water supply. It is alleged by Plaintiffs that the City of Flint decided to use water from the Flint River, which the City was allegedly aware required anti-corrosive treatment to prevent lead, copper and other heavy metals from leaching from lead, copper and tron based water lines. It is also alleged that Flint officials and the Michigan Department of Environmental Quality (“MDEQ”) were aware of the presence of elevated levels of Trihalomethanes in the water and above the legal limit. It is further alleged that Flint City Council members demanded the Insured, Emergency Manager for the City of Flint, to reconnect with Detroit water, but that the Insured refused to do so, and continued to mislead Flint residents to believe that the water was safe. The Insured’s tenure as Emergency Manager ended in January of 2015. The Plaintiffs have filed a purposes Class Action Complaint against various Flint City Officials and MDEQ officials, as well as the Insured, for violation of 42 USC Section 1983 of substantive due process for state created danger and bodily integrity. THE POLICY ACE issued ACE Miscellaneous Professional Liability Policy No. G27158766-002 to the Insured for the period December 18, 2014 to December 18, 2015 (“Policy”). The Policy has a limit of liability of $1 million per Claim, subject to an Aggregate Limit of $1 million with a per claim retention of $2,500. The Policy provides a Retroactive Date of December 18, 2013 with respect to the limits of liability up to $1 million each Claim and in the aggregate. The Policy requires that ACE defend covered actions, Claims Expenses (including defense costs) are a part of, and not in addition to, the limit of liability. With respect to this matter, we note the following pertinent policy provisions. Any terms that appear in Bold Face Type have special meaning. Please refer to Section III of the Policy (Definitions) for any terms herein that appear in Bold Face Type and are not defined below. I. INSURING AGREEMENT AND DEFENSE a. Insuring Agreement The Company will pay on behalf of the Insured all sums in excess of the Retention that the Insured shall become legally obligated to pay as Damages and Claims Expenses because of a Claim first made against the Insured and reported to the Company during the Policy Period or if elected, the Extended Reporting Period, xxxEND_PAGE:treasury01_b26_3730_4111_103 ted by reason of a Wrongful Act committed on or subsequent to the Retroactive Date and before the end of the Policy Period. I. DEFINITIONS A. Claim means: i, A written demand against any Insured for monetary or non-monetary damages; ii, A civil proceeding against any Insured for monetary damages, non-monetary damages or injunctive relief, commenced by the service of a complaint or similar pleading; iii, An arbitration proceeding against any Insured for monetary damages, non- monetary damages or injunctive relief; iv. A civil, administrative or regulatory investigation against any Insured commenced by the filing of a notice of charges, investigative order or similar document; v. A Disciplinary Proceeding; including any appeal therefrom B. Bodily Injury means i. any physical injury to the body, physical pain, sickness, disease, and death. Bodily Injury also means mental injury, mental anguish, mental tension, emotional distress, pain and suffering, or shock, whether or not resulting

Paul, Can we set up a call to talk about this coverage? David N. Sheeran, CPA | Executive Vice President [o] 248. 204.8544 [c] 248.361.0084 [f] 248.869.6045 26255 American Drive, Southfield My 204 MEADOWBROOK INSURANCE AGENCY {

Paul, Thanks for the email and information. We are in the market for Darnell for the 12/18/15 renewal. Can we set up a phone call to discuss this further? David N. Sheeran, CPA | Executive Vice President {o] 248. 204.8544 |[c] 248.361.0084 [f] 248.869.6045 26255 American Drive, Southfield MI 48034 1 MEADOWBROOK ee =e INSURANCE AGENCY DMSIOW OF NEADONBROOK INSURANCE GROUP “flag

Dave Here is our legal counsel’s views. | believe that as an EM the SOM will purchase liability coverage. How much is coverage for the EMs. Do cost vary upon locale?

xxxEND_PAGE:treasury01_b33_5236_5444_181

Thoughts?

Dear Paul, Thanks for your time yesterday. Meanwhile today we received notice of a lawsuit recently filed in regards to the City of Flint water system. As you will note, Darnell Earley is a named defendant. We have notified the carrier and will follow up with the carrier. Meanwhile, we want to circle back on the State of Michigan defending emergency managers particularly when they are no longer the EM at the public entity. If the SOM agrees to defend a former EM’s actions, then the professional liability coverage for a current EM will be more attractive to the markets and cost less. In this case Mr Earley is named in a lawsuit for his actions while at the City of Flint and there is a policy in place. We are working on the renewal for his professional liability coverage while the EM at DPS, Does the SOM want each EM to purchase individual professional liability and charge the premium to the public entity? What public entity and how would we allocate this premium? Sorry to bring this up, just looking for clarification. Please call me to discuss any questions. David N. Sheeran, CPA | Executive Vice President [o] 248. 204.8544 [c] 248.361.0084 [f] 248.869.6045 26255 American Drive, Southfield MI ial MEADOWBROOK INSURANCE AGENCY | OI/SION OF SEADOWGROOK NSLRANCE GROUP” "ROARED

Paul: That would not be my interpretation. You did not indicate how Meadowbrook staff reached the conclusion that governmental immunity no longer would apply to Darnell for acts taken by him while at the City of Flint. I will presume that they read § 20(1) of the Act to apply only to an Emergency Manager currently serving in the local government regarding which litigation arises and concluded it would not apply to Darnell since he no longer is Emergency Manager for the City of Flint. That conclusion may appear reasonable if § 20(1) is read in isolation. However, when read as a whole, § 20 is replete with instances where the term “Emergency Manager” refers to past as well as current occupants of that office. Section 20 was intended to remedy two shortcomings in Act 72: providing legal representation for Emergency Financial Managers while in office and after /eaving office. Section 20(2) was intended to address the former and § 20(5) to address the latter, which was of particular concern since two former Act 72 Emergency Financial Managers had been subjected to litigation after leaving office. With one exception, the Attorney General’s Office consistently took the position under Act 72 that it would not provide legal representation for Emergency Financial Managers because they were not State officials. Section 20(2) requires such representation, but only if litigation challenges: (a) the validity of the Act, (b) the authority of a State official or officer acting under the Act, or (c) the authority of an Emergency Manager and even then only if he or she was acting within the scope of his or her authority under the Act. If, hypothetically speaking, litigation were to be filed against Darnell for acts taken by him while at the City of Flint, the Attorney General’s Office would be obligated to provide legal representation only if such litigation involved (a) or (c); (b) would not apply because Emergency Managers are neither State officials or officers. As noted above, § 20(5) would address, again hypothetically speaking, litigation filed against Darnell for acts taken by him while at the City of Flint. If not covered by insurance, his litigation-related expenses, actual and anticipated, would be assessed against the City of Flint, if approved by the State Treasurer after determining that Darnell’s conduct had been within the scope of his authority and occurred on behalf of a local government while it was in receivership. See § 20(5)(a) and (b). Let me know should you have further questions. Fred

Tom | spoke to Meadowbrook and they are confident that they can find another carrier for Darnell. There chief concern is that if Darnell is sued for an action taken as Flint EM, PA 436 governmental immunity no longer covers him--Section 20 (4) (5). Fred is that your interpretation? Also, insurance will cost approx. $5,000 which, in their opinion, is probably less that it would cost the AG to defend him. | talked to Darnell who really wants the additional protection and is discussing the matter further with Meadowbrook. http://www.

Should let Tom know also

| talked to Darnell and he wants Meadowbrook to find another carrier even though he knows as EM he has immunity. | think Ann makes some good points.

He probably isn’t trusting the state to back him up and wants added assurance of liability coverage, which is outlined in Sec. 20(4) of the statute. He also may not feel comfortable having the AG represent him and would again prefer to have the extra insurance coverage [which provide for legal defense if needed). After reading Sec. 20(5) in the statute, there is reliance that the state treasurer will approve the legal expenses and determine that his actions fell within (5)(a)(b). I can see some possible holes in the statute that would make me feel uncomfortable, especially in light of ail the legal threats being thrown his way.

Interesting, but not surprising to hear that the prof liab insurance carrier doesn’t want to renew coverage based on all of the negative media coverage. Since | worked at a med mal insurance co. for 10 years, | understand why an underwriter might have a difficult time assessing the risk for this coverage and would prefer to not be exposed to any “potential” risk going forward. Did the state provide coverage for Darnell? | was wondering why they would contact the state versus Darnell. | can also understand why Darnell would want to continue receiving this coverage. | would if | were in his shoes for a number of reasons. The premiums on this coverage are sure to go up based on the potential risk, and that is if any carrier is willing to take on the risk.

Paul, For any number of reasons, | want that coverage. | would ask that Meadowbrook identify a carrier. | am also curious as to why they didn't contact me. In any event, they should be asked to pursue this matter despite their concerns about media coverage of an event that clearly | was not liable for. DE Darnell Earley, ICMA-CM, MPA Emergency Manager Detroit Public Schools

Hi Darnell | received an email today from Meadowbrook Insurance that ACE/Westchester gave notice that it will not renew your professional liability coverage. Meadowbrook is concerned that if will be difficult to find a new carrier because of a recent Freep article on Flint Water. xxxEND_PAGE:treasury01_b36_6099_6552_453 Do you need professional liability coverage? Section 20 of PA 436 provides that EM is immune from liability and that the AG shall defend any civil claim, demand, or lawsuit. As a result, | think you may not need additional coverage. However, before | respond to Meadowbrook, | want to get your thoughts on the matter. My cell is 517 899 1291 thanks pdf Director of the Office of School Review and Fiscal Accountability Michigan Department of Treasury 430 W. Allegan Street Lansing, MI 48922 (517) 241-1186 95 xxxEND_PAGE:treasury01_b36_6099_6552_454

torberg& G@imichigan goy> Here you go Director of the Office of School Review and Fiscal Accountability Michigan Department of Treasury 430 W. Allegan Street Lansing, MI 48922 (517) 241-1186 xxxEND_PAGE:executiveofficeemails20_b1565_3881_3882_2

Thanks Me and Terry will see Rep Neely prob tomorrow