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Originally Posted by afc wimbledon
Insurance policies cover whatever the hell your willing to pay for. The more they cover the more you pay, knowing they were treading on dodgy ground, the city mave have, for a crap load of dosh, inserted a specific rider covering them in the event of the payments being ruled illegal.
If the GI takes the city to court and the court rules the payment of 25 million is in breach of the gifting law then the city can't pay it, that is cut and dry.
At that point the NHL has 2 choices, eat the 25 million or take the agents for the city to court for entering into a legal agreement they had no authority to sign, my guess would be, they (the mayor, the city manager and the like) are covered by insurance while acting in good faith for the city, therefore when they lose the case and the court orders them personally to pay the NHL, the insurance would pick up the tab, technically this isn't insurance paying the debt for the city.
It is also possible their is a clause in the contract saying in the event of the 25 million being ruled a gift the city isn't obligated to pay it and the NHL eats the cost, I doubt the NHL would have signed on to that though.
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Your understanding of the legal issues involved here is completely non-existant. Personal responsibility for actions as a government official applies in situations where people act clearly outside of their powers. Nothing about this falls into that area. Your argument would get you laughed out of court.
You're right though, you can buy insurance for anything. But buying insurance for a debt of $25mil, that is evidenced by a fully executed contract would cost you $25mil. It's not dischargable simply because there was litigation.