In an imaginative approach to gain access to its insurance policies, the town has sued its primary carriers to try to make them cover a $12.4 million jury judgment in the Tabor land case plus millions of dollars in legal fees and costs.
The lawsuit was filed in New Haven Superior Court late last month preceded by a so-called “demand” written by First Selectman Anthony “Unk” DaRos, who in 2003, when the property was seized by eminent domain, was also First Selectman.
DaRos and then town counsel Penny Bellamy were the primary architects of the Tabor plan. He maintains that he moved by eminent domain to take the 77 acres because the parcel shares a border with the contaminated town dump and he didn’t want residents living there.
The town’s Board of Finance and the Representative Town Meeting both gave formal approval to taking Tabor by eminent domain, unanimously agreeing with DaRos. They have not stepped back from their decision.
At the time of the taking, New England Estates, the would-be developer of the property, had not exercised its option to purchase the land in order to erect a large-scale housing development, one that in various incarnations ranged from 275 to 354 units. After the town moved to take the land in 2003, NEE asserted that DaRos had “violated the public trust” and “misused his official position” when he purportedly interfered in NEE’s contract with the land’s owners, Thomas Santa Barbara Jr., and Frank Perrotti, Jr.
The town does not seek insurance reimbursement relating to the owner’s case. That’s because when the Board of Selectmen voted to take the land by eminent domain on July 9, 2003, the town’s insurance policies excluded eminent domain from coverage. In a novel effort to avoid this exclusion, the town’s attorneys now argue that the developer’s case arises out of a different set of legal principles. Specifically: NEE asserted and a Waterbury jury found last September that the town had violated its civil rights.
The insurance case is separate from an appeal now before the Connecticut Supreme Court seeking to overturn the $12.4 million jury verdict. That appeal says the trial judge, William T. Cremins, Jr., “unlawfully permitted a double recovery” for the same parcel of land, first for the owners, then for NEE. Oral arguments are expected several months from now.
What town attorneys Clendenen & Shea have done in this case, as they did in the appeals case, is to separate the two cases — the first involving the owners, Santa Barbara and Perrotti and the second involving NEE’s civil rights issue, what they term the “underlying action.” The owners were awarded $4.6 million at a bench trial last August.Since the Tabor parcel shares a border with the town dump, the Board of Selectmen said it wanted to remediate “environmental contamination” and possibly erect ballfields at the site. But NEE never bought that argument, claiming the town had robbed the developer of his civil rights, even though the developer held no permits to build and had not exercised his option to purchase the property. NEE asserted that the town did not want affordable housing, even though only a small portion of the proposed 354 units was classified as affordable housing.
NEE sued the town on July 18, 2003, claiming then and at trial that there was an unconstitutional taking of property in a manner that was in bad faith, pretextual, unreasonable or an abuse of power. The taking of the land, NEE asserts, was not for “a public use or purpose.” DaRos says the ball fields served a public purpose.
The lawsuit seeks damages for breach of contract from Arrowood Indemnity Co. and American Alternative Insurance Co.,(AAIC) of Princeton, N.J. The suit is aimed primarily at AAIC, the umbrella company that provided up to $10 million in insurance to the town.
The suit says Arrowood, successor by merger to the Fire and Casualty Insurance Company of Connecticut, should have defended the town. Instead it denied the town’s claim in August, 2003, saying eminent domain actions were excluded from coverage. Whether the first company actually informed AAIC is unclear, but in the event it did not, the town said it was doing so now.
Kerry Callahan, the town’s trial attorney, told the jury that the “town made a decision based on what they believed to be the truth.” He cautioned that the taking was not made illegally and that the bad faith standard had not been met. He said the “landfill is still alive with sewage, contaminants” and other debris but he was unable to call expert witnesses because the town’s then counsel, the Marcus Law Firm, failed to give him key dates, court papers said.
Asked if attorneys for two prior administrations, that of John Opie and Cheryl Morris, had moved to take action against the insurance companies, Clendenden replied: “no comment.” Whether there were negotiations in the months leading up to this lawsuit is unclear. What is clear is that this is the first lawsuit against the insurance companies.
In March, DaRos approved hiring New York-based Reed Smith, a firm that specializes in insurance recovery. One of its attorneys, Paul E. Breene, is named on the brief. Kevin Shea is handling the case for the town. Breene did not respond to a request for comment. Shea was not available.
DaRos said then and told the Eagle this week that “some parts we know were not covered, but there were some parts that I feel the insurance company should have covered. I want to make sure to cover all bases,” he said.
The complaint says the insurance carriers had “a duty” to defend the town against the claims made in the “underlying action and has a duty to pay any covered damage.
“The town of Branford is entitled to reimbursement under a policy that it expended to investigate, defend, settle or pay any judgment rendered in the civil rights action.”
The jury was bound by the law that Cremins delivered to them in his charge. The judge told the jurors there was a reasonable probability that the developer would have obtained the necessary approvals and permits for the affordable housing plan. This charge was essential to the developer’s case. What the judge meant was that eventually the developer would have prevailed in the state court system to get his approvals.A prior market value housing plan had been rejected by the town’s Planning and Zoning Commission and the Commission later rejected the affordable housing plan.
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I just hope we can recover the money from the insurance company. We were wrong and got caught. Let the insurance company pay. Good job Mr. DaRos in going after them. Don't let up.