A federal judge has ruled that the Connecticut town of East Haven is not entitled to insurance coverage for a civil lawsuit and $11 million judgment against it regarding the closure of a local quarry in 2017 for political reasons.
The town sued to force two insurers to provide coverage. Last Friday, the town lost its case when the insurers were granted summary judgment in the federal district court for Connecticut.
During the time period relevant to its underlying dispute with the quarry owners, the town had two different liability insurers. Between July 1, 2015, and July 1,
2016, the town was insured by Starr Indemnity and Liability and between July 1, 2016, and July 1, 2021, the town was insured by Allied World Insurance. Both insurers disclaimed duties to defend and indemnify the town for the civil case under the terms of their policies.
The federal district court found that neither insurer breached a duty to indemnify or defend the town in relation to the lawsuit by the quarry owners. In the case of St
arr, the actions taken by the officials that closed the quarry were taken outside of the policy period. In Allied World’s case, an exclusion for claims related to the “lack of due process” barred coverage.
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The underlying action against the town, former Mayor Joseph Maturo, Jr., a zoning official and the town tax assessor by the quarry was filed on June 15, 2017. T
he plaintiffs were John Patton, One Barberry Real Estate Holding, LLC and Farm River Rock LLC, who owned and operated a quarry in East Haven. They alleged that the to
wn interfered with their quarry’s operations through various regulatory measures before eventually shutting it down through a series of cease-and-des
ist orders in 2017. The town’s actions included reclassifying portions of the quarry as industrial land and taxing it at a higher rate than previously beginning in October 2015; informing Patton that blasting permits would not be granted in the months preceding the 2
015 municipal election; and issuing three cease-and-desist orders between February and May 2017, the last of which instructed the owners to completely shut down their quarry operations.
The plaintiffs claimed that the town and its officials violated their federal and state constitutional rights. They sought damages in excess of $25 million.
Since both Starr and Allied World denied they had a duty to defend, the lawsuit was defended through trial by the town through its retained counsel without the assistance of either insurer.
A federal judge in a bench trial concluded that the town and officials infringed on the quarry owners’ constitutionally protected property right in an arbitrary and irrational manner, in violation of the Fourteenth Amendment’s substantive due process protections. The judge awarded damages of $9,465,832.
