Government Waste
Lancaster taxpayers will be responsible for paying out the $1.9 million bonded for the purchase of the 3949 Walden Avenue (Colecraft) building. The same taxpayers will have to pay the $101,000 spent in feasibility, schematic design and evaluation studies, etc. More importantly, will taxpayers get stuck with paying for the town costs associated with the lawsuit, even though the town is insured against such litigation?
At the recent Town Board meeting, this writer questioned the Board as to whether any 2006 budget funds contained revenue provisions associated with the 3949 Walden Avenue project. The answer was an emphatic no!
Well then, where could the money be coming from to pay for the $101,000 costs? Could it be from the difference in what was bonded for the purchase of the police / courts building ($1.9 million) and the actual purchase price ($1.63 million). The $270,000 reserve would more than offset study costs that some believe were frivolous.
Litigation costs
Well, at least the town’s litigation costs will be covered, right? Perhaps not.
On December 12, 2003 the town received a correspondence from Coregis Insurance Company informing them that the town insurance policy they have with their company does not provide any coverage for the claims presented in connection with the complaint filed in the Supreme Court in the County of Erie, New York against Robert Giza, Mark Montour, Ronald Ruffino, SR. and Donna Stempniak.
It was stated in the correspondence, “Based upon the information available to us and the allegations contained in the Complaint as presently framed, your policy does not provide any coverage for the claims presented. Coregis can neither defend nor indemnify you for the claims presented.”
Coregis Policy Language
VI. EXCLUSION
This policy does not apply to the following, regardless of the cause of action or legal theory alleged:
C. Any demand or proceeding seeking relief or redress in any form other than Money Damages, including any form of injunctive or other equitable relief, including, but not limited to, restitution, replevin, unjust enrichment, declaratory judgments, or any accounting.
The plaintiffs seek declaratory relief in the form of orders of the court. You will note that the definition of damages states that the declaratory relief is not a “claim” nor “damages” as defined in the policy. Therefore, the policy does not apply to any declaratory relief. In addition, Exclusions c, specifically exclude claims for non-monetary relief.
The plaintiffs also seek to have the defendants restore, remit and pay back to the Town and to the Village the $7,500 each entity paid for the Feasibility Study. The definition of money damages means monetary relief for past harm and damages. The $7,500 fee paid for by the Town is not a past harm or damage. The definition of “Loss” specifically states that it does not include the return of fees. Reimbursing the Village for the $7,500 they paid is restitution and restitution is precluded coverage under your policy.
For reasons stated, Coregis can neither defend nor indemnify the Town of Lancaster nor any of its officers or employees named in the Complaint.
Town fires back
On January 20, 2004, the Lancaster Town Board passed the following resolution (#20):
WHEREAS, the Town Board has been apprised by its insurance carrier for Public Officials Liability, Coregis Insurance, that Coregis Insurance is denying coverage and defense on an action commenced against the members of the Town Board, and
WHEREAS, the Town Board does not agree with the determination made by Coregis Insurance and deems it in the public interest to commence an action to compel the carrier to defend:
NOW THEREFORE, BE IT RESOLVED, that the Town Board of the Town of Lancaster hereby authorizes the Supervisor to engage the services of Sliwa & Lane for the purposes of pursuing whatever legal action is appropriate to compel the insurance carrier to provide coverage in the lawsuit pursuant to the terms as outlined in the engagement letter provided by Sliwa & Lane.
Regardless of lawsuit outcome, the town acted irresponsibly in their purchase of the 3949 Walden Avenue building, spent money imprudently and acted arbitrarily and capriciously in denying public access and input in the project process.
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