Chester is uninsured against multimillion-dollar lawsuits

The town of Chester is uninsured against two discrimination cases in which the town is being sued for tens of millions of dollars.

In April, Network Adjusters Inc., a member of the Allied World group of insurance companies, informed the town that Allied World has no "duty to indemnify and/or defend the Town" against a notice of claim filed by the Greens of Chester developers before the policy's start date. Allied World further accuses the town of committing "wrongful acts or claims" before the policy went into effect.

In July, the Greens sued the town for breach of contract, seeking $80 million in each of eight complaints.

The New York State Insurance Department in Albany says a 2010 agreement between the town and the Greens settled the dispute. Allied World says it need not litigate the matter again.

On Oct. 9, U.S. District Court Judge Cathy Seibel ordered both sides into mediation. "The Court recommends that a mediator with land use experience be assigned for this case," she wrote.

Town Supervisor Bob Valentine referred questions to the town's lawyer, Scott Bonacic, who told The Chronicle recently that ongoing litigation made it impossible to comment on the matter.

'Willful violations'

Also in April, Selective Insurance of New York sued the town in connection with the late Steve Sherman's thwarted development, first brought before the planning board 19 years ago under the name Chester Golf. Selective says it has no duty to defend the town and accuses the town of fraud and willful violation its policies. It lists among these violations "inverse condemnation" -- that is, it alleges the town effectively took Sherman's property without compensating him for it. Sherman died in 2013.

Exhibit A in the filing documents is a lawsuit Sherman brought years ago against the town board and planning board that states: "After making application to the Town Planning Board in 2000 seeking subdivision approval so that he could use and profitably sell the real property that he had acquired, the Town of Chester employed its police powers in a manner that has deprived Plaintiff of the use and enjoyment of his 398 acres of land ('Marebrook')." Selective accuses the town of "failing to cooperate" in defending against Sherman's claims.

Selective Insurance is also suing Nancy Sherman, the executor of Steve Sherman's estate, and Laroe Estates Inc. In turn, the Sherman estate is suing the insurance company.

The case is now in federal court in the discovery phase, in which both sides exchange information.

Discrimination a through-line

Discrimination is a through-line in these two lawsuits and in two others for which the town does have insurance.

The Greens suit is "over illegal, discriminatory actions by town officials in violation of an existing agreement," said developer Livy Schwartz in a recent letter to the editor. He said the complaint includes "dozens of derogatory and discriminatory comments" that town officials made against Hasidim, "almost all of which are drawn from the town’s own video footage and meeting minutes."

In the Sherman case, Selective Insurance cites Steve Sherman's claim that the town "feared the development of an undesirable ultra-Orthodox Jewish community and that those fears fueled the town's discriminatory conduct and motive to continually deny" Sherman's subdivision applications, and to change zoning laws to thwart him.

The town is insured in the lawsuit filed earlier this year by Jeremiah Johnson El, a Warwick man who says police officers Bruce Chambers and Robert Bird harassed him during a traffic stop. The complaint says Chambers "made a comment that was negative regarding Plaintiff's indigenous status" after following him for a mile and then pulling him over.

The town is also insured against a gender discrimination lawsuit filed last month by Loretta (Lori) Streichert, a former employee of the Chester Recreation Department. The lawsuit says Streichert was ignored by town officials and was the victim of the town's unfair hiring and salary decisions.