East Haven is taking its fight with two insurance companies to a federal appeals court. On Oct. 21, the town notified the court that it will appeal a Sept. 25 ruling that left taxpayers, not insurers, responsible for the $11 million quarry settlement, according to Insurance Journal, which reported the appeal Oct. 29. The case goes to the U.S. Court of Appeals for the Second Circuit.
In the Sept. 25 decision, U.S. District Judge Sarala V. Nagala ruled that neither Allied World Insurance nor Starr Indemnity and Liability Company had a duty to defend or indemnify the town over the lawsuit brought by the owners of the Farm River Rock quarry. She granted both insurers’ motions for summary judgment, denied the town’s, and directed the clerk to close the case.
How the town got here
The quarry’s owners, John Patton, One Barberry Real Estate Holding LLC and Farm River Rock LLC, sued the town and its officials in June 2017, after the town shut the quarry down with a series of cease-and-desist orders that spring. Their complaint sought more than $25 million.
After a 13-day bench trial, the court ruled in October 2023 that former Mayor Joseph Maturo Jr., former Zoning Enforcement Officer Christopher Soto and the town violated the quarry owners’ substantive due process rights. The court awarded Farm River Rock $9,465,832 in damages, and prejudgment interest brought the judgment to $10,691,178. The town appealed, then settled the case for $11 million in February 2025 while that appeal was pending. According to the new ruling, the town indemnified Maturo and Soto and paid on their behalf.
Neither insurer ever stepped in. The town had notified Allied World of the lawsuit in June 2017, and Starr in February 2020, and both repeatedly denied coverage. The town sued the two companies in July 2021.
Why the judge sided with the insurers
The town had two liability carriers in the years that mattered: Starr from July 1, 2015, to July 1, 2016, and Allied World from July 1, 2016, through July 1, 2021. Each insurer argued the problem belonged to the other.
- Starr: The judge found the wrongful acts that created the town’s liability happened in 2017, centered on the May 9, 2017, decision to issue the third cease-and-desist order that shut the quarry, which was after Starr’s policy ended. Earlier events, like the 2015 blasting-permit dispute, were treated as background evidence, not the act that triggered liability.
- Allied World: The 2017 shutdown did fall inside Allied World’s coverage period, but the judge ruled that a policy exclusion for property losses tied to a “lack of due process” squarely bars coverage. She rejected the town’s argument that the exclusion should cover only takings claims.
- Duty to defend: Both policies required the town to pay its first $1 million itself. The ruling says the town’s legal bills stayed under that amount, so the insurers’ duty to defend never kicked in before the case was settled.
The judge did reject one of Starr’s arguments. She found the town waited an unreasonable two and a half years to notify Starr of the suit, but said Starr had not shown the delay hurt it.
What happens next
The appeal now goes to the Second Circuit in New York. No schedule for briefs or arguments had been reported as of Nov. 1. If the ruling stands, the town gets nothing back from either insurer for the settlement. Under the policies described in the ruling, Starr’s coverage limit was $4 million, and Allied World’s was $1 million in primary coverage plus $3 million in excess coverage per occurrence.
The Courier will follow the appeal as it moves forward.
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