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Town of Cumberland v. Rhode Island Interlocal Risk Management Trust11/24/2004
ning board to proceed accordingly. On July 17, 1989, the planning board, after hearings, again denied the subdivision applications. After an unsuccessful appeal to the town zoning board, the underlying claimants appealed to the Superior Court.
Meanwhile, the underlying claimants had filed a second complaint in the Superior Court challenging the validity of the zoning ordinance amendment. On appeal, this Court invalidated the zoning ordinance amendment because the initiative or referendum process did not comply with the procedural safeguards required for adoption or amendment of subdivision regulations and zoning ordinances. L.A. Ray Realty v. Town Council of Cumberland, 603 A.2d 311, 315 (R.I. 1992) (L.A. Ray Realty I). Our decision in L.A. Ray Realty I mooted the underlying claimants' appeal of the town zoning board's decision, prompting them to amend their complaint to allege substantive and procedural due process violations and intentional interference with prospective economic advantage.
The trial justice found that the town did not deprive the underlying claimants of any due process rights but that it did tortiously interfere with their prospective economic advantage, inviting the parties to submit briefs on causation and damages. On June 26, 1995, the trial justice found that the underlying claimants had suffered damages amounting to $1,094,742.81. However, under the Governmental Tort Liability Act, G.L. 1956 chapter 31 of title 9, recovery was limited to $100,000 per claimant. On appeal, in L.A. Ray Realty v. Town Council of Cumberland, 698 A.2d 202 (R.I. 1997) (L.A. Ray Realty II), this Court held that, in addition to intentionally interfering with the underlying claimants' prospective economic advantage, the town violated their substantive and procedural due process rights. Further, we concluded that the underlying claimants were entitled to recover the full amount of their damages under 42 U.S.C. ยง 1983.
On remand to the Superior Court for a determination of the proper amount of damages, the town settled with the underlying claimants for approximately $1.6 million and sought indemnification from defendants. The defendants' denial of the town's indemnification claim prompted this lawsuit.
The town filed a complaint alleging breach of contract and seeking a declaratory judgment that it was entitled to indemnification for the amount paid to settle the underlying lawsuit. The town moved for summary judgment, asserting that its insurance policies afforded coverage for civil rights violations and, therefore, defendants were obligated to indemnify it as a matter of law. The defendants also moved for summary judgment, countering that the intentional, illegal, and fraudulent nature of the town's actions precluded coverage under the terms of the policies and, further, recovery for the conduct would contravene Rhode Island public policy. Additionally, defendants argued that the town's denial of the underlying claimants' subdivision applications amounted to a constructive taking and such takings were specifically excluded from the town's coverage.
The motion justice granted summary judgment for the town finding that the town was entitled to indemnification under the Trust policy because coverage for civil rights violations was explicitly included. Neither the exclusion for fraudulent actions found in the errors and omissions clause, nor Rhode Island public policy, precluded coverage under the general liability policy. Furthermore, the motion justice found that the exclusion for payments arising out of condemnation of land was inapplicable. The defendants appeal from the judgment of the Superior Court.
On appeal, defendants jointly raise three i
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