Landfill Investigation: Legal Experts Weigh In
Wednesday, September 08, 2010
Two legal experts offered differing views on the state’s attempt to recover $75 million in wasted money at the landfill by suing its insurer, which provided it with a policy covering employee theft.
“It sounds to me like it’s a reasonable strategy,” said William Devereaux, a principal at Pannone Lopes Devereaux & West LLC. “I don’t know whether they will succeed or not.”
He said the suit against the Travelers insurance company could achieve two things for the state. The suit requests a “declaratory judgment” from a U.S. District Court judge, which Devereaux said would clarify whether its insurance policy covers the actions of employees at the Rhode Island Resource Recovery Corporation who mismanaged the state landfill, according to a state audit.
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When contracts are vague, Devereaux said the courts tend to side with the party that is insured—not the insurance company. “You also can’t make chicken soup out of chicken droppings,” Devereaux added. “You’ve got to be able to point to specific clauses in the contract and say the coverage comes under these specific provisions.”
But regardless of whether Resource Recovery wins that suit or not, it would help the state’s other lawsuit against property owners who sold it over-priced and contaminated land, according to Devereaux. As part of their defense, he said those being sued could ask the state what it had done to mitigate its damages. Suing the insurance company shows the state has made that effort, Devereaux said.
Law Professor Skeptical
But Ron Washburn, a Bryant University professor who teaches legal studies, was skeptical about how successful the state would be in its suit against the property owners.
A basic tenet of contract law, he said, is that you can enter into as good a deal, or as bad a deal, as you want. “If the state of Rhode Island had the power to enter into these bad deals, why are the landowners at fault?” Washburn asked. He said the landowners would be at fail if they had disclosed key documents related to the land deals - something that the state does allege in its lawsuit.
More importantly, though, Washburn questioned how the lawsuits would prevent similar waste and mismanagement from happening again. “I think that’s putting a Band-Aid on a gushing wound and I don’t see that action as preventing this from happening again,” Washburn said.
Related Articles
- State Sues Travelers Insurance for $16 Million Tied to Landfill
- Landfill Investigation: Cost of Employee ‘Theft’ as High as $24M
- Landfill Investigation: Former AG Arlene Violet Rips Lynch for Not Pressing Charges
- Something Rotten in Landfill Deal?
- Landfill: State Sues Three Firms
- State Landfill Sues Over Bad Land Deals
