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Oyster Bay board OKs $800G payment to settle dispute with insurer over legal fees in day laborer case

Town of Oyster Bay officials sued the Illinois

Town of Oyster Bay officials sued the Illinois National Insurance Company in 2019, seeking reimbursement of legal fees the town paid to lawyers representing Centro de la Comunidad Hispana de Locust Valley and The Workplace Project in a case over an ordinance cracking down on day laborers. Credit: Anthony Lanzilote

The Oyster Bay Town Board has voted to accept $800,000 to settle a lawsuit the town brought against an insurance company seeking $1.5 million the town paid after losing a lawsuit over a day laborer ordinance.

The town sued the Illinois National Insurance Company in state court in 2019, seeking the money it paid to the lawyers representing Centro de la Comunidad Hispana de Locust Valley and The Workplace Project. The groups sued the town in federal court in 2010 to overturn an ordinance intended to prevent day laborers from gathering on the street in search of work.

A federal judge ordered the town to pay the plaintiffs’ legal fees after the ordinance was struck down and the town lost on appeal.

The town argued in legal filings that the municipal insurance policy it obtained from the Illinois National Insurance Company covered the legal fees ordered by the judge. AIG Property Casualty, as an authorized representative of the insurer, had told the town that coverage for attorney fees was limited to $100,000. Lawyers for Miranda Slone Sklarin Verveniotis LLP, representing the town, argued in court filings that the policy limit had been vaguely worded and was unenforceable.

Lawyers from Kaufman Dolowich & Voluck LLP, representing the insurance company, alleged in a Dec. 2, 2020, court filing that the town was refusing to provide information sought in discovery and blamed town officials, including former Oyster Bay Supervisor John Venditto, for enacting an unconstitutional ordinance that they knew would result in litigation. Venditto, who died last year, resigned in 2017 and pleaded guilty to state corruption charges in 2019.

"Having refused to compromise and/or yield, the [Town of Oyster Bay] engaged in years long litigation wherein it lost each step of the way," the insurance company’s lawyers wrote. "Now, the [Town of Oyster Bay] wants its insurer … to ‘foot the bill’ for the [Town of Oyster Bay’s] conscious decision to engage in a war of attrition with the Hispanic community."

Lawyers for the insurance company did not respond to a request for comment.

The town’s lawyers responded in a court filing that the insurance company was seeking "irrelevant" information and that they were offended by the insurer’s "blatantly transparent attempts to pander to the Hispanic community … and malign the town and memory of now-deceased former Supervisor Venditto in the process."

In January, the parties went into commercial mediation, and the town’s lawyers notified the court in March that the matter had been settled, pending formal approval by the town board.

Last week, the board approved the settlement 7-0 at its regular meeting. Town Supervisor Joseph Saladino declined to be interviewed.

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