East Lyme to review legal battle with developer

East Lyme - The Board of Selectmen will meet in closed session tonight to discuss litigation by New England National, the development company engaged in a legal dispute with the town.

The company, representing Robert Blatt and the Torrance family trusts, is appealing previous court decisions in U.S. District Court in New Haven. New England National is seeking about $13 million overall in its most recent filing.

New England National is also seeking a formal injunction to prevent the town from placing a conservation easement on the town's 301-acre Darrow Pond property, which the company says would interfere with its easement rights.

First Selectman Paul Formica said the town's attorneys will give a status report to the board tonight regarding the latest activities of the court.

The legal dispute with the town began about a decade ago when the company had claimed in bankruptcy court that the town over-valued the assessment of its land in the vicinity of Darrow Pond.

The town settled the litigation and signed a compromise agreement with the company in 2008, but New England National claimed in an adversary proceeding in 2010 that the town did not uphold certain terms of that agreement. The town disputed these claims in court. Last year, the federal bankruptcy court said it lacked jurisdiction over the matter and dismissed that adversary proceeding.

New England National also filed a second complaint in 2011, alleging among other claims that the town failed to supervise some of its employees. The court had granted in part a motion to dismiss the proceeding. New England National appealed both cases in U.S. District Court last year.

As part of those appeals, New England National is revising some of its previous complaints to encompass additional claims. Judge Stefan Underhill is hearing the case.

New England National's most recent filing, on March 26, is called the "third amended and restated, verified complaint." The company's claims include that the town's decision to settle with its own insurance company violated the compromise agreement.

In 2011, the town purchased the Darrow Pond acreage from Webster Bank for $4.15 million for open space in partnership with the Trust for Public Land. Parts of the property held easements from the time when New England National and Niantic Real Estate owned both the property and the neighboring land. The town has maintained that the conservation easement would not remove the other easements but would retain some of the company's responsibilities for maintenance and use of the pond.

Formica said Tuesday he had just received the amended complaint, so he couldn't directly comment on it.

"I hope with each flurry of activity, we get closer to the end," he said about the court case.

A regular Board of Selectmen meeting will follow the 7 p.m. executive session.

k.drelich@theday.com

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