The South Portland City Council will discuss next week whether to sue the Maine Municipal Association, which provides insurance to the city, to force the association to cover damages awarded to a Cape Elizabeth developer by the state’s highest court.
The award, for $380,000 in damages to Cape developer Joseph Frustaci, was first made in 2004 in Superior Court, as a result of a suit Frustaci brought against the city.
The Maine Supreme Court upheld that decision last week, deciding Frustaci had suffered losses when the city discontinued the last 25 feet of two roads that terminated at the boundary to his property.
Frustaci planned on developing that property, in Cape Elizabeth between Mitchell Road and Woodland Avenue and right along the South Portland city line, by using the two South Portland dead-end roads – Charlotte Street and Edgewood Road – as road access to the parcel. (He has since gone forward with the project, after buying more land in Cape Elizabeth to provide access off Mitchell Road.)
Abutting residents in South Portland were unhappy with his first plan, and lobbied the City Council to do something about it.
South Portland city attorney Mary Kahl said the residents did not legally have any say in the planning process of the development, because it was in Cape Elizabeth, but the council felt that because the South Portland residents on those two streets would bear the brunt of all effects of the development, such as increased traffic, they deserved a say.
Because there would be no direct access from Cape Elizabeth, it would have fallen on South Portland to provide services such as trash pickup and snow removal to the homes in the development, Kahl said.
Kahl said the city was “stonewalled” by Cape Elizabeth in an attempt to get South Portland residents input like that of Cape Elizabeth residents, into the planning process.
The discontinuance of the two roads was “a last resort,” Kahl said, so that South Portland would be in a position where Cape Elizabeth would have to negotiate if the development went along as proposed.
“It was not a goal to stop the subdivision,” Kahl said, “just to have a say in how it would be developed.”
In 2000, the city discontinued the roads, effectively removing access to Frustaci’s parcel.
State law says a town can discontinue a public road, but must pay damages, if any, to abutters.
Frustaci filed two complaints with Superior Court because the city did not award any damages for his loss in property value as a result of the discontinuances. In addition to requesting statutory damages, Frustaci also claimed the discontinuances amounted to an unconstitutional taking of private property by government.
A judge decided in favor of the city in most of the claims, but requiring the city pay the damages Frustaci claimed he suffered.
A jury trial, which ended in 2004, awarded Frustaci $380,000 in damages, which was “to the penny” what Frustaci wanted, said his attorney James Haddow. The written decision in that cases says the amount was the different in property value “immediately before and immediately after the discontinuance.”
The city appealed the award, saying because the judge had ruled the discontinuance was not an unconstitutional taking of private property, there should be no damages.
Last week’s Supreme Court decision rejected that argument, which Kahl called “very, very unusual.” She said she received e-mails from interested attorneys all over the country after the 2004 decision.
“It’s an unfortunate decision on the court’s part and obviously we think they were incorrect,” said South Portland Mayor Jim Hughes.
Frustaci’s attorney, Haddow, said after calculating pre- and post-judgment interest rates the amount the city of South Portland owes Frustaci is more like $500,000. Kahl said she did not know what the final amount would be.
She said the costs should be covered by South Portland’s insurance. However, one of the city’s insurers, the Maine Municipal Association, has claimed it is not responsible for covering the damages resulting from the court case.
Hughes said he did not think the city would end up actually suing to collect. “I fully expect they’ll pay up in the end,” he said.
Kahl said the irony is that Frustaci still connected a road in his development with Edgewood Road. Edgewood was a slightly different case than Charlotte Street because two Cape Elizabeth homes already used it for access.
When the city discontinued the end of Edgewood they granted an easement to those two homes. The road still physically exists there and extends slightly into Cape Elizabeth, but those two homes are the only ones legally allowed to use it.
“The reality is Frustaci has made a very handsome profit and has not been damaged at all,” Kahl said.
Send questions/comments to the editors.
