PENINSULA TOWNSHIP, MI – Another lawsuit has hit Michigan’s wine country.
A second insurance company sued Peninsula Township, a stretch of farmland that juts into Grand Traverse Bay, arguing it shouldn’t be required to cover nearly $50 million in lawsuit damages owed to the wineries of Old Mission Peninsula.
Emcasco Insurance Company and Employers Mutual Casualty Company filed the suit in the U.S. Western District of Michigan on Sept. 12.
It came in response to an October 2020 complaint brought by 11 wineries that said Peninsula Township’s strict agricultural zoning rules restricted business and violated their constitutional rights.
The yearslong court battle ended in July when U.S. District Court Judge Paul Maloney awarded the wineries millions of dollars in damages for “an impossible to understand ordinance and arbitrary enforcement of the same.”
Related: After a five-year legal battle, Old Mission Peninsula wineries win $50 million
To pay the damages, a special assessment, or additional property taxes, will be added to the Peninsula Township tax roll. Liability insurance will also cover some of the cost, but it’s unclear how much will be paid out – especially as two insurers are now fighting the bill.
In a complaint, Emcasco Insurance Company is arguing it has “no obligation” to pay under the township’s policies that ran from July 2019 through April 2021. It said the policies covered damages for injuries and property damage, not “zoning or permitting duties” with land use.
“When we have no duty to defend, we will have the right to defend, or to participate in the defense of, the insured against any other ‘suit’ seeking damages to which this insurance may apply,” the complaint said.
The lawsuit, which names Peninsula Township, the wineries and an intervenor group called Protect the Peninsula, is seeking a declaration from the court that “no coverage is available” under Emcasco’s policies.
Related: After Michigan peninsula lost $50M winery lawsuit, insurer fights paying it
A similar suit brought last month claimed U.S. Specialty Insurance Company also shouldn’t be on the hook because Peninsula Township’s policy had ended years earlier. And even if that township was covered, the insurer said it would only be required to pay up to $100,000.
The Peninsula Township board went into closed session Tuesday, Sept. 23 to discuss both lawsuits with attorneys. An agenda said holding an “open meeting would have a detrimental financial effect” on the township’s position.
“Nothing came from that as far as a vote or a decision. We have more information that we need to gather,” said Peninsula Township Supervisor Maura Sanders.
Sanders previously told MLive that the township will “vigorously defend” its residents and “seek to recover any and all insurance coverage that is due.” She said three insurance companies provided coverage during the time the wineries sought damages.
“Understandably, Peninsula Township residents and the public are interested in knowing how much coverage is available, but because each insurance company has a different response to the order and judgment entered by Judge Maloney, we have been awaiting their final decisions,” she said in an August statement.
Related: Michigan’s wine country considers selling lighthouse to pay for $50M lawsuit
The township board is also exploring other ways to pay the judgement that will minimize any cost on residents.
Sanders floated potential cost-saving measures in a July 30 memo like closing all township offices, suspending planning and zoning and halting park and cemetery maintenance.
It also mentioned the “review and potential sale” of township assets like Mission Point Lighthouse, an iconic site built in 1870 at the tip of Old Mission Peninsula. Others listed are Archie Roadside Park, some lots at Haserot Beach and Bowers Harbor Park.
The township board also previously voted to dispute the judge’s decision in the 6th Circuit U.S. Court of Appeals.
Michigan’s wine country sued again, as another insurer says it won’t pay $50M lawsuit
