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Hi and welcome to JA. Ray here to help you today.
I am so sorry you have had to got through all of this.It is certainly possible to sue the town for damages including mental anguish if the town was negligent or grossly negligent.
You would have lawyer file a demand letter and then a civil suit if necessary.
You need a civil litigation lawyer , you can locate one here.
You can also contact the town and ask about filing a damage claim, they are likely self insured and self adjust.You would submit a claim for damages for all your harms including mental anguish.You may need some estimates to clean and restore your house.
I very much appreciate the chance to help you today.If you get me the town I will get you contact information.
If you can positive rate it is always much appreciated.Take care now.