| Rural Community Coalition, Inc. v Village ofBloomingburg |
| 2014 NY Slip Op 04110 [118 AD3d 1092] |
| June 5, 2014 |
| Appellate Division, Third Department |
[*1]
| Rural Community Coalition, Inc., et al.,Respondents, v Village of Bloomingburg et al., Defendants, and Town ofMamakating et al., Respondents, and Shalom Lamm et al.,Appellants. |
Whiteman, Osterman & Hanna, LLP, Albany (John J. Henry of counsel), forappellants.
Montalbano, Condon & Frank, PC, New City (Kurt E. Johnson of counsel), forRural Community Coalition, Inc. and others, for respondents.
Jacobowitz & Gubits, LLP, Walden (J. Benjamin Gailey of counsel), for Townof Mamakating, respondent.
Lahtinen, J.P. Appeals (1) from an order of the Supreme Court (Schick, J.), enteredFebruary 14, 2014 in Sullivan County, which granted plaintiffs' motion for a preliminaryinjunction, and (2) from an order of said court, entered April 14, 2014 in SullivanCounty, which, among other things, denied certain defendants' motion to increase theamount of the undertaking set forth in the prior order.
This dispute arises out of a development in progress of a 396-unit townhouse projectin [*2]defendant Village of Bloomingburg, a villagelocated in Sullivan County that had a population of about 400 people. DefendantsShalom Lamm and Kenneth Nakdimen, acting at times through various entities, are thedevelopers of the project, which traces its relevant beginning to 2006. DefendantRaymond Farms, LLC, a Lamm and Nakdimen entity, entered into a confidentialagreement in May 2006 with, among others, Duane Roe and Roe's then corporation,Sullivan Farms II (which is now a Lamm and Nakdimen controlled entity). Under theterms of the May 2006 confidential agreement, Sullivan Farms II and Roe were to playkey roles in acquiring property for the project in the Village as well as the borderingdefendant Town of Mamakating, ensuring that the portion of the property in the Townwas annexed by the Village, and obtaining necessary approvals to construct 400townhouse units.[FN1]
The Town and Village found that it was in the public interest for the Village to annexabout 240 acres from the Town, including land upon which the proposed project wouldbe constructed. The Village annexed the relevant parcels by Local Law No. 3 (2006) ofthe Village (hereinafter the 2006 local law), which was filed with the Secretary of Statein December 2006. Although the underlying order of annexation noted that the parcelswould be zoned R-1 with a PUDR (planned unit development residential) overlay, the2006 local law failed to mention the zoning classification, which was corrected in LocalLaw No. 2 (2008) of the Village (hereinafter the 2008 local law) that set forth the zoningclassification. Thereafter, a State Environmental Quality Review Act (see ECLart 8) review of the project was conducted during 2008 and 2009. In May 2010, theVillage entered into a development agreement in which the project developers agreed tocomplete or provide financial guarantees to construct a wastewater treatment plant andrelated infrastructure.[FN2] The Village Planning Board certifiedsubdivision approval and the final subdivision plat was filed in June 2011. Buildingpermits were issued for three model townhouses, which were completed by July2012.
The developers then applied for additional building permits for phase one of theproject, as well as work related to the wastewater treatment plant. Those permits weregranted in October 2012 and, also that month, several plaintiffs in this case commenced adeclaratory judgment action challenging the 2011 final subdivision approval (RuralCommunity Coalition v Village of Bloomingburg, Sup Ct, Sullivan County, indexno. 2888/12). In April 2013, Supreme Court (Cahill, J.) dismissed that action astime-barred and further noted that the court would not have granted injunctive reliefsince those plaintiffs established neither a likelihood of success nor that the equitiesweighed in their favor.
Construction thus continued, with the developers reportedly spending about $5million on the wastewater treatment plant, which according to the developers has beencompleted. They also obtained 127 building permits for the first phase of the residentialproject and, by January [*3]2014, were in various stagesof construction on 84 units. At that time, the purported total spent on all aspects of theproject since commencement in 2006 was, according to the developers, about $25million. In January 2014, plaintiffs commenced this action seeking, among other things, apermanent injunction and alleging, among other things, that the 2006 annexation wasvoid because inhabitants of the annexed area had not voted on the issue of annexation,that the 2010 development agreement was void because the then Mayor of the Village(Mark Berentsen) had a conflict of interest, and that the 2008 local law, as well as zoningdeterminations, had various defects.
Upon commencing this action, plaintiffs moved for a preliminary injunction andobtained a temporary restraining order in January 2014 preventing Sullivan Farms II andRaymond Farms from proceeding with "any and all construction activity" on the projectproperty. Prior to filing responsive papers or serving an answer, Lamm, Nakdimen,Sullivan Farms II, Raymond Farms and defendant Sullivan Farms III, LLC (hereinaftercollectively referred to as the project defendants) requested an immediate hearing to seekvacatur of the temporary restraining order. The parties appeared before Supreme Court(Schick, J.) and, at that time, the Town and defendant Town Board of the Town ofMamakating (hereinafter collectively referred to as the Town defendants) supported therelief sought by plaintiffs. After hearing the parties' arguments, Supreme Court issued anorder preliminarily enjoining Sullivan Farms II and Raymond Farms from engaging inconstruction activity with very limited exceptions. Supreme Court further directed thatplaintiffs post an undertaking in the amount of $100,000 and, thereafter, the courtrejected the project defendants' application to increase, as well as plaintiffs request todecrease, the amount of the undertaking. By separate notices of appeal, the projectdefendants seek review of the order granting a preliminary injunction and the subsequentorder refusing to alter the amount of the undertaking. This Court stayed so much of thepreliminary injunction as prevented the completion of 12 buildings that had been framed(2014 NY Slip Op 67765[U] [2014]), and subsequently ordered that the two appeals beheard together (2014 NY Slip Op 69161[U] [2014]).
"[B]ecause preliminary injunctions prevent the litigants from taking actions that theyare otherwise legally entitled to take in advance of an adjudication on the merits,they should be issued cautiously" (Uniformed Firefighters Assn. of Greater N.Y. vCity of New York, 79 NY2d 236, 241 [1992]; see H. Meer Dental Supply Co. vCommisso, 269 AD2d 662, 663 [2000]; Hendrickson v Saratoga HarnessRacing, 170 AD2d 719, 720 [1991]). A preliminary injunction constitutes "drasticrelief" (Troy Sand &Gravel Co., Inc. v Town of Nassau, 101 AD3d 1505, 1509 [2012]; see Cooper v Board of White SandsCondominium, 89 AD3d 669, 669 [2011]) and, while ordinarily a decisionwithin the trial court's discretion, nonetheless the party seeking such relief "mustdemonstrate a probability of success on the merits, danger of irreparable injury in theabsence of an injunction and a balance of equities in its favor" (Nobu Next Door, LLC v Fine ArtsHous., Inc., 4 NY3d 839, 840 [2005]; see Doe v Axelrod, 73 NY2d 748,750 [1988]; Moore v Ruback'sGrove Campers' Assn., Inc., 85 AD3d 1220, 1221 [2011]). The ruling on amotion for a preliminary injunction—whether granted or denied—does notestablish the law of the case nor is it an adjudication on the ultimate merit of theunderlying action (see Town ofConcord v Duwe, 4 NY3d 870, 875 [2005]; Trump on the Ocean, LLC v State of New York, 79 AD3d1325, 1327 [2010], lv dismissed and denied 17 NY3d 770 [2011]).
The project defendants argue, among other things, that the lengthy delays in bringingthis action, as well as the fact that an earlier action challenging the project was dismissed,weigh [*4]strongly against finding that plaintiffs mettheir burden of establishing a likelihood of success. At argument of the motion beforeSupreme Court, the court indicated that plaintiffs' contentions regarding the local board'szoning determinations did not appear sufficiently meritorious in light of the dismissal inthe earlier action. The court was troubled, however, by (and ostensibly granted thepreliminary injunction based upon) whether the failure to conduct a referendum renderedthe annexation void and whether an alleged conflict of interest involving Berentsen (theVillage Mayor) rendered the 2010 development agreement void.
Residents of an area proposed for annexation have the right to vote whether toapprove the annexation (see NY Const, art IX, § 1 [d]; GeneralMunicipal Law § 713 [1]). Although at the time this annexation occurredthere was authority for permitting an annexation in some circumstances without areferendum (see Matter of Cityof Utica v Town of Frankfort, 10 NY3d 128, 134 n 1 [2008] [setting forthAppellate Division cases that had allowed such annexations]), it is now clear that areferendum is required of residents in an area proposed for annexation (see id. at134-135). Here, however, plaintiffs waited over seven years before challenging theannexation. During such time extensive governmental activity occurred—rangingfrom review under the State Environmental Quality Review Act to various zoningdeterminations—and, in reliance thereon, the project defendants expendedsignificant money. Further, there is no indication that plaintiffs who reside in the annexedarea or other residents of that area did not receive Village municipal services during thepast seven years or were precluded from participating in Village governmental activities,including providing input to the Planning Board regarding the proposed project as itprogressed.
We are unpersuaded by plaintiffs' assertion that, in essence, the failure to conduct areferendum leaves the annexation subject to being set aside at any time in the futurewithout regard to any time limitation. Cases involving an alleged failure to adhere to avoting requirement during an annexation have generally been found to be subject to apertinent limitations' period (see CG6 Concrete Specialists, Inc. v Department ofPolice, Town of Berryville, Va., 2004 WL 2203451, *2, 2004 US Dist LEXIS19663, *6 [WD Va, Sept. 30, 2004, No. 5:04CV00014]; St. Louis County, Mo. v Cityof Town & Country, 590 F Supp 731, 735 [ED Mo 1984]; cf. Atkins vTown of Rotterdam, 266 AD2d 631, 633 [1999]). A statute of limitations may applyeven when conduct inconsistent with a statute or the state constitution is alleged (seeNew York Pub. Interest Research Groups v Levitt, 62 AD2d 1074, 1075 [1978],appeals dismissed 46 NY2d 849, 850 [1979]; see also Matter of Smith v Town of Plattekill, 13 AD3d695, 697 [2004]). Simply stated, "a [s]tatute of [l]imitations does not have the effectof curing the underlying wrong, but rather extinguishes the right to judicial relief"(New York Pub. Interest Research Groups v Levitt, 62 AD2d at 1075). We neednot decide the particular limitations' period for challenging an annexation made without areferendum—whether four months (see CPLR 217), six years (seeCPLR 213) or some time in between (see e.g. CPLR 9802). Plaintiffs failed toestablish a likelihood that a challenge to the annexation based upon the failure to conducta referendum would be viable where, as here, over seven years have passed since theannexation.[FN3][*5] Next, we consider the 2010 development agreement, which plaintiffs contend isvoid because Berentsen had a conflict of interest arising from the 2009 acquisition ofsome project property by himself and his parents (see General Municipal Law§ 804). The Second Department, in a case affirmed by the Court ofAppeals, has held that the three-year statute of limitations of CPLR 214 (2) applies tosuch a claim (see Stettine v County of Suffolk, 105 AD2d 109, 113 [1984],affd 66 NY2d 354 [1985]). The Berensten deeds had been a matter of publicrecord since 2009, before the 2010 development agreement was executed. Any conflictwas known or should have been known as of the execution in 2010 of the developmentagreement, which was also a public document. This action was not brought until2014.
Long delays can be relevant to the issue of whether equitable injunctive relief shouldbe granted (see e.g. Zaccaro v Congregation Tifereth Israel of Forest Hills, 20NY2d 77, 80 [1967]; Bailey vChernoff, 45 AD3d 1113, 1115 [2007]). Although plaintiffs allege someunsavory (or worse) conduct by certain people involved directly or indirectly in theproject, it is not clear from this record whether they can successfully show that theproject defendants engaged in such conduct so as to prevent them from relying onequitable defenses such as laches (see generally Sparkling Waters Lakefront Assn., Inc. v Shaw,42 AD3d 801, 804 [2007]; Matter of Uciechowski v Ehrlich, 221 AD2d 866,868 [1995]). There is no dispute that plaintiffs have been aware of the pending projectfor many years, with at least one of them having sold property to Sullivan Farms II in2006, many live nearby and are capable of observing the ongoing construction, and someparticipated in the 2012 lawsuit challenging the final subdivision approval. No appealwas taken from the dismissal of that lawsuit and, notwithstanding the fact thatconstruction has been ongoing since 2012, plaintiffs did not commence this action untilJanuary 2014. Plaintiffs alleged before Supreme Court that part of that delay was due tothe fact that they did not discover the May 2006 confidential agreement until 2013;however, their claims are not premised primarily upon that agreement, but rely insteadupon aged defects in public actions by various Village entities. The project hasproceeded and was well under way at the time that plaintiffs commenced this action, withseveral buildings near completion and substantial work having been done on thewastewater treatment plant.
The delay in bringing this action is significant and a route around the time-relatedissues to the merits has not been clearly plotted in the papers before us.[FN4] Upon review of therecord, we are unpersuaded that plaintiffs made a "strong showing" of likelihood ofsuccess on the merits (Smith v City of Albany, 115 AD2d 825, 826 [1985][internal quotation marks and citation omitted]). "Thus, the first prong of the test forpreliminary injunctive relief . . . was not satisfied, and, as a matter of law, apreliminary injunction should not have been issued" (Doe v Axelrod, 73 NY2d at751).
The other grounds asserted by plaintiffs and the Town defendants for upholding thepreliminary injunction are unavailing. The project defendants' remaining arguments areacademic, including their appeal from the separate order denying their request to increasethe amount of the undertaking.
McCarthy, Rose, Egan Jr. and Lynch, JJ., concur. Ordered that the order enteredFebruary 14, 2014 is reversed, on the law, with costs, and motion for a preliminaryinjunction denied. Ordered that the appeal from the order entered April 14, 2014 isdismissed, as academic.
Footnote 1:Roe reportedly thereafterinaccurately portrayed himself as the developer and the project as 125 second homes witha golf course.
Footnote 2:One of the conditionsincluded in the Village Planning Board's conditional approval of the project was that theproject developers either complete or financially guarantee the construction of awastewater treatment plant and related infrastructure.
Footnote 3:The fact that the 2008local law added the zoning classifications omitted from the 2006 local law (which hadeffected the annexation) does not extend the time to challenge the 2006 annexation.
Footnote 4:Although thetime-related issues are affirmative defenses, the project defendants vigorously assertedsuch issues before Supreme Court.