Lawyers fight Riverhead’s motion to dismiss Triple Five affiliate’s claim over EPCAL contract

Lawyers for Riverhead Town appeared in court Thursday, ready to convince a judge to throw out a lawsuit brought by Calverton Aviation and Technology to force the sale of city-owned land in Calverton Enterprise Park for $40 million.

Calverton Aviation and Technology (CAT), a subsidiary of North American business conglomerate Triple Five, filed a lawsuit in January against Riverhead Town, the town’s Community Development Agency and the Riverhead Industrial Development Agency to reverse the cancellation of the town’s sale. owns land and runways in the industrial park.

The land was formerly owned by the Navy and operated by the Northrop Grumman Corporation as an aircraft design and testing center; part of the land was sold and converted into industrial enterprises. In 2018, the city entered into a contract with CAT to sell and develop 1,644 acres of city-owned parkland, including two runways. The approximately 1,000 acres of land sold to CAT were to be preserved and preserved as wildlife habitat.

The Riverhead City Council voted unanimously to terminate the contract with CAT in October 2023. The decision came after the Riverhead Industrial Development Agency rejected CAT’s application for financial assistance to build the facility, allowing the city council to terminate the contract under the terms of the letter. agreement reached by the city and CAT in March 2022.

State Supreme Court Justice David Reilly described the case at the end of arguments Thursday at the courthouse in Riverhead as “not necessarily complex, but layered.” Reilly spent about two hours listening to each side’s arguments and peppering them with questions about various elements of the case.

The city filed a motion to dismiss the case in April. Reilly’s decision on the motion will determine whether the case proceeds; if this happens, the fate of the property could be sealed for years while the case is pending. The property currently has a notice of lien filed against it by CAT, which, unless and until it is vacated by the court, effectively prevents the city from transferring or encumbering the property until the lawsuit is completed completed.

And any outcome of the case will determine the fate of the property, which, regardless of owner, will be key to the future of the city’s economy for the next several decades.

Jarrett Behar of Certilman Balin Adler & Hyman, special counsel for Riverhead Town in the lawsuit, told the judge that CAT’s argument is “convoluted and complex” and the story “completely ignores” the law and documents presented in the case.

“This story just doesn’t make sense,” Behar said of the CAT complaint.

A topic that Reilly brought up during Behar’s questioning was the city’s obligations under the purchase agreement with CAT. The contract required the city to provide a property subdivision map—which would separate the land being sold to CAT from the land the city intended to keep—but the city was unable to obtain approval for the subdivision.

Behar argued that the city did not breach the contract when it did not file the subdivision application because the city had the right, under the terms of the contract, to terminate the agreement if the subdivision application was not filed on time.

Reilly asked whether the city has the right to rely on property served by the Riverhead Water District (a condition of the contract) since the city does not have the right to supply water within the Suffolk County Water Authority service area. Behar said CAT agreed to have the Riverhead Water District maintain the site when it entered into the agreement and continued to remain in the agreement even after the city encountered difficulties in obtaining permits for the water district to maintain the site.

Behar also responded to CAT’s claim that she was “tricked” into signing a written agreement with the city to apply for Riverhead IDA financial assistance. He called this statement “incredulous”; According to him, the agreement was drawn up on CAT letterhead.

Behar said CAT has no claims against the Riverhead Industrial Development Agency, which the city agency created by state law to encourage development. Challenges to that agency’s decision were to be made through a separate appeal process known as section 78 proceedings.

Mark Kasowitz of Kasowitz Benson Torres LLP, the lawyers hired by CAT to represent the company against the city, said it was clear the city was “desperate” to back out of the contract to sell the land to CAT.

If the Riverhead MAP had approved the project and the lease with CAT, the site’s public water supply would still be an issue under the purchase agreement with the city, Reilly said. CAT will only have “rent and pray”.

Kasowitz said the city should not have involved Riverhead MAP in the first place. The city brought IDA into the deal only to “offload what was becoming a political hot potato,” he said. City politicians have made a rushed effort to get IDA to make a decision before the 2023 city elections, he said. He noted that after the IDA decision was made, former supervisor Yvette Aguiar bragged about quitting the contract.

Reilly asked Kasowitz why, if the company believed the city was acting in bad faith, it signed a letter of agreement with the city to file an application with the Riverhead IDA.

“Help me be sympathetic to a multinational conglomerate,” Reilly said.

Kasowitz said the city improperly gave the Riverhead IDA the authority to determine whether a company is “qualified and eligible,” a decision a municipality must make before selling land without bid in an urban renewal zone such as EPCAL.

Behar said the city only found CAT “qualified and compliant” once, in 2018, but under the purchase agreement it had the authority to allow the IDA to determine whether CAT still had the financial ability to develop the project.

Kasowitz and his lawyer, Ronald Rossi, argued that the case should continue because the city made fraudulent statements and misrepresentations that should be decided by the court. Rossi said CAT promised to invest in the project and create jobs in the city, but city politicians were afraid of the public reaction.

Reilly did not rule on the motion to dismiss after arguments concluded. He advised both parties to submit a three-page letter outlining their thoughts on whether the court should grant the case for summary judgment. Summary judgments are decisions made by a court in favor of one party without a full trial.

“I think we had a good argument today. I think our attorneys have done a great job of preparing for this,” Riverhead City Attorney Eric Howard, who was in the courtroom for the argument, said in an interview after the judge adjourned. “Mr. Behar was eloquent. He understood all the issues clearly (and) presented them very well to the court, and I think the judge was excellent. It is clear that he read the newspapers, he knows all the facts, and I think, I am confident that he will make a fair decision once he checks everything.”

Kasowitz said in an interview after the hearing that he “thought it was a very good exercise before a smart judge, and at the end of the day we have a very detailed and serious complaint.”

“I think there will be a motion to dismiss and then we will move forward with discovery and then we can hopefully quickly prosecute this case and then restore CAT’s rights to the contract so that the truly valuable project is what they are planning to build here could help the people of this city,” Kasowitz said.