Rural Cmty. Coal., Inc. v. Vill. of Bloomingburg

• Decision Date: 05 June 2014
• Parties: RURAL COMMUNITY COALITION, INC., et al., Respondents, v. VILLAGE OF BLOOMINGBURG et al., Defendants, and Town of Mamakating et al., Respondents, and Shalom Lamm et al., Appellants.
• Court: New York Supreme Court — Appellate Division

118 A.D.3d 1092

987 N.Y.S.2d 654

2014 N.Y. Slip Op. 04110

RURAL COMMUNITY COALITION, INC., et al., Respondents,

v. VILLAGE OF BLOOMINGBURG et al., Defendants,andTown of Mamakating et al., Respondents,andShalom Lamm et al., Appellants.

Supreme Court, Appellate Division, Third Department, New York.

June 5, 2014.

Whiteman, Osterman & Hanna, LLP, Albany (John J. Henry of counsel), for appellants.

Montalbano, Condon & Frank, PC, New City (Kurt E. Johnson of counsel), for Rural Community Coalition, Inc. and others, for respondents.

Jacobowitz & Gubits, LLP, Walden (J. Benjamin Gailey of counsel), for Town of Mamakating, respondent.

Before: LAHTINEN, J.P., McCARTHY, ROSE, EGAN JR. and LYNCH, JJ.

LAHTINEN, J.P.

Appeals (1) from an order of the Supreme Court (Schick, J.), entered February 14, 2014 in Sullivan County, which granted plaintiffs' motion for a preliminary injunction, and (2) from an order of said court, entered April 14, 2014 in Sullivan County, which, among other things, denied certain defendants' motion to increase the amount of the undertaking set forth in the prior order.

This dispute arises out of a development in progress of a 396–unit townhouse project in defendant Village of Bloomingburg, a village located in Sullivan County that had a population of about 400 people. Defendants Shalom Lamm and Kenneth Nakdimen, acting at times through various entities, are the developers of the project, which traces its relevant beginning to 2006. Defendant Raymond Farms, LLC, a Lamm and Nakdimen entity, entered into a confidential agreement 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 the terms of the May 2006 confidential agreement, Sullivan Farms II and Roe were to play key roles in acquiring property for the project in the Village as well as the bordering defendant Town of Mamakating, ensuring that the portion of the property in the Town was annexed by the Village, and obtaining necessary approvals to construct 400 townhouse units.¹

The Town and Village found that it was in the public interest for the Village to annex about 240 acres from the Town, including land upon which the proposed project would be constructed. The Village annexed the relevant parcels by Local Law No. 3 (2006) of the Village (hereinafter the 2006 local law), which was filed with the Secretary of State in December 2006. Although the underlying order of annexation noted that the parcels would be zoned R–1 with a PUDR (planned unit development residential) overlay, the 2006 local law failed to mention the zoning classification, which was corrected in Local Law No. 2 (2008) of the Village (hereinafter the 2008 local law) that set forth the zoning classification. Thereafter, a State Environmental Quality Review Act ( see ECL art. 8) review of the project was conducted during 2008 and 2009. In May 2010, the Village entered into a development agreement in which the project developers agreed to complete or provide financial guarantees to construct a wastewater treatment plant and related infrastructure.² The Village Planning Board certified subdivision approval and the final subdivision plat was filed in June 2011. Building permits were issued for three model townhouses, which were completed by July 2012.

The developers then applied for additional building permits for phase one of the project, as well as work related to the wastewater treatment plant. Those permits were granted in October 2012 and, also that month, several plaintiffs in this case commenced a declaratory judgment action challenging the 2011 final subdivision approval ( Rural Community Coalition v. Village of Bloomingburg, Sup.Ct., Sullivan County, index no. 2888–12). In April 2013, Supreme Court (Cahill, J.) dismissed that action as time-barred and further noted that the court would not have granted injunctive relief since those plaintiffsestablished neither a likelihood of success nor that the equities weighed in their favor.

Construction thus continued, with the developers reportedly spending about $5 million on the wastewater treatment plant, which according to the developers has been completed. They also obtained 127 building permits for the first phase of the residential project and, by January 2014, were in various stages of construction on 84 units. At that time, the purported total spent on all aspects of the project since commencement in 2006 was, according to the developers, about $25 million. In January 2014, plaintiffs commenced this action seeking, among other things, a permanent injunction and alleging, among other things, that the 2006 annexation was void 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 zoning determinations, had various defects.

Upon commencing this action, plaintiffs moved for a preliminary injunction and obtained a temporary restraining order in January 2014 preventing Sullivan Farms II and Raymond Farms from proceeding with “any and all construction activity” on the project property. Prior to filing responsive papers or serving an answer, Lamm, Nakdimen, Sullivan Farms II, Raymond Farms and defendant Sullivan Farms III, LLC (hereinafter collectively referred to as the project defendants) requested an immediate hearing to seek vacatur 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 of Mamakating (hereinafter collectively referred to as the Town defendants) supported the relief sought by plaintiffs. After hearing the parties' arguments, Supreme Court issued an order preliminarily enjoining Sullivan Farms II and Raymond Farms from engaging in construction activity with very limited exceptions. Supreme Court further directed that plaintiffs post an undertaking in the amount of $100,000 and, thereafter, the court rejected the project defendants' application to increase, as well as plaintiffs request to decrease, the amount of the undertaking. By separate notices of appeal, the project defendants seek review of the order granting a preliminary injunction and the subsequent order refusing to alter the amount of the undertaking. This Court stayed so much of the preliminary injunction as prevented the completion of 12 buildings that had been framed (2014 N.Y. Slip Op. 67765[U] ), and subsequently ordered that the two appeals be heard together (2014 N.Y. Slip Op. 69161[U] ).

“[B]ecause preliminary injunctions prevent the litigants from taking actions that they are 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. v. City of New York, 79 N.Y.2d 236, 241, 581 N.Y.S.2d 734, 590 N.E.2d 719 [1992];see H. Meer Dental Supply Co. v. Commisso, 269 A.D.2d 662, 663, 702 N.Y.S.2d 463 [2000];Hendrickson v. Saratoga Harness Racing, 170 A.D.2d 719, 720, 565 N.Y.S.2d 610 [1991] ). A preliminary injunction constitutes “drastic relief” ( Troy Sand & Gravel Co., Inc. v. Town of Nassau, 101 A.D.3d 1505, 1509, 957 N.Y.S.2d 444 [2012];see Cooper v. Board of White Sands Condominium, 89 A.D.3d 669, 669, 931 N.Y.S.2d 696 [2011] ) and, while ordinarily a decision within the trial court's discretion, nonetheless the party seeking such relief “must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of an injunction and a balance of the equities in its favor” ( Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839, 840, 800 N.Y.S.2d 48, 833 N.E.2d 191 [2005];see Doe v. Axelrod, 73 N.Y.2d 748, 750, 536 N.Y.S.2d 44, 532 N.E.2d 1272 [1988];Moore v. Ruback's Grove Campers' Assn., Inc., 85 A.D.3d 1220, 1221, 924 N.Y.S.2d 197 [2011] ). The ruling on a motion for a preliminary injunction—whether granted or denied—does not establish the law of the case nor is it an adjudication on the ultimate merit of the underlying action ( see Town of Concord v. Duwe, 4 N.Y.3d 870, 875, 799 N.Y.S.2d 167, 832 N.E.2d 23 [2005];Trump on the Ocean, LLC v. State of New York, 79 A.D.3d 1325, 1327, 913 N.Y.S.2d 792 [2010],lv. dismissed and denied17 N.Y.3d 770, 929 N.Y.S.2d 74, 952 N.E.2d 1067 [2011] ).

The project defendants argue, among other things, that the lengthy delays in bringing this action, as well as the fact that an earlier action challenging the project was dismissed, weigh strongly against finding that plaintiffs met their burden of establishing a likelihood of success. At argument of the motion before Supreme Court, the court indicated that plaintiffs' contentions regarding the local board's zoning determinations did not appear sufficiently meritorious in light of the dismissal in the earlier action. The court was troubled, however, by (and ostensibly granted the preliminary injunction based upon) whether the failure to conduct a referendum rendered the annexation void and whether an alleged conflict of interest involving Berentsen (the Village Mayor) rendered the 2010 development agreement void.

Residents of an area proposed for annexation have the right to vote whether to approve the annexation ( seeN.Y. Const., art. IX, § 1[d]; General Municipal Law § 713[1] ). Although at the time this annexation occurred there was authority for permitting an annexation in some circumstances without a referendum ( see Matter of City of Utica v. Town of Frankfort, 10 N.Y.3d 128, 134 n. 1, 855 N.Y.S.2d 1, 884 N.E.2d 1000 [2008] [setting forth Appellate Division cases that had allowed such annexations] ), it is now clear that a referendum is required of residents in an area proposed for annexation ( see id. at 134–135, 855 N.Y.S.2d 1, 884 N.E.2d 1000). Here, however, plaintiffs waited over seven years before challenging the...