Wilmorite, Inc. v. Eagan Real Estate, Inc., 77-CV-47.

• Decision Date: 29 September 1977
• Docket Number: No. 77-CV-47.,77-CV-47.
• Citation: 454 F. Supp. 1124
• Parties: WILMORITE, INC., Fayetteville Plaza, Inc. and James P. Wilmot, d/b/a Fayetteville Mall, Plaintiffs, v. EAGAN REAL ESTATE, INC., Eagan Real Estate Management Corp., Eagan Real Estate, Leo T. Eagan, William Eagan, Edward Eagan, Kimbrook Realty, Kimbrook Corp., CFB Development Corp., Camperlino and Fatti Builders, Inc., Frank Bargabos, Pyramid Development, Inc., Pyramid Brokerage Company, Inc., Michael Falcone, Allied Stores Corporation, Dey Brothers and Co., Inc., Winmar Company, Inc., Barney Deasy, Paul D. Lonergan, Katherine M. Shea, John Murphy, Earl Oot, Roger Smith, Arthur Reed and David C. Murray, Defendants.
• Court: U.S. District Court — Northern District of New York

454 F. Supp. 1124

WILMORITE, INC., Fayetteville Plaza, Inc. and James P. Wilmot, d/b/a Fayetteville Mall, Plaintiffs, v. EAGAN REAL ESTATE, INC., Eagan Real Estate Management Corp., Eagan Real Estate, Leo T. Eagan, William Eagan, Edward Eagan, Kimbrook Realty, Kimbrook Corp., CFB Development Corp., Camperlino and Fatti Builders, Inc., Frank Bargabos, Pyramid Development, Inc., Pyramid Brokerage Company, Inc., Michael Falcone, Allied Stores Corporation, Dey Brothers and Co., Inc., Winmar Company, Inc., Barney Deasy, Paul D. Lonergan, Katherine M. Shea, John Murphy, Earl Oot, Roger Smith, Arthur Reed and David C. Murray, Defendants.

No. 77-CV-47.

United States District Court, N. D. New York.

September 29, 1977.

Harris, Beach, Wilcox, Rubin & Levy, Rochester, N. Y., for plaintiffs; James M. Hartman, Rochester, N. Y., of counsel.

Bond, Schoeneck & King, Syracuse, N. Y., for Eagan defendants; N. Earle Evans, Jr., Syracuse, N. Y., of counsel.

Hinman, Howard & Kattel, Binghamton, N. Y., for Allied defendants; Pamela S. Dwyer, New York City, Sullivan & Cromwell, New York City, of counsel.

Hancock, Estabrook, Ryan, Shove & Hust, Syracuse, N. Y., for Pyramid defendants; William L. Allen, Jr., Syracuse, N. Y., of counsel.

Nixon, Hargrave, Devans & Doyle, Rochester, N. Y., for Winmar defendants; John Stuart Smith, Rochester, N. Y., of counsel.

Urciuoli & Covino, Liverpool, N. Y., for Kimbrook defendants; Mario D'Arrigo, Liverpool, N. Y., of counsel.

Nottingham, Paltz, Cerio & Engel, Syracuse, N. Y., for defendant Murray; Richard L. Engel, Syracuse, N. Y., of counsel.

Bryant, O'Dell & Basso, Syracuse, N. Y., for defendant Pyramid Brokerage Co.; John D. Bryant, Syracuse, N. Y., of counsel.

Oot, Setright & Ciabotti, Syracuse, N. Y., for defendant Oot; Victor J. Ciabotti, Syracuse, N. Y., of counsel.

R. J. and P. R. Shanahan, Syracuse, N. Y., for defendant Reed; William F. Lynn, Syracuse, N. Y., of counsel.

MEMORANDUM-DECISION AND ORDER

PORT, Senior District Judge.

I. THE MOTIONS

In this $72,000,000 damage action for alleged violations of the antitrust laws, brought by a developer of regional shopping centers against competing developers of similar shopping areas and others in concert with them, the defendants have moved to dismiss the complaint for failure to state a claim or for summary judgment.

II. THE COMPLAINT

Accepting the material facts alleged in the complaint as true for the purposes of the motions to dismiss, see Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 740, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976), it alleges as follows:

Plaintiffs.

Plaintiffs are developers and owners of regional shopping centers¹ in New York and other states. They developed and built Fayetteville Mall and are in the process of developing Great Northern Mall.

Defendants.

Twenty-seven defendants are named. They are mainly real estate investors and developers in Onondaga County. The Eagan defendants² are the largest real estate investors and brokers in the county, owning and operating three regional shopping centers, Shoppingtown, Fairmount Fair, and Penn Can Mall. The Kimbrook defendants³ own and operate a Planned Unit Development (PUD) comprised of residential and commercial uses, in northern Onondaga County. The Kimbrook defendants are economically controlled by the Eagan defendants.⁴ The Pyramid defendants,⁵ who are independent of the other developers, own and operate regional shopping centers in Onondaga County including Seneca Mall, River Mall and Pyramid Malls. The Allied defendants⁶ operate a department store in Shoppingtown and are part of the joint venture now developing Penn Can Mall. In addition to these major defendants, various individuals⁷ are named who either are related to one of the major groups of defendants or have participated in the opposition to plaintiffs' development in Onondaga County.

Fayetteville Mall.

In 1965 plaintiff, Wilmorite, Inc., planned to build a regional shopping center, Fayetteville Mall, in Fayetteville, New York. Plaintiff obtained an option to purchase a large tract of land known as Andrea Acres on which to build Fayetteville Mall. Fayetteville Mall would compete with Shoppingtown, located two miles away. In June of that year, efforts were initiated by plaintiffs to change the zoning of Andrea Acres from residential and agricultural to commercial. In January of 1967, the Manlius Town Board amended its zoning ordinance and rezoned Andrea Acres as "Regional Shopping District."⁸

Between June, 1965 and the change of the zoning ordinance creating the "Regional Shopping District", defendants conspired to obstruct its passage. They instigated opposition to the amendment among neighboring merchants and homeowners. They retained witnesses to appear on behalf of the homeowners at public hearings and created publicity adverse to the amendment. They instigated and financed legal proceedings in opposition to the rezoning.

The first legal proceeding brought by any of the defendants occurred after plaintiffs' initial efforts to obtain a rezoning from the town authorities. These efforts had resulted in the creation of a "Residential Shopping District" zone for Andrea Acres. Although not alleged in the complaint, the proceeding was cited by defendants: Beneke v. Board of Appeals, 51 Misc.2d 20, 273 N.Y.S.2d 121 (Sup.Ct.1966). This was an Article 78 proceeding which annulled the affirmance by the Zoning Board of Appeals of the issuance of a building permit for Fayetteville Mall on the grounds that there was insufficient evidence for the building inspector to determine whether the mall would comply with the requirements for the "Residential Shopping District" which had been created at plaintiff's behest. Subsequently, the ordinance was further amended to create the "Regional Shopping District" in January of 1967.

The complaint further alleged that after the zoning ordinance was amended to create the Regional Shopping District, two suits were commenced challenging the amendment. One was brought by 148 neighboring property owners and the other by an individual resident of the town. Both, however, were organized and financed by various defendants including the Eagans and Allied. Although both actions were ultimately dismissed by the New York Court of Appeals in 1971,⁹ they had been successful below. Justice Farnham of the New York State Supreme Court held the amendment void and invalid for lack of a comprehensive plan and for lack of public notice concerning various conditions on the use of Andrea Acres.¹⁰ The Appellate Division reversed in part, holding that the amendment was enacted pursuant to a comprehensive plan, but affirmed as to the lack of notice of the conditions on the lands' use.¹¹

The opposition to the zoning amendment and the subsequent lawsuits were organized and financed with the intent of delaying or preventing the development of Fayetteville Mall. Defendants intended to misuse the judicial process and to defeat the lawfully enacted zoning amendment in order to eliminate plaintiffs as competitors within Onondaga County. To that extent, the opposition and the lawsuits were "sham and wrongful legal proceedings in opposition to Fayetteville Mall."¹² More generally, defendants conspired to restrain trade, eliminate competition, prevent the development of plaintiffs' shopping center, limit the number of regional shopping centers and the extent of commercial space to be leased for that purpose, and finally, to monopolize the development of regional shopping centers within Onondaga County.

As a result of defendants' conduct, the construction of Fayetteville Mall was delayed for six years. The delay caused an increase in construction costs and a decrease in plaintiff's profits. The delay further prevented plaintiffs from obtaining certain commercial tenants for Fayetteville Mall and enabled Shoppingtown to lease space to a major department store and other tenants who had earlier signed lease options for Fayetteville Mall.

Great Northern Mall.

After the dismissal of the Fayetteville Mall lawsuits in 1971,¹³ defendants' conduct is free of complaint by the plaintiffs until 1975, when plaintiffs initiated plans to develop Great Northern Mall. This proposed mall would compete with defendants' regional shopping center, Penn Can Mall. Once again, the land involved was zoned residential and agricultural, and plaintiffs applied for a zoning change to permit the construction of a regional shopping center. At the same time, the Kimbrook defendants were applying for a zoning change to permit a 23 acre shopping center. By March of 1976, the zoning change for plaintiffs had been granted and Kimbrook withdrew its request.

Following the zoning change, litigation again ensued. In March, 1976, Kimbrook sued to declare the zoning amendment for Great Northern Mall invalid.¹⁴ In June, Kimbrook brought another suit—an Article 78 to reverse the recommendation of the Onondaga County Planning Board which had recommended the change and the resolution of the Town Board of Clay by which the zoning amendment had been enacted. This latter case was dismissed by the court in December of 1976. As had been the case with the Fayetteville Mall litigation, both of these suits were brought at the direction of the Eagans and were encouraged and financed by those defendants along with Allied. In addition, these two recent suits were also instigated and financed by the Pyramid defendants.

The same motives which had inspired the earlier Fayetteville Mall litigation are responsible for these two suits. Defendants intend to misuse the judicial process and defeat the zoning change in order to delay or prevent the development of Great Northern Mall. The "sham and wrongful legal proceedings"¹⁵ are motivated by anticompetitive and monopolistic purposes. Finally, the suits are affecting Great Northern Mall in the same manner that the earlier litigation affected Fayetteville Mall: Development and construction...