Amended Ghermezian Complaint

Analysis of the legal situation by Robert Gass

I am not an attorney, but I did some research. ( double check everything ):

Understanding the new amended Lawsuit

The Basics

• Plaintiffs: Calverton Aviation & Technology LLC (CAT), a subsidiary of the Ghermezian family's Triple Five Worldwide conglomerate.
• Defendants: The Town of Riverhead, the Town of Riverhead Community Development Agency (CDA), and the Town of Riverhead Industrial Development Agency (RIDA).
• Court: Supreme Court of the State of New York, County of Suffolk.

Specific Causes of Action

The primary claims by CAT are:

• Breach of Contract:  The Town, CDA, and RIDA allegedly violated the original Purchase Agreement (dated November 19, 2018) and subsequent agreements (the Letter Agreement and the Preliminary Agreement).
• Fraud: CAT accuses the Town and CDA of making false representations to induce CAT to agree to the restructured deal involving RIDA.
• Bad Faith: The Town and CDA are accused of not acting honestly or sincerely to fulfill their obligations under the agreements.
• Improper Interference: CAT claims the Town improperly influenced RIDA's review process to get a negative outcome against CAT.

What CAT Wants (Goals)

The plaintiffs are seeking the following:

• Compel Closing: Force the Town to proceed with the sale of EPCAL to CAT, as promised in the agreements.
• Financial Damages:  Seek compensation for the losses CAT has suffered due to the defendants' actions, which may include expenses and potential lost profits.
• Injunctive Relief  a court order preventing the Town from selling EPCAL to anyone else while the lawsuit is ongoing.

Key Points from the Lawsuit

• The Project: CAT plans to develop the EPCAL site for environmental, energy, and academic tenants. Phase 1 involves a $250 million investment and building 1 million square feet of space.
• Town's Obligations: The Town failed to get approvals for subdividing the property, which stalled the purchase.
• RIDA Review: CAT agreed to RIDA reviewing its financial ability, but alleges it was a pretextual process with the outcome predetermined by the Town to get out of the deal.
• Political Motivations: CAT suggests the Town's actions were motivated by public opposition to the project and upcoming elections.

Important Notes

• This is only one side of the story. We don't yet have the Town of Riverhead's response, which would likely offer opposing interpretations of the agreements and events.
• The outcome of this lawsuit is uncertain. The court will analyze the legal arguments and evidence to decide if the Town breached the agreements and acted improperly.

 Here's the approach someone might suggest:

Lines of Defense

1. Contradictions and Misrepresentations:

• Highlight CAT's prior detailed plans and drawings featuring a cargo jetport.
• Demand specific, credible declarations about what they now intend to build, supported by concrete plans and financial models.
• Argue that CAT's sudden about-face undermines their credibility and supports a claim of misrepresentation, potentially negating the whole agreement.

2. Triple Five's Financial Situation and Litigation History

• Subpoena detailed financial records to verify Triple Five's debts and liabilities. Seek expert analysis to show if they truly have the capability to finance the project.
• Investigate the allegations in other lawsuits, particularly related to fraud and scams. If patterns exist, this damages their credibility as a reliable development partner.
• Present evidence demonstrating that Triple Five's financial and legal issues raise legitimate concerns about their ability to meet obligations within the Purchase Agreement.

3. Breach of the 'Good Faith' Obligation

• Argue that the sudden shift in development plans, coupled with Triple Five's history, violates the implied duty of good faith and fair dealing in contract law.
• Point to the Town's efforts to facilitate the original Purchase Agreement, and how CAT's inconsistent plans obstructed the process, amounting to a breach of faith.

4. Improper Purpose and Public Harm

• If local public opposition to the original cargo jetport plan was significant, gather evidence to support this. This shows CAT attempted to mislead the public.
• Argue that their shift in plans is a bad faith tactic to circumvent public concerns after making binding agreements with the Town. This lack of transparency is harmful to the public interest.

Strategic Considerations

• Counterclaims:  Consider filing counterclaims for damages. For example, costs incurred by the Town due to CAT's inconsistent plans or any misrepresentations they made.
• Public Outreach: The Town should have a robust public relations strategy to address the public's changing perceptions and inform them about the potential risks of partnering with CAT and Triple Five.
• "No Surprises" Defense:  Throughout the trial, emphasize that the Town acted in good faith on an agreed-upon project, only for CAT and Triple Five to alter the foundational development plans.

Important Notes

• Strength of Evidence:  The Town's success rests largely on uncovering clear evidence of misrepresentation by CAT and the financial issues impacting Triple Five's ability to perform.
• Local Political Climate: The outcome could hinge on the strength of public opposition and whether it outweighs the potential economic benefits. The Town may need to offer alternative development plans for public consideration.

 

Comparison

Again, please keep in mind that I am not an attorney. Double check all these ideas and conclusions. After doing some research, here is a summation from a non-attorney. It's a breakdown comparing the two lawsuits highlighting the key differences:

Similarities

• Plaintiff: Both lawsuits are filed by Calverton Aviation & Technology LLC (CAT).
• Defendants: Both lawsuits name the Town of Riverhead, the Town of Riverhead Community Development Agency (CDA), and the Town of Riverhead Industrial Development Agency (RIDA).
• Project: Both lawsuits center around the failed development deal for the Enterprise Park at Calverton (EPCAL).
• Accusations: Both lawsuits allege breach of contract, fraud, and improper actions on the part of the defendants that led to the deal's collapse.

Key Differences

5. Original Lawsuit (January 2024):

   • Focus: Addresses the Town's failure to obtain subdivision approval, which stalled the project. Emphasizes CAT's flexibility to renegotiate and even accept an inferior ground lease structure to keep the project moving.
   • RIDA's Role: RIDA's financial review of CAT is portrayed as a manufactured barrier created by the Town to justify terminating the contract.
   • Fraudulent Inducement:  Centers on the Town's alleged misrepresentation that it would close the deal even if RIDA did not approve CAT, used to get CAT to agree to the restructured deal.

6. Amended Lawsuit (February 2024):

   • Focus: Heavily emphasizes the wrongful termination based on RIDA's pretextual finding that CAT lacked financial capability.
   • RIDA's Role: Depicts RIDA as manipulated by the Town Board, who pressured them for a negative outcome. Further alleges that RIDA and the Town colluded behind the scenes, violating RIDA's obligation to hold a public hearing.
   • Political Motivations: Explicitly states that the Town's actions were driven by political opposition to the project leading up to the 2023 elections, rather than legitimate concerns about CAT's ability to perform.
   • Cure Attempt: Includes details about CAT's attempt to cure the alleged financial ability breach by offering to pay cash and provide a letter of credit, which the Town ignored.

Overall Shift in the Narrative

The amended lawsuit presents a more aggressive posture by CAT. There's a stronger emphasis on:

• Illegitimate Termination: The focus is less on the Town's past failures to facilitate the deal and more on RIDA's allegedly improper denial of CAT's financial capability.
• Collusion and Bad Faith: The Town and RIDA are accused of actively working together against CAT, undermining the integrity of RIDA's review process.
• Political Games: Public opposition to the project and the election cycle are portrayed as the driving factors behind the Town's behavior.

It's Important to Note

• These descriptions are based on the plaintiffs' side of the story; the Town of Riverhead would likely offer a very different narrative.
• Lawsuits are complex, and the outcome of this case remains uncertain.

Here's a breakdown of how someone might approach things if they were the Town of Riverhead's legal counsel. Remember, this is from a non-lawyer and doesn't replace getting advice from a qualified attorney with local knowledge.

Immediate Next Steps

Gather Evidence:  Meticulously collect all communications, contracts, meeting minutes, etc., related to the EPCAL project. Pay close attention to anything supporting your version of events.

Witness Interviews:  Interview key Town staff, CDA members, and potentially RIDA members involved in the decisions. Document their recollections and understanding of events, especially those countering CAT's narrative.

Analyze Local Law: Review local ordinances and statutes related to development agreements, the CDA's and RIDA's powers and procedures. Look for potential defenses based on the Town's adherence to regulations.

Focus of the Town's Reply (Key Defense Points)

1. Contractual Compliance (Procedural): Argue the Town acted within its rights under the Purchase Agreement (and subsequent agreements). Emphasize any clauses providing the Town discretion in terminating the deal under specific circumstances.
2. Good Faith Efforts:  Present evidence supporting the Town's attempts to facilitate the deal, highlighting any actions taken to help CAT overcome the hurdles (subdivision, etc.). This counters the 'bad faith' and 'collusion' accusations.
3. RIDA's Independence:  Underscore RIDA's role as an independent agency. Provide evidence supporting RIDA's autonomy in its review process, demonstrating a lack of improper influence from the Town Board.
4. Public Interest:  Frame the argument by highlighting the Town's responsibility to protect taxpayers' interests. Emphasize that public concerns over the project were valid and legitimate and not merely political maneuvering.
5. CAT's Misrepresentations (Potential): Investigate if CAT misrepresented its plans for the site (i.e., the cargo jetport issue). If inconsistencies exist, use it to cast doubt on their credibility and whether they upheld their contractual good faith obligations.

Areas Where The Town Needs to be Cautious

• Optics of Collusion:  Avoid any actions or communications that could even remotely suggest the Town exerted control over RIDA's process. This is critical, as CAT's accusations center around this point.
• Public Records:  Anticipate public records requests (FOIA) from CAT seeking internal Town or CDA communications. Be mindful that these could become evidence, and any statements contradicting your defense would be damaging.
• Public Opposition: Be sensitive to public sentiment while upholding the Town's legal position. If opposition was a significant factor, find ways to justify it based on legitimate concerns (e.g., environmental impact, project scale changes) rather than purely political ones.
• Financial Prudence: If RIDA's concerns about CAT's financial ability genuinely existed, be careful not to overstep your authority or misrepresent information to RIDA. Actions aiming solely to stop the project rather than a good-faith assessment could strengthen CAT's claims.

Important Considerations

• Settlement as an Option: Explore settlement options if the Town's risk of losing seems high or if a protracted legal battle is a bad look politically.
• Counterclaims: Consider counterclaims if there's potential that CAT breached the agreement or made misrepresentations to the Town.
• Public Relations:  Develop a strong public relations strategy alongside your legal defense. The narrative in the court of public opinion will matter substantially.

Robert Gass is a retired New York City Battalion Fire Chief who lives in Calverton.  He has no legal training but has strong research skills and insight.