Posted by: Patricia Salkin | January 12, 2014

NY Appeals Court Holds that Municipalities are Treated no Differently from Private Parties with Respect to Contractual Obligations such as Settlement Agreements (in Wind Case)

Ecogen Wind LLC and Ecogen Transmission Corp made a motion to the NY Supreme Court to enforce a stipulation of settlement from protracted litigation previously reported on this blog. The Town cross-moved to vacate the settlement on the grounds that, the settlement agreement was illegal and constituted “a gratuitous and invalid act to grant petitioners ‘vested rights’ where the Town Board had no authority to do so.” Ecogen Wind LLC and Ecogen Transmission Corp moved to dismiss the Town’s declaratory judgment action, which the Supreme Court granted in part, but concluded that petitioners had not obtained vested rights in a traditional sense because no substantial changes or improvements had been made to the real property. The trial court further held that petitioners were prevented for 168 days from making such improvements because the Town Board could have approved and reached a Road Agreement with petitioners within that time and before the moratorium was enacted. Accordingly, the court gave petitioners 168 days in which to make such improvements and obtain vested rights, denied the Town’s cross motion to vacate the settlement agreement, and denied petitioners’ motion to dismiss the declaratory judgment action.

On appeal, the Appellate Court found the lower court should have granted in its entirety petitioners’ motion to enforce the settlement agreement, since stipulations of settlement are favored by the courts and not lightly cast aside. The Court reminded that a party will be relieved from the consequences of a stipulation made during litigation only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident. Because municipalities are treated no differently from private parties with respect to contractual obligations, such as settlement agreements, this court upheld the settlement agreement in question.

Ecogen Wind LLC v. Town of Prattsburgh Town Bd., 859, 2013 WL 6823368 (N.Y. A.D. 4 Dept. 12/27/2013)

The opinion can be accessed at:

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