NY Jury Awards $2.375M in Damages After Finding Village Reneged on Agreement to Rezone Property

Editor’s note: Thank you to Kelly A. Pressler, Esq., senior counsel at Jacobowitz and Gubits, LLP for this contribution.

BT Holdings, LLC (“BT”) purchased approximately 65 acres located in Chester, Orange County in the mid-80s.  At that time, the property was located partially in the Town of Chester and partially in the Village. The property remained vacant and unused until 2004 when the Town changed the zoning on the portion of the land within its borders.   BT began pursuing development of the site, meeting with the Town and Village officials to collaborate on a development plan.  The Village requested that BT annex the land entirely into the Village borders, allowing the Village to reap all of the tax benefits and permitting BT to use the Village’s municipal water supply. BT petitioned for annexation in January 2008.  An extensive, highly specific SEQRA review took place, concluding with the Village’s Findings statement in December 2011.  During the SEQRA review, the Village, as lead agency, reviewed a very specific development plan for luxury townhomes and senior housing arranged to create a neighborhood configuration.  The  Village also tasked BT with developing and drafting a new zone which would apply to the project; that new zoning was also part of the SEQRA review.  The Village’s Findings statement was approved unanimously and the Village Board voted in favor of the annexation.     The Town voted against annexation and two lawsuits were commenced, with BT and the Village fighting the Town to allow the annexation.  Those two lawsuits were settled via two Stipulations of Settlement, signed by all three parties, in approximately June 2013.  In the Stipulations, the Town agreed to rescind their SEQRA findings and adopt the Village’s, allowing the annexation; BT agreed to a reduction in the overall number of units in its project; and the Village agreed to allow construction of the proposed project in the manner set forth in the SEQRA Findings.   Once the annexation became final, the Village refused to assign any zoning to BT’s property, including the zoning that was drafted and reviewed during SEQRA process.  In November 2014, the Village Board voted against three different zoning districts for BT’s property, and also voted against assigned existing zoning to the Property, choosing again to leave the property un-zoned.   BT filed a lawsuit for breach of contract and breach of implied covenant of good faith and fair dealing.  After a jury trial in Orange County Supreme Court, the jury unanimously found the Village of Chester and its Board of Trustees liable for breaching both Stipulations of Settlement and the implied covenant of good faith and fair dealing contained in each Stipulation.  The jury awarded BT $2.375 million in damages.

See, http://www.recordonline.com/news/20171128/village-of-chester-ordered-to-pay-24m-to-developer