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Calverton Aviation & Technology has filed a lawsuit against Riverhead Town in an attempt to reverse the cancellation of the $40 million sale of town-owned land at the Calverton Enterprise Park to the company.

The lawsuit, filed in Suffolk County Supreme Court, accuses the town, its community development agency, and the Riverhead Industrial Development Agency of engaging in a “scheme to evade Riverhead’s binding contractual obligation to sell 1,643 acres at the EPCAL property in Calverton to CAT,” according to a press release by the company’s public relations firm.

The Riverhead Town Board voted unanimously to cancel the contract with CAT on Oct. 24. That decision came after the Riverhead Industrial Development Agency denied CAT’s application for financial assistance to develop the land, allowing the Town Board to cancel the contract pursuant to the terms of a letter agreement reached by the town and CAT in March 2022.

“As alleged in the complaint, there can be absolutely no question that CAT is qualified to develop EPCAL,” Marc Kasowitz, a partner in Kasowitz Benson Torres LLP, the the national commercial litigation firm representing CAT, said in the company’s press release. “For over five years, CAT has worked in good faith and spent millions of dollars to develop a property that has been dormant for some 25 years in a manner consistent with the needs expressed to it by the Town of Riverhead and its citizens.”

“With this lawsuit, CAT intends to vindicate its contractual right to do so, to correct the false record espoused by the Town Council and RIDA concerning CAT, and, ultimately, to create a world class center for industry and innovation for the benefit of the people of Riverhead,” Kasowitz said.

CAT simultaneously with the lawsuit filed a notice of pendency of the action with the Suffolk County Clerk. The notice of pendency, unless and until it is set aside by a court, effectively prevents the town from transferring or encumbering the property until the lawsuit is disposed by judgment or settlement. The document puts potential buyers, lenders and tenants know that a lawsuit has been filed that affects title to the property notice, making it difficult if not impossible for the town to sell, lease or otherwise encumber the property. CAT’s notice of pendency affects all 2,124 acres owned by the Riverhead Community Development Agency at the former Grumman site.

CAT, an affiliate of the Canadian development conglomerate Triple Five, threatened to sue the town in response to the contract’s cancellation. A company representative also said that it reached out to Riverhead officials in an effort to move forward with the purchase of the land, despite the contract being canceled.  

CAT’s plans to develop the site came under intense public scrutiny after a project engineer presented to the IDA plans to develop logistics centers and air cargo uses along the runways at the site. The development plan, which CAT representatives said was a mistake, brought hundreds of people out to public meetings last year and was the most galvanizing issue of last year’s local campaign.

The complaint, filed today in Suffolk County Supreme Court, alleges that the town breached its contractual obligations to CAT in several ways. That includes failing to obtain approval of a subdivision map of the land to complete the sale, under the terms of the 2018 purchase agreement, and concocting a “fraudulent scheme” to escape its obligations under the contract that included misrepresentations and interference.

Read the complaint below.

The March 2022 letter agreement between the town and CAT, which was agreed to release the town of its requirement to complete the required subdivision and close the sale, violated New York State law by “delegating critical duties and determinations to RIDA that the Town and the CDA could not legally delegate,” the complaint says. The lawsuit states that the company was unaware the process was against the law. 

“The seemingly spontaneous request for CAT to submit to review by RIDA was outside of any obligation in the Purchase Agreement and outside of any normal course activities of RIDA,” CAT’s complaint states.

The complaint describes a March 2022 meeting between town officials and CAT officials during which former Supervisor Yvette Aguiar “assured CAT that the concept of involving RIDA, and closing via a ground lease, was solely in order to get the project started prior to completion of the subdivision process.”

It alleges that the town, in order to convince CAT to agree to Riverhead IDA review, claimed that the ability to terminate the contract was “solely for ‘optics’ and that “the Town fully intended to close with CAT even if RIDA, ultimately, did not approve CAT.” 

“The Town and the CDA, however, never intended to honor the Purchase Agreement, Letter Agreement or Preliminary Agreement,” the complaint says. “The proposed RIDA process was a ruse, an escape hatch to enable the Town to manufacture a pretextual basis – i.e., a RIDA finding that CAT was not financially qualified to develop the Project – for the Town to escape its contractual obligation.” 

The complaint states that the town did not “engage in good faith and provide the assistance it was contractually obligated to provide CAT in dealing with RIDA,” and that members of the Town Board including Aguiar and Supervisor Tim Hubbard, then a council member, “actively worked against CAT, pressuring RIDA to deny approval and imploring them to reject CAT’s and Triple Five’s incontrovertible financial capabilities.” 

The complaint cites public statements made by Aguiar and Hubbard against the sale of the property to CAT, including a letter published in RiverheadLOCAL by Hubbard voicing that he had “doubts about the sale of the EPCAL property to CAT.” It also notes comments made and letters written by Aguiar to pressure the IDA to make a decision on CAT’s application.

It further cites public opposition to the sale as a “critical issue” in the 2023 local elections. “The public sentiment against Triple Five’s EPCAL development plans – though rooted in misunderstanding by the public – had reached a crescendo, and RIDA faced intense pressure from the Town Board, who appointed RIDA’s members,” the complaint states.

The complaint details what CAT submitted to the IDA during the agency’s due diligence review process, which they said was “substantially stronger and more detailed than what was presented in the Q+E Sponsor process in 2018.” 

The IDA also requested information that had “no bearing whatsoever on CAT’s financial ability to acquire and develop the Property,” including information related to aviation uses at the site, according to CAT. CAT provided “as detailed of a response as possible” to these requests, according to the complaint.

“RIDA’s information demands, however, strongly suggested that RIDA was fundamentally confused about the financial information that CAT had provided, or otherwise misunderstood basic commercial custom and practice for project-financed development projects,” the complaint states. It says CAT “repeatedly offered” to aid in the IDA’s review and go over details, but the agency refused the requests.

The complaint says the IDA prematurely stopped its due diligence process and issued a “pretextual determination” on the application. The company said the IDA penalized the company for an inability to provide documentation and information, including site plans and commitments from tenants, “knowing CAT could not comply at this stage in development.”

“Since CAT was not in a position to provide this information and documentation, RIDA accused CAT of failing to provide requested documents and repeatedly insisted that CAT was “vague” in its submissions,” the complaint states. “But CAT was not vague; RIDA’s demands were commercially unreasonable and impossible for any developer to satisfy. “

CAT says the IDA “presented a series of slapdash adverse findings cloaked under the guise of careful consideration. The result, however, was nakedly pretextual, replete with misrepresentations and obfuscations designed to evade an obvious and inescapable truth: Triple Five and CAT collectively have vastly more than enough cash resources available to develop EPCAL.” The Riverhead IDA also did not meet its legal obligation to hold a public hearing on the company’s application, the complaint states.

The Town Board then used the IDA’s decision to cancel the contract. Aguiar “gleefully took credit for the scheme announcing to the world that ‘she personally negotiated an amendment to the contract in March of 2022 that allowed the [T]own [B]oard to declare the contract null and void,’” the complaint says. 

CAT said it attempted to close the deal and pay the balance of the $40 million purchase price in cash, but the town has not responded to the company’s notice, in violation of its purchase agreement, according to the complaint. It has also violated the agreement by amending the zoning of the property to remove several aviation uses, the complaint says.

“For the Town politicians seeking office in 2023 – including Hubbard – this stunt – purportedly terminating the Purchase Agreement for a Project they publicly mischaracterized and excoriated – worked,” the complaint says. “Running against the fictitious cargo jetport plan, they swept the opposition in the election on November 7, 2023. But their illegal scheme has landed both the Town and CAT in this Court, rather than engaging in badly needed development that will lift the Town’s economic fortunes, and which is over two decades overdue.”

The lawsuit is seeking to declare the March 2022 letter agreement void and for the town and CAT to close on the sale of the property under its original purchase agreement. The company is also seeking compensatory damages, attorneys’ fees and costs.

Riverhead Town Supervisor Tim Hubbard, Town Attorney Erik Howard and Riverhead IDA Director Tracy Stark-James did not immediately return calls requesting comment.

Editor’s note: This article was updated after initial publication to include more detail regarding the lawsuit’s allegations.

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Alek Lewis is a lifelong Riverhead resident and a 2021 graduate of Stony Brook University’s School of Communication and Journalism. Previously, he served as news editor of Stony Brook’s student newspaper, The Statesman, and was a member of the campus’s chapter of the Society of Professional Journalists. Email: alek@riverheadlocal.com