Attorneys for Riverhead Town appeared in court on Thursday ready to persuade a judge to dismiss the case brought by Calverton Aviation and Technology to force the $40 million sale of town-owned land at the Calverton Enterprise Park.
Calverton Aviation and Technology (CAT), a subsidiary of the North American business conglomerate Triple Five, filed the lawsuit in January against Riverhead Town, the town’s Community Development Agency and the Riverhead Industrial Development Agency to reverse the cancellation of the sale of the town-owned land and runways at the industrial park.
The land used to be owned by the Navy and operated by the Northrop Grumman Corporation as an aircraft design and testing facility; part of the land was sold and redeveloped for industrial businesses. The town in 2018 entered into a contract with CAT to sell and develop 1,644 acres of the park owned by the town, including the site’s two runways. Roughly 1,000 acres of the land sold to CAT would have been preserved and maintained as a habitat for wildlife.
The Riverhead Town Board voted unanimously to cancel the contract with CAT in October 2023. That decision came after the Riverhead Industrial Development Agency denied CAT’s application for financial assistance to develop the property, allowing the Town Board to cancel the contract under the terms of a letter agreement reached by the town and CAT in March 2022.
State Supreme Court Justice David Reilly described the case by the end of Thursday’s arguments at the courthouse in Riverhead as “not necessarily complex, but multi-leveled.” Reilly spent roughly two hours listening to the arguments of each side and peppering them with questions about the different elements of the case.
The town filed a motion to dismiss the case in April. Reilly’s ruling on the motion will determine whether or not the case will go forward; if it does, the fate of the property can be tied up for years while the case proceeds. The property currently has a notice of pendency filed against it by CAT which, unless and until it is set aside by a court, effectively prevents the town from transferring or encumbering the property until the lawsuit is over.
And any outcome in the case will determine the fate of a property that, regardless of the owner, will be key to the future of the town’s economy for the next few decades.
Jarrett Behar of Certilman Balin Adler & Hyman, Riverhead Town’s special counsel for the court case, told the judge that CAT’s argument is “convoluted and complicated,” with a story that “completely ignores” the law and the documents present in the case.
“The story just doesn’t make sense,” Behar said of CAT’s complaint.
A topic Reilly honed in on while questioning Behar was the obligations of the town under its sales contract with CAT. The contract required the town to file a subdivision map for the property — which would have split land being sold to CAT from land the town intends to keep — but the town was unable to get the subdivision approved.
Behar said the town did not breach the contract when it failed to file the subdivision because the town had the right, under the terms of the contract, to terminate the agreement if the subdivision was not filed in time.
Reilly asked whether the town had the right to rely on the property being serviced by the Riverhead Water District — a term of the contract — since the town did not have the right to provide water within the service area of the Suffolk County Water Authority. Behar said CAT agreed to the Riverhead Water District serving the property when it entered into the agreement and continued to remain in the agreement even after the town faced difficulties getting approvals for the water district to serve the property.
Behar also addressed CAT’s claim that it was “duped” into signing a letter agreement with the town to apply for financial assistance to the Riverhead IDA. He called the claim “incredulous;” the agreement was drafted on the CAT’s own letterhead, he said.
Behar said CAT has no claims against the Riverhead Industrial Development Agency, which the town agency created by state law to provide development incentives. Challenging that agency’s decision should have been done under a separate appeal process, known as an Article 78 proceeding.
Marc Kasowitz of Kasowitz Benson Torres LLP, the lawyers hired by CAT to represent the company against the town, said it was clear the town was “desperate” to get out of its contract to sell the land to CAT.
If the Riverhead IDA had approved the project and the lease agreement with CAT, Reilly said, there would still be the problem of getting public water to the site under the sales agreement with the town. CAT would only have “a lease and a prayer.”
Kasowitz said the town should not have brought the Riverhead IDA in at all. The town only brought the IDA into the deal to “offload what was becoming a hot political potato,” he said. Town politicians made a rushed effort to get the IDA to a decision before the 2023 town elections, he said. After the IDA’s decision was made, former Supervisor Yvette Aguiar boasted about getting out of the contract, he noted.
Reilly asked Kasowitz why, if the company believed the town was acting in bad faith, it signed the letter agreement with the town to make the application to the Riverhead IDA.
“Help me be sympathetic to a multi-national conglomerate,” Reilly said.
Kasowitz said the town improperly gave the Riverhead IDA the power to determine whether the company was “qualified and eligible,” a determination a municipality must make before it sells land without a bid in an Urban Renewal Area such as EPCAL.
Behar said the town determined CAT “qualified and eligible” only once, in 2018, but that it had the authority under the sale agreement to let the IDA determine whether CAT still had the financial ability to develop the project.
Kasowitz and his co-counsel, Ronald Rossi, argued that the case needs to go on because there are fraudulent statements and misrepresentations by the town that must be decided by the court. Rossi said CAT promised to invest in the project and bring jobs to the town, but that the town’s politicians got scared after public backlash.
Reilly did not decide on the motion to dismiss after the arguments concluded. He told both parties to submit a three-page letter giving their thoughts on whether the court should refer the matter for summary judgment. Summary judgements are decisions made by the court in favor of one party without a full trial.
“I think we had a good argument here today. I think our attorneys did an excellent job preparing for this,” Riverhead Town Attorney Erik Howard, who was in the courtroom during the appearance, said in an interview after the judge adjourned. “Mr. Behar was articulate. He clearly understood all of the issues [and] presented them very well to the court, and I think the judge was excellent. It’s clear that he’s read the papers, he’s familiar with all the facts and I think I feel confident that he’ll issue a fair decision once he reviews everything.”
Kasowitz said in an interview after the session that he “thought that it was a very good exercise in front of a smart judge, and at the end of the day, we have a very detailed, strong complaint.”
“I think it will survive a motion to dismiss and then we’ll be into discovery and then we’ll be able to hopefully, quickly, prosecute this case, and then have have CAT’s rights to the contract restored so that the really valuable project that they’re planning to build here can can help the people of this town,” Kasowitz said.
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