Judge dismisses 16 of 17 claims in Calverton Aviation’s EPCAL lawsuit against Riverhead

A State Supreme Court justice has dismissed all but one of Calverton Aviation & Technology’s claims in its lawsuit against the Town of Riverhead, the Riverhead Community Development Agency and the Riverhead Industrial Development Agency over the planned sale of 1,643 acres at the Calverton Enterprise Park. 

In a 19-page decision and order filed late Friday afternoon, Justice David Reilly granted the town’s motion to dismiss 16 of the 17 causes of action in CAT’s complaint. 

But the judge let one claim proceed:  CAT’s claim against the town for tortious interference with contractual relations.

“Tortious interference” is a tort — a civil wrong — that involves disrupting someone else’s contract or business relationship.

CAT alleges the town wrongfully interfered with CAT’s Sept. 21, 2022 preliminary agreement with the Riverhead IDA, which the court described as establishing “the process the parties would follow to effectuate the ultimate sale of the property to CAT.”

The Riverhead IDA on Oct. 23, 2023 adopted a resolution declining CAT’s and the Community Development Agency’s joint application for financial assistance.  The next day at an emergency meeting, the Town Board adopted a resolution canceling the CAT contract.

READ MORE:

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CAT contends the town influenced that outcome by pressuring the IDA during its review of CAT’s finances. According to the complaint, the alleged interference included private and public communications aimed at pushing the IDA to deny the application, including public statements by Town Board members encouraging RIDA to deny the CAT application and a meeting interruption by Supervisor Yvette Aguiar with a speech urging RIDA to come to a premature determination, ending with this “let’s stop this here.”

The town argued the claim should be dismissed, in part because it contended the IDA did not breach its agreement with CAT and the IDA’s review was proper.

Justice Reilly declined to dismiss the tortious interference claim, ruling that CAT “has adequately pled its claim.”

The judge did not decide whether the interference occurred. The decision means only that CAT has alleged enough, at the pleading stage, for the claim to proceed and be tested through litigation.

Either side may appeal the portions of the decision it lost to the Appellate Division, Second Department. CAT could appeal the dismissal of most claims, while the town could appeal the ruling allowing the tortious interference claim to proceed.

“We will consider options on appeal with outside counsel, particularly if CAT moves to appeal,” Town Attorney Erik Howard said in an email this morning. “In that scenario, it would make sense to appeal since we will be at the appellate level anyway. I understand that the Triple 5 Group is routinely litigious so I wouldn’t be surprised if they appealed.”

Significantly, among the causes of action dismissed by the court was CAT’s claim for specific performance of its 2018 $40 million purchase agreement with the town. If that cause of action had been allowed to stand, and CAT eventually prevailed on it at trial, the town could have been forced to fulfill its obligations under the agreement and transfer title of the land to CAT.

The surviving tortious interference cause of action is typically a claim for money damages only and does not seek relief affecting the title to property.

Howard said specific performance is available as an extraordinary remedy in a tortuous interference action, so the notice of pendency may survive. However, he said, “CAT would have to prove economic loss which cannot be remedied through compensatory damages. I think that’s a difficult analysis for them since they would have to establish lost business opportunities and revenues associated with permitted uses of the property and they didn’t have much of a plan for the property in the first place.”

If the notice of pendency is canceled or expires, it would remove one legal impediment to selling or leasing the property to another party.

Most of CAT’s other 16 causes of action were dismissed because the judge found the parties’ written agreements already spelled out what would happen if the IDA did not approve the project — including allowing the town and CDA to terminate — and did not give CAT the cure rights or guarantees it claimed. The court also ruled that several of CAT’s theories sought to recast contract disputes as fraud or equitable claims, or to challenge the IDA’s decision-making process, in ways the complaint did not support under the cited statutes and contracts.

“This is a WIN for the Riverhead taxpayers,” Supervisor Jerry Halpin said this morning. “The 1,643-acre EPCAL property belongs to the taxpayers and is literally our most valuable real estate asset.  I look forward to exploring all ideas — big and small — and hearing from taxpayers about what they think would be the best fit for the future of EPCAL. I also want to thank our Town Attorney’s office, who under the leadership of Erik Howard, successfully navigated the Town through this case,” he said.

The attorneys representing Calverton Aviation & Technology could not immediately be reached for comment.

Friday’s decision came 15 months after attorneys for both the town and CAT argued the town’s motion to dismiss before Justice Reilly on Nov. 21, 2024 and more than two years after CAT first filed its complaint.

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FOR MORE COVERAGE of the town’s history with CAT/Triple Five, see:

The $40 million land deal between Riverhead and Triple Five affiliate ‘CAT’: a look back

DEEPER DIVE: Our 2018 three-part series on the history of the EPCAL site:

‘What’s past is prologue’: Understanding the Calverton Enterprise Park saga

Pine Barrens, politics and the plan that launched a thousand schemes

EPCAL’s (would-be) ‘greatest hits’