Hampton Bays Connections, Inc. v. Duffy

127 F.Supp.2d 364

HAMPTON BAYS CONNECTIONS, INC., and Phoenix Group Of Hampton Bays, Inc., Plaintiffs, v. Robert DUFFY, individually, Nancy Graboski, individually, John Blaney, individually, Peg Caraher, individually, Vincent Martorello, individually, Paul J. Houlihan, individually, "John Doe" and "Jane Doe", #'s 1-5, 6-10, and 11-15, individually and personally, representing the fictitious names of individuals, whose full names are unknown to Plaintiff, were at all relevant times herein employees of the Town of Southampton Department of Land Management Planning Division, the Town of Southampton Department of Land Management and Zoning Division, and the Town Board Members of the Town of Southampton, and the Town of Southampton, Defendants.

No. CV 99-7029(ADS).

United States District Court, E.D. New York.

January 26, 2001.

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Perry, Kearon & Campanelli, LLP by Andrew J. Campanelli, Westbury, NY, for Plaintiffs.

The Law Offices of Frederick Eisenbud by Frederick Eisenbud, Alicia Menechino, Melville, NY, for Defendants.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

This lawsuit arises from the allegations by the plaintiffs, Hampton Bays Connections, Inc. ("HBC") and the Phoenix Group of Hampton Bays, Inc. ("Phoenix," collectively the "plaintiffs") that the defendants, consisting of the Town of Southampton and various of its agencies, employees, and officials, violated the plaintiffs' constitutional rights to free speech, equal protection, and substantive and procedural due process under 42 U.S.C. § 1983. Presently before the Court are (1) the defendants' motion to dismiss the amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P."); (2) the defendants' motion for sanctions pursuant to Fed.R.Civ.P. 11 and 28 U.S.C. § 1927; and (3) the plaintiffs' motion for sanctions pursuant to 28 U.S.C. § 1927.

I. BACKGROUND

A. The HBC Property

The following facts are derived from the plaintiffs' amended complaint. In April 1995, HBC purchased a 9.77 acre parcel of real property located at 240 West Montauk Highway, in Hampton Bays. In early fall 1997, HBC leased the front 1.5 acres of its property, which was zoned for "Highway Business," to McDonald's Corporation for the construction of a 3,000 square-foot McDonald's restaurant. At the time of the lease, HBC intended to construct an ambulatory surgery center, which would be used by Stony Brook Hospital ("Stony Brook"), on the rear portion of its property, which was zoned for residential use.

On October 23, 1997, the Southampton Planning Board ("Planning Board") issued a pre-application report regarding the McDonald's proposal. The Planning Board set forth several recommendations but was otherwise favorable to the construction of the restaurant. At about the same time the pre-application report was issued, a member of the Planning Board informed HBC that in order to build the restaurant, HBC would have to purchase four Pine Barrens Credits, which are transferable development rights that permit increased development in certain portions of Long Island. HBC bought four Pine Barrens Credits for the sum of $50,000.

On March 23, 1998, McDonald's submitted a formal application to the Planning Board for a special exception use permit and for site approval to build a McDonald's Restaurant on HBC's property. According to the plaintiffs, the Planning Board is required, by law, to issue a "determination of significance" within 20 days of receipt of an application. The Planning Board failed to take any action on the McDonald's application for three months.

Meanwhile, HBC and Stony Brook were pursuing the necessary permits for the construction of the ambulatory surgery center. On April 24, 1998, the New York State Department of Health ("DOH") issued a Certificate of Need to Stony Brook authorizing the construction of the center. The Certificate of Need was conditioned on construction commencing on or before December 31, 1998, and if construction did not begin by that date, the approval would be deemed cancelled.

Between March and July 1998, Edmund Bodkin ("Bodkin"), an officer and a member of the Board of Directors of HBC as well as the President and member of the Board of Directors of Phoenix, met with defendant Robert Duffy ("Duffy"), who was Planning and Development Administrator for the Town of Southampton, to discuss the possibility of constructing an ambulatory surgery hospital on the rear portion of HBC's property. The plaintiffs allege that Duffy told HBC representatives that he would defeat the application for the ambulatory surgery center in retaliation for HBC's pursuit of the McDonald's application. The plaintiffs claim that Duffy said, "The McDonald's application will hurt the surgical center's application. If this application was not here, you would have no problem getting the surgical center. I do not want a McDonald's in Hampton Bays." When the HBC representatives told Duffy that approval for the ambulatory surgery center was not a decision for him alone to make, he responded, "If McDonald's does get approval, I'll make sure that [the] trees remain in front of McDonald's blocking the view from Montauk Highway." According to the plaintiffs, Duffy continued by stating, "If you attempt to cut the trees down, I'll have you arrested."

On August 13, 1998, the Planning Board held a public hearing on McDonald's application for a special exception use permit and the site plan approval. Defendants Nancy Graboski ("Graboski"), John Blaney ("Blaney"), and Peg Caraher ("Caraher"), all members of the Planning Board, continued the hearing to September 10, 1998, a move that the plaintiffs claim was a violation of the local ordinance. The amended complaint alleges that a local ordinance required the Planning Board to render a decision on the McDonald's application within 62 days of the hearing, but the Planning Board failed to do so.

In August 1998, HBC continued to pursue construction of the ambulatory surgery center. As noted above, the rear portion of HBC's property was zoned for residential use. Thus, in order to erect the center, HBC had to petition the Planning Board to change the zoning designation to Planned Development District ("PDD"), which it did by filing an application to that effect on August 27, 1998. The Town returned the application to HBC on September 14, 1998, because it was incomplete. The amended complaint alleges that defendant Duffy issued a memo on August 31, 1998, in which he set forth additional requirements that must be met before HBC's application would be accepted.

On September 28, 1998, before HBC could resubmit its application for a change of zone, and before the Planning Board decided McDonald's application for its site plan approval and special exception use permit, the Southampton Town Board imposed a six-month moratorium on the issuance of any zoning approvals in the Hampton Bays. In a press release, issued on September 8, 1998, the Town Board stated that the main purpose for the moratorium was to stop the McDonald's construction.

In December 1998, HBC applied for an exemption from the moratorium so that the Planning Board could consider its application for a change of zone. At roughly the same time, Cat Cove, a real estate developer who is not a party to this action, also submitted an application for an exemption from the moratorium so that it could obtain approval for construction of a 90,000-foot shopping center approximately one and one-half miles from the HBC property. On or about December 15, 1998, the Town Board granted Cat Cove's application for an exemption. On December 22, 1998, the Town Board held a hearing regarding HBC's application for an exemption to the moratorium, and in January 1999, it denied that application. The plaintiffs contend that as a result of the Town Board's denial of HBC's application, the DOH's Certificate of Necessity expired, Stony Brook looked at other property for construction of its ambulatory surgery center, and HBC lost a 25-year, $17,000,000 lease with the hospital.

On June 10, 1999, the Planning Board granted McDonald's special exception use permit and site plan approval. On June 17, 1999, McDonald's applied for a building permit from the Town of Southampton Department of Land Management and Zoning ("Building Department"). The Building Department returned the application on the ground that it was not submitted with a wastewater management approval. The plaintiffs contend that McDonald's decision to submit its application without a wastewater management approval was based on the Planning Board's advice that McDonald's was not required to obtain the approval prior to submitting its application for the permit. The plaintiffs allege that the Planning Board intentionally misrepresented the requirements for a building permit in an attempt to delay construction of the McDonald's.

On June 22, 1999, the Town Board Members held a hearing in regard to the enactment of a Zoning Ordinance. The plaintiffs contend that the hearing was improperly held, because the Planning Board, which is required to provide the Town Board with a written report prior to the hearing, did not submit that report until after the hearing had opened. On July 13, 1999, the Town Board adopted an amended local zoning law, and the plaintiffs allege that the amended law was significantly different from the one discussed at the public hearing. On the same date, McDonald's resubmitted its application for a building permit, and on August 17, 1999, the Building Department denied McDonald's application based on the newly enacted amended zoning law.

The Court takes judicial notice of a decision of the Supreme Court of the State of New York, Suffolk County (Cohalan, J.), dated August 3, 2000, reversing the Building Department's denial of McDonald's application for a building permit. The Suffolk County Supreme Court found that held that the ...