Exhausting all attempts to appeal a default judgment in its fight against a potentially crippling $50 million lawsuit that a condo developer first filed in 2003, the City Council voted 4-0 to retain expert witnesses and construction engineers as it prepares for a trial to determine damages.
The developer, Sinclair Haberman, is seeking to recoup more than $50 million in profits and interest it claims it lost, as well as legal fees it incurred, since Long Beach’s Zoning Board of Appeals revoked its permits to build three oceanfront condominium buildings on Shore Road in 2003, a project that dates back to the 1980s.
In its suit, Haberman alleged that the zoning board bowed to political pressure from unit owners at the adjacent Sea Pointe Towers, at 360 Shore Road, who claimed that their views would be obstructed by the proposed condos and expressed concerns about parking, among other complaints. The developer claimed that because the zoning board’s chairman lived next door to the proposed site, there was a conflict of interest.
In July, a state appellate court rejected the city’s appeal of a State Supreme Court judge’s 2015 decision that Long Beach had defaulted on the lawsuit by not filing a response, denying the city the ability to argue in court that it was not liable for damages. The city was dealt another blow last month when the court rejected its request to reargue its appeal.
An attorney representing the city, Robert Spolzino, said at the time that the city was considering another attempt to appeal the suit before the New York State Court of Appeals. At last week’s meeting, Corporation Counsel Rob Agostisi said that the city’s motion to retry the case was rejected by the Court of Appeals earlier this month.
“A default judgment does not mean that a case is over,” Agostisi said. “It means that you move on to the next phase of litigation, where damages are assessed. To date, the plaintiffs have not provided one shred of evidence to support their allegation that they are entitled to $50 million or anything remotely close to that for that matter. That’s to be determined at a damages inquest, where the city will need expert witnesses to testify on its behalf.”
Agostisi said the court’s most recent rejection was not unexpected, and that the city had been bracing for a damages trial, which has yet to be scheduled, and was working on its defense.
“We quietly sprang into action the second that default judgment was upheld over the summer,” Agostisi said, adding that the city has a viable defense. “In fact, I personally spent the last four months or so interviewing experts not only to determine their qualifications, but to identify each of our separate damages defenses.”
The council voted to hire Manhattan-based accounting firm KPMG LLP, with its real estate consulting group to serve as its lead expert consultants and witnesses in the case, at a rate of up to $575 per hour. The council also voted to retain Hauppauge-based Cashin Spinelli & Ferretti LLP to provide technical and engineering expertise for a fee of up to $185 per hour.
The firm previously served as the city’s consultant on its property damage claim after Hurricane Sandy, helping the city recover $10 million within 30 days of the storm and an additional $800,000 in insurance proceeds.
“CSF has already demonstrated that it possesses the unique mixture of technical knowledge and highly specialized expertise needed to successfully convey the city’s defenses at trial,” Agostisi said.
Councilwoman Chumi Diamond recused herself from the vote, saying that she is a tenant in a building owned by the plaintiff.
Though Agostisi said that the damages could be closer to $1 million, an attorney representing Haberman, Scott Mollen, told the Herald last month that the total damages could exceed $50 million when interest and legal fees are included.
“It’s extremely unfortunate that a city that is financially fragile may have to deal with a judgment in excess of $50 million,” Mollen said. “The financial consequences to the city of this litigation are clearly on the irresponsible public officials who allowed local politics to interfere with the rights of a property owner to develop their property.”