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On October 17, 2019, the Town was served with a lawsuit brought by John Livingston (Livingston lawsuit) to stop the referendum on Sherman’s and stop the sale of Sherman’s to the Caroga Arts Collective. It should be noted that in an email last year, Mr. Livingston advised the Board that the sale of Sherman’s should go to a referendum vote. Earlier this year, the Town was served with another lawsuit from Balboaa Land Development Inc. (Balboaa lawsuit) owned by George Abdella, to take back the donated Sherman’s property due to the Town’s breach of contract regarding the Donation Agreement that came with the property. A court hearing was scheduled for both cases with the same judge for Friday, October 25th.
As a result of the Livingston lawsuit, the Town Board was faced with the prospect that the sale of Sherman’s to the Caroga Arts Collective (which had been approved by George Abdella) and the referendum which the board had voted twice to hold, could be delayed, canceled or the results declared null and void even if the referendum vote was successful. The Board could not sit idle when faced with the proposition that it would be hindered or unable to sell Sherman’s in addition to still facing the risk and cost that both lawsuits posed to taxpayers. For example, the Town spent over $10,000 in legal fees on these two cases in the week leading up the court hearing on October 25th.
The Town did not have a strong case with the Balboaa lawsuit. This was primarily because the original donation of Sherman’s was not handled properly. Former Town Supervisor Ralph Ottuso accepted the donation of Sherman’s property from Balboaa and entered into the Donation Agreement in December 2014 without Board authority. Months of discussion ensued until the Town Board, in 2015, ratified the action taken by Mr. Ottuso and voted to accept the donation of Sherman’s subject to the terms of the Donation Agreement. However, two months later, the same board changed its mind and voted to accept the donation of Sherman’s free and clear of the conditions it had promised to keep in the Donation Agreement. The Board did not speak to George Abdella or offer to give the property back to him, but alleged that because the promises made in the Donation Agreement had not been included in writing on the deed conveying Sherman’s to the Town, those promises were extinguished by the legal doctrine of merger and were not binding on the Town. George Abdella disagreed with the position taken by the Town, and he has continually threatened to sue the Town for rescission of the donation and/or for damages related to the Town’s failure to maintain Sherman’s. Since that time, the rights and duties of ownership of Sherman’s have been in question and a cloud on the title has hung over the property.
In preparation for the October 25th hearing, the Town’s Attorney conducted extensive legal and factual research on the issues, and advised the Board that the merger doctrine relied upon by the former Board was not likely to shield the Town from Mr. Abdella’s claims. Moreover, the Town’s Attorney believed that the Court would return Sherman’s to Balboaa and grant Balboaa damages for failure to maintain the property. If the Town didn’t want to accept the Donation Agreement in 2015, the property should have been returned to Balboaa at that time. At the hearing on October 25th, Judge Kupferman confirmed what had been suspected by the Town’s Attorney and advised the parties that the deed wasn’t given without restrictions. Judge Kupferman also indicated that the Donation Agreement was part of the transaction and that the Town would have had a very difficult time convincing him that Sherman’s should be kept by the Town without restrictions or under any circumstances. After court recessed, Judge Kupferman advised the Town’s Attorney that the Town made a good decision to settle the matter with Balboaa as it avoided facing a “hot bench” on the issues.
The Town Board’s decision to enter into a settlement agreement with Balboaa was made to: 1) resolve years of uncertainty and threat of litigation concerning the rights and duties of ownership of Sherman’s; 2) free the Town from the cost and responsibility of upkeep and maintenance associated with a large and cumbersome asset; 3) put an end to two lawsuits at once and avoid significant legal costs to the Town; 4) protect the Town from a damage award for failure to maintain the property; 5) put Sherman’s back on the tax rolls; and, 6) allow the Town to move forward. While this may not have been the way Town Board members wanted or expected this to end, the majority of the Board felt this was the best option for the Town. In the end, it came down to whether or not it was smart to continue spending tens of thousands of tax payer dollars litigating the Balboaa lawsuit which the Town was unlikely to win.
As mentioned above, the Board voted twice to hold the referendum and wanted it to happen. The Livingston lawsuit caused the Board to change course. We hope this explanation helps you understand our settlement decision.
The decision came down to the Balboaa lawsuit and tax payer dollars. We hope that when you consider how poorly the donation of Sherman’s was handled by the Town in 2014-15, the legal doctrines underlying real property, contracts and the donation of property to municipalities, and the significant potential that the Town would be ordered to give back the property, pay damages and incur significant legal costs in the process – you will agree that the settlement was the best option for the Town.