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February 10, 2004.

BART DIDDEN, DOMENICK BOLOGNA, FRED DeCESARE, CABERNET 119 REALTY CORP., OPUS 113 CORP., PAUILLACE 115 REALTY CORP., 117 NORTH MAIN STREET CORP., Plaintiffs, -against- THE VILLAGE OF PORT CHESTER, THE BOARD OF TRUSTEES for the VILLAGE OF PORT CHESTER, GERALD LOGAN, individually and in his official capacity as Village Trustee for the Village of Port Chester, DANIEL COLANGELO, JR., individually and in his official capacity as Village Trustee for the Village of Port Chester, JOHN M. CRANE, individually and in his official capacity as Village Trustee for the Village of Port Chester, GERARD DIROBERTO, individually and in his official capacity as Village Trustee for the Village of Port Chester, ANTHONY NAPOLI, individually and in his official capacity as Village Trustee for the Village of Port Chester, ROBERT SORENSEN, individually and in his official capacity as Village Trustee for the Village of Port Chester, G&S Port Chester, LLC. and Gregory Wasser, Defendants

The opinion of the court was delivered by: JAMES McMAHON, Magistrate Judge

In this action, Plaintiffs Bart Didden, Domenick Bologna, Fred DeCesare, Cabernet 119 Realty Page 2 Corp., Opus 113 Corp., Pauillac 115 Realty Corp. and 117 North Main Street Corp. seek an order staying a condemnation proceeding in state court. For the following reasons, Plaintiffs' motion is denied.


  This case arises out of a dispute between private developers over a development project associated with the Village of Port Chester's ("Port Chester") redevelopment of 27 acres of its downtown and waterfront area.

 The Redevelopment Project

  Port Chester had been seeking to redevelop its blighted waterfront and downtown areas since 1977 without success. In April 1998, Defendants G&S Port Chester, LLC. ("G&S"), and its principal, Defendant Gregory Wasser (together, the "Private Defendants") entered into a Land Acquisition and Disposition Agreement ("LADA") with Port Chester which named G&S as the designated developer of the Modified Marina Redevelopment Project (the "Redevelopment Project") in the urban renewal area of Port Chester known as the Marina Redevelopment Project Urban Renewal District (the "MUR District") in April 1998. The agreement called for development of approximately 500,000 square feet of modern retail establishments.

  The Project was to be anchored by a Costco Wholesale warehouse store employing more than 150 people. The Project also includes a movie theater, a Marshall's department store, a Designer Page 3 Shoe warehouse, a Bed, Bath & Beyond, a Michael's Arts & Crafts Store, as well as a Stop & Shop Supermarket. All of these stores are under construction today, employing dozens of union construction workers pursuant to agreements with several major contractors. Upon completion, the Project will offer jobs to more than 1,000 people, produce millions in tax revenues to Port Chester and the State, and add over 2000 additional parking spaces to downtown Port Chester.

  On July 14, 1999, following a public hearing, the Port Chester Board of Trustees (the "Board") adopted a resolution (the "1999 Findings") (1) making a Finding of public purpose for condemnation purposes under Article 2 of the New York State Eminent Domain Procedure Law and (2) approving the LADA and the designation of G&S as "the qualified and eligible redeveloper" for the Project (Affidavit of Greg Wasser ¶ 12 Exh. A.) The 1999 Findings stated that the Project "is designed to revitalize and beautify the Village's long neglected waterfront, eliminate a deteriorating downtown urban blighted area, bring sorely needed jobs to the Village, add to the Village's tax base, and importantly, bring the public back to the Village's downtown and waterfront." (Wasser Aff. ¶ 11 Exh. A.) Notice of the hearing was published pursuant to New York Eminent Domain Procedure Law (the "EDPL") § 202A, which requires the condemnor to publish notice of the hearing in newspapers at least 10, but not more than 30 days before the hearing. Although the EDPL does not require individual notice to the affected property holders, Defendants have attached a copy of the notice of public hearing and copies of signed receipts acknowledging that Plaintiffs received that notice. (Wasser Aff. ¶ 12 Exhs. D & E.) The EDPL allowed affected property owners 30 days after July 14, 1999 to appeal the Board's findings. EDPL § 207. Plaintiffs took no such appeal.

  The Redevelopment Project became one of Westchester County's largest and most visible of Page 4 such endeavors. It was the subject of substantial environmental review, public meetings and widespread publicity.

  The Redevelopment Project called for the acquisition of thirty-eight separate properties and the relocation of more than one hundred individual families, most of whom were renting substandard or illegal apartments in deteriorated structures. Fifty-two businesses were also relocated. Lawsuits predictably ensued. G&S reached private settlements with most of the displaced business owners, landowners and residential tenants, and the Condemnation Part of the Supreme Court of Westchester County determined the remaining claims, some after trial.

  Due to the Redevelopment Project's size, it has been undertaken in phases. G&S obtained building permits and proceeded with its first phase, which included Costco; it was completed in August 2002. At the same time, Defendants acquired land for subsequent phases and installed millions of dollars of public infrastructure improvements, including the construction of a waterfront park and new sea wall; new water, sanitary and storm sewers; new traffic controls, curbing and lighting and removal of old overhead utility lines.

  While the first phase appears to have proceeded apace, the second phase of the Redevelopment Project was significantly delayed due to litigation initiated by various property owners and tenants. Although all cases were eventually decided in favor of Port Chester, the process took nearly two years. At the federal level, property owner William Brody, filed suit in this Court, alleging that the EDPL violated the Due Process Clause of the Fourteenth Amendment, both facially and as applied to him. In January 2001, the district court (Baer, J.) granted Brody's motion for a preliminary injunction, finding that defendants had failed to give Brody notice of the Findings of the Port Chester Page 5 Board of Trustees or of his statutory right to appeal the Board's Findings. The injunction halted large portions of the Redevelopment Project, at a significant cost to Defendants, until it was lifted by the Second Circuit on August 8, 2001. See Brody v. Village of Port Chester, 261 F.3d 288 (2d Cir. 2001) ("Brody I"). Port Chester acquired title to Brody's property on August 28, 2001.

  At the state court level, several owners challenged Port Chester's request for a writ of assistance pursuant to EDPL § 405(A), thereby preventing Port Chester from condemning their properties. Justice Peter Rosato of the Supreme Court of Westchester County granted Port Chester's writ in all cases. See e.g., In Matter of Village of Port Chester, Greatest Estate Services of America, Inc., 00 No. 64481 (N.Y.Sup.Ct. Weschester Co. March 18, 2002); In Matter of Village of Port Chester v. Luis Perez, d/b/a Luis Luncheonette, 00 No. 3793 (N.Y.Sup.Ct. Westchester Co. March 27, 2002); In Matter of Village of Port Chester v. Fabio Sorto, d/b/a Rinconcito Salvadoreno, 00 No. 3793, (N.Y.Sup.Ct. Westchester Co. March 18, 2002). Plaintiffs appealed Justice Rosato's decisions to the Appellate Division, and were granted stays pending appeal of those decisions to the New York Court of Appeals. The stays were entered on March 28, 2002.

  Progress on the second phase began again when the stays were lifted after the Court of Appeals dismissed the final three motions for leave to appeal on July 1, 2003. See In Matter of Village of Port Chester, Greatest Estate Services of America, Inc., 100 N.Y.2d 577, 764 N.Y.S.2d 386 (2003); In Matter of Village of Port Chester v. Luis Perez, d/b/a Luis Luncheonette, 100 N.Y.2d 577, 764 N.Y.S.2d 386 (2003); In Matter of Village of Port Chester v. Fabio Sorto, d/b/a Rinconcito Salvadoreno, 100 N.Y.2d 577, 764 N.Y.S.2d 386 (2003). Port Chester finally had possession of all the parcels for the second phase by July 11, 2003. (Affidavit of John Watkins ¶ 24.) Page 6

  Soon thereafter, Port Chester began preparation for phase three of the process, which included the area containing Plaintiffs' property.

  In 2002, Private Defendants had publically announced their intention to locate Walgreens, a national drug store chain, in the area of the MUR District commonly referred to as "Retail E." The announcement came after Private Defendants failed to come to terms with CVS Pharmacy, following protected negotiations. (Wasser Aff. ¶ 30, see below.) In June 2003, G&S sought amendments to its approved site plan for the MUR District, including "Retail E," in order to accommodate the Walgreens store. (Didden Decl. ¶ 20.) Plaintiffs believed that the site plan was flawed, and planned to comment on the flaws at the next public hearing, scheduled for July 21, 2003. (Id. ¶ 21.) At the hearing, G&S announced that it was withdrawing the proposed amendments. (Id. ¶ 22.) Port Chester ordered and received updated title reports in August 2003, a map in October 2003, and a metes and bounds description in November 2003. (Watkins Aff. ¶¶ 26-30.) As soon as the metes and bonds description was finalized, Port Chester assembled a Petition to condemn Plaintiffs' property. (Id ¶ 31.) The condemnation proceeding was commenced on November 6, 2003.

 The CVS Project

  Plaintiffs are private developers who own or control various adjoining properties in Port Chester that are situated in "Retail E" (the "Inside Properties"). In addition to the Inside Properties, Plaintiffs own or control four adjoining properties situated outside the MUR District (the "Outside Properties").

  Since at least 1996, Plaintiffs have tried to redevelop both the Inside and Outside Properties as a CVS Pharmacy (the "CVS Project"). CVS showed little interest in the Project until Port Chester Page 7 adopted the LADA agreement and designed G&S as the developer.

  In late 2001, a CVS representative entered into negotiations with a G&S representative to discuss the possibility of locating a CVS entity in the "Retail E" area. (Declaration of Alfred Callegari ¶ 7.) The negotiations resulted in a proposal for development of a CVS store on "Retail E," which CVS ultimately rejected on May 8, 2002 because the size of the "Retail E" area was inadequate (Id ¶ 8.)

  In March 2003, CVS approached Plaintiffs because the Inside Properties and Outside Properties, both owned by Plaintiffs, were, in combination, sufficiently large to accommodate CVS's spatial requirements. (Callegari Decl. ¶ 9; Declaration of Bart Didden, dated January 15, 2004 ¶ 25.) Plaintiffs secured various municipal approvals for the CVS Project and entered into a long-term lease of the Inside and Outside Properties with CVS. (Callegari Decl. ¶ 10.)

  Plaintiffs entered into the CVS lease knowing full well that, under the LADA, the Private Defendants, as the designated developer of all sites within the MUR District (including the Inside Properties), "at some point, [] might attempt to buy or condemn [the Inside Properties]." (1/15/04 Didden Decl. ¶ 26.) As long ago as March 30, 1999, Plaintiffs had sent a letter to the Board (the "March 1999 Letter") stating that G&S's designation as "preferred developer" placed them at a competitive disadvantage in their negotiations with G&S, and asked that Port Chester remove the Inside Properties from the proposed project and site plan approval process. (Wasser Aff. Exh. C.)*fn1 The letter, which followed-up on comments made by Plaintiffs at a March 19, 1999 public hearing, is here reproduced in its entirety: Page 8

  Dear Madam Mayor and Board Members:
We would like to thank the Board for its willingness to listen and take under advisement the public's numerous comments and suggestions regarding the revitalization of the marina district of our village.
We would like to take this opportunity to review the comments of March 18 and formally restate our request for your thoughtful consideration. We have owned the property known as 103-105 North Main Street for six years. Dick has owned and maintained some of the adjacent buildings for more than fifteen years. Approximately three years ago, when CVS was endeavoring to construct a pharmacy in Byram and failed due to opposition by the local residents, we had contact with CVS. We were at that time willing to build to their specifications, but they informed us that they were "not interested in Port Chester."
We were willing to develop then. We are still willing to develop and are ready.
At this time, when G&S Investors is proposing a project for the downtown area, we find a synergy surrounding the project which is causing increased interest among many possible tenants, including CVS which formerly had no interest in Port Chester.
As you are aware, we have had a number of meetings in recent months, in the village with G&S and additionally with G&S and Peg/Park, the planners for G&S, in White Plains. These meetings have been promising, but they have borne no fruit. Hence, we find ourselves at a unique disadvantage. We are anxious to develop our property, but by your actions, we are precluded because of the "preferred developer" status granted by you, the Board, upon G&S Investors with respect to "Retail E". We will continue to negotiate with G&S, but with the designation of "preferred developer", G&S enjoys the ultimate assistance of condemnation for those property owners with whom they are unable to finalize a deal. (Emphasis added).
  To our detriment, with their right to condemnation, G&S is not required or bound to ultimately negotiate in good faith. We have been discussing a proposed partnership whereby we would contribute all of the land necessary for the proposed building known as "Retail E". G&S would build the building and we assume, based on land value vs. construction costs and tenant acquisition, the percentages of ownership would be derived. This is a hypothetical formula and difficult to get agreement on. G&S, which we find open and cooperative to work with, has no urgency in finalizing a deal with us. They are not required to finalize a deal of this or any nature. They, by a matter of right, may go directly to condemnation and proceed on their way. Page 9 have believed in Port Chester for many years, as evidenced by our investments. Our investments are not limited to just this one site. Besides real estate, our respective primary operating businesses employ many local residents and provide needed services not only to businesses but residents, as well.
Our impression from speaking with various Board members and hearing your comments made at the public meetings, we realize that this project doesn't fully satisfy your individual wishes 100%. Agreed. But just as you do, we want to see a doable project proceed in the village.
Since "Retail E," located on our property, was not included in the original proposal, the removal of our property in no way would hamper the integrity or functionality of the future project. Furthermore, since we still desire to develop the property and would so in concert with the style of the G&S proposal, even if not a partnership with G&S, we request the following action of the Board of Trustees:
To remove the property know as 103-105 North Main Street and the immediately adjoining properties from the proposed project and site plan approval process so that from a level playing field we may negotiate with G&S to a possible partnership.
If a partnership with G&S is not attainable for whatever reason, we are agreeable to commit, in a binding fashion, to construct a building in accordance with the G&S construction schedule on the site without delay after proceedings through the local approval process. Your fallback position is that at anytime it is deemed that we are not living up to our end of the agreement, you can always rededicate the preferred developer status on this property and move it forward or include the property in phase 2.
Please permit us the opportunity to maintain and fully realize our investment potential without seeking the injunction of the courts to protect our rights of ownership. We would like to explore the possibility of working with G&S and, ultimately, together with local financing and utilizing G&S, construct a building that compliments the entire project and have the ownership remain here in local hands. In our opinion, this course of action would be consistent with what is best for the village. Nobody wants to delay the progress of the village.
As you can see, we all share the same opinions. They may not be the best, but they are doable today.
Yours for a better village,
  Domenick Bologna and Bart A. Didden. Page 10

 In response to the letter, Port Chester declined to grant Plaintiffs' request for removal from the Redevelopment Plan, but urged the parties to convene a meeting to discuss the CVS Project.*fn2

  In fact, Plaintiffs and Private Defendants were already well acquainted. Plaintiffs participated in a public hearing convened by Defendants in March 1999. The March 1999 Letter also referred to "a number of meetings in recent months, in the village with G&S and additionally with G&S and Peg/Park, the planners for G&S, in White Plains." (Wasser Aff. Exh. C.) At their first meeting, G&S representative Gregg Wasser informed Plaintiffs that their properties were not part of the first phases of the development, but that before the Project reached their properties they would attempt to reach a fair settlement prior to initiating a condemnation proceeding. (Wasser Aff ¶¶ 24-25.) At another meeting, in 1999, the parties discussed the possibility of initiating a joint venture. (Id. ¶ 26.) Plaintiffs describe Page 11 G&S's conduct at these meetings as "open and cooperative." (March 1999 Letter.)

  At the July 21, 2003 public hearing, Plaintiffs voiced their concerns regarding G&S's proposed Walgreens site plan. Rather than engage in further public debate with Plaintiffs, G&S withdrew the amended site plan application and attempted, again, to negotiate with Plaintiffs directly. (Wasser Aff. ¶ 31.)

  At the behest of Port Chester officials, including the Mayor of Port Chester, the parties met again on November 5, 2003.

  The parties do not agree on what happened during the meeting. Plaintiffs allege that Private Defendants demanded that Plaintiffs either pay them $800,000 or give them a partnership interest in the project or Private Defendants would cause Port Chester to commence a condemnation proceeding against the Inside Properties and thereby divest Plaintiffs of title. Private Defendants characterize the meeting differently. According to Gregg Wasser, the G&S representative present at the meeting, he and G&S's attorney informed Plaintiffs Didden and Bologna that it would be a waste of time for the lawyers to argue over who had "better" rights to proceed with their project. In lieu of continuing the "rights" debate, Wasser claims to have offered to conduct a joint venture with Plaintiffs on the Retail E property. After Plaintiffs rejected the offer, Wasser determined that the only other way to proceed would be to establish a value for the property and for one side to buy-out the other. Wasser estimated that the profit on the CVS store deal would be $2 million. He then stated to Plaintiffs that whoever would be responsible for completing the Project should be given some credit for the additional work and was entitled to more than a 50-50 split. Based on the $2 million profit figure, Wasser proposed a buy-out figure of $800,000, in addition to the fair market value of the property, to be divided among Plaintiffs Page 12 Didden, Bologna and DeCesare. He said he would be just as happy being bought out by Plaintiffs at that figure as he would be to buy Plaintiffs out. (Wasser Aff. ¶ 32.) He also informed Plaintiffs that the condemnation process was continuing, and that, if they could not reach an agreement, G&S expected that Port Chester would acquire the Inside Properties through condemnation.

  On November 6, 2003, Port Chester commenced a condemnation proceeding against the Inside Properties in the Westchester County Supreme Court by filing a Notice of Petition and Petition (the "Condemnation Proceeding"). The petition seeks court permission authorizing Port Chester to file an acquisition map with the court and thereby gain title in fee to the Inside Properties pursuant to Article 4 of the EDPL. See In the Matter of Village of Port Chester to Acquire Title To Certain Real Property Located In the Village of Port Chester, Westchester County, State of New York, and Designated on the Tax Maps of the Village of Port Chester as Section 2, Block 60, Lots 9, 10, 11, 12, 13, 14, 15, 16, No. 18821/03 (N.Y.Sup.Ct. Westchester Co. filed November 6, 2003).

  On November 24, 2003, the Port Chester Planning Commission held a public hearing on Plaintiffs' site plan application for the CVS Project, and granted preliminary site plan approval. (Declaration of Domenick Bologna, dated January 15, 2004 ¶¶ 21-22.) Following receipt of the site plan approval, Plaintiffs attended a meeting of the Board on December 1, 2003, in which they asked the Board to withdraw the pending Condemnation Proceeding. (1/15/04 Bologna Decl. ¶ 23.) On December 3, 2003, the Board held a special meeting to consider Plaintiffs' request. Although the request was denied, Port Chester allowed Plaintiffs additional time to respond to petition. (Id. ¶ 24.)

  On December 17, 2003, Plaintiffs again petitioned Port Chester to amend the boundary line of the MUR District to remove the Inside Properties from the district (the "Rezoning Petition"). (Id. ¶ 25.) Page 13 On January 6, 2004, the Board held another special meeting, during which it announced, upon the advice of its special counsel, that it would not act on the Rezoning Petition. (Id. ¶ 27.) Instead, it agreed to convene a meeting with the Board's counsel, Plaintiffs and Private Defendants. This meeting occurred on January 12, 2004. (Id. ¶ 28.) Private Defendants reiterated their November 5 offer to Plaintiffs at the January 12, 2003 meeting. Plaintiffs did not accept.

 The Instant Action

  On January 16, 2004, Plaintiffs filed a complaint and an order to show cause with this Court, seeking temporary and preliminary injunctive relief that would stay the Condemnation Proceeding, as well as declaratory and monetary relief pursuant to 42 U.S.C. § 1983 against Port Chester and its Board of Trustees (the "Public Defendants") and Private Defendants. As a first claim for relief, the complaint alleges that Defendants are depriving Plaintiffs of their property without due process in violation of the Fourteenth Amendment. The second claim for relief alleges that Defendants have effected a taking of Plaintiffs' property in violation of the Takings Clause of the Fifth Amendment to the United States Constitution, as applied to the states through the Fourteenth Amendment. The third claim for relief alleges that Defendants have abused their condemnation powers in violation of Plaintiffs' substantive due process rights under the Fourteenth Amendment. The fourth claim for relief alleges that Plaintiffs have been intentionally and unlawfully singled out and mistreated by Defendants in violation of the Equal Protection Clause. The fifth claim for relief seeks a declaration that the development agreement (LADA) between Public Defendants and Private Defendants is unconstitutional because it unlawfully delegates Public Defendants' eminent domain power to the Private Defendants. The sixth Page 14 and seventh claims for relief seek preliminary and permanent injunctive relief as well as attorney's fees.

  The crux of Plaintiffs' argument is that the Public and Private Defendants have conspired to deprive Plaintiffs of the use of their property in order to pursue their own private interests — specifically, their development plans with Walgreens — rather than the interests of the public. Plaintiffs ask this Court to enjoin the Condemnation Proceedings.

  The Defendants have asked me to abstain from deciding these issues, which they allege are properly before the state court in the Condemnation Proceeding. In lieu of such a ruling, Defendants ask that I deny Plaintiffs' request for a preliminary injunction on the merits.

  Following oral arguments on January 16, 2004, I granted Plaintiffs' request for a 10-day temporary restraining order and ordered Plaintiffs to post a $1,000 bond, which they did. On January 23, 3004, after full briefing and oral arguments, I lifted the TRO and denied Plaintiffs' request to enter a preliminary injunction ...

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