14‐2864‐cv

Lexjac, LLC v. Beckerman

      

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

          

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.  CITATION TO A

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY

FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.  

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST

CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION

ʺSUMMARY ORDERʺ).  A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON

ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 22nd day of June, two thousand fifteen.

PRESENT: JOSÉ A. CABRANES,

    REENA RAGGI,

    DENNY CHIN,

     Circuit Judges.       

   

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LEXJAC, LLC, RICHARD ENTEL,   

    Plaintiffs‐Counter‐Defendants‐Appellees,   

   

    v.             14‐2864‐cv   

           

JULIANNE W. BECKERMAN, INDIVIDUALLY AND

AS MAYOR OF THE INCORPORATED VILLAGE OF

MUTTONTOWN, CARL JUUL‐NIELSON,

INDIVIDUALLY AND IN THEIR OFFICIAL

CAPACITY AS MEMBER OF THE BOARD OF

TRUSTEES OF THE INCORPORATED VILLAGE OF

MUTTONTOWN, J. RANDOLPH BARTHOLOMEW,

INDIVIDUALLY AND IN THEIR OFFICIAL
   

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CAPACITY AS MEMBER OF THE BOARD OF

TRUSTEES OF THE INCORPORATED VILLAGE OF

MUTTONTOWN, STEVEN FINE, INDIVIDUALLY

AND IN THEIR OFFICIAL CAPACITY AS MEMBER

OF THE BOARD OF TRUSTEES OF THE

INCORPORATED VILLAGE OF MUTTONTOWN, PAT

MILLER, INDIVIDUALLY AND IN THEIR OFFICIAL

CAPACITY AS MEMBER OF THE BOARD OF

TRUSTEES OF THE INCORPORATED VILLAGE OF

MUTTONTOWN,         

    Defendants‐Counter‐Claimants‐ 

Appellants,

THE BOARD OF TRUSTEES OF THE INCORPORATED

VILLAGE OF MUTTONTOWN, THE INCORPORATED

VILLAGE OF MUTTONTOWN,

Defendants‐Counter‐Claimants, Cross

Defendants‐Appellants,

BONNIE OʹCONNELL,

Defendant‐Counter‐Claimant, Cross‐

Claimant.

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FOR PLAINTIFFS‐APPELLEES: E. CHRISTOPHER MURRAY, Ruskin Moscou

Faltischek, P.C., Uniondale, New York.

FOR DEFENDANTS‐APPELLANTS: STEVEN G. LEVENTHAL, Leventhal, Cursio,

Mullaney & Sliney, LLP, Roslyn, New York.  

    Appeal from the United States District Court for the Eastern District of

New York (Seybert, J., and Lindsay, M.J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is VACATED

and the case is REMANDED.
   

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Defendants‐appellants timely appeal from the September 13, 2013

judgment of the district court awarding plaintiffs‐appellees $1,450,000 in compensatory

damages for violation of procedural due process.  We assume the partiesʹ familiarity

with the facts, procedural history, and issues on appeal, which we summarize briefly

below.

Background

This case involves a 1.1‐acre parcel of land (ʺSmallacreʺ) in the Village of

Muttontown (the ʺVillageʺ) in Nassau County.  In July 1969, the Planning Board of the

Village approved a 28‐home residential development by the developer Foreal Homes,

Inc. (ʺForealʺ).  This approval was contingent on Forealʹs offer to ʺdedicateʺ Smallacre to

the Village.  On July 27, 1972, Foreal offered Smallacre to the Village.  The Village did

not accept the offer until it purported to do so, as described below, in 2007.

On December 18, 2003, Richard Entel, through his wholly owned

corporation Lexjac, LLC, purchased Smallacre from Foreal for $90,000.  Foreal retained a

right of first refusal and an interest to one half of the proceeds of any future sale of

Smallacre.  On October 17, 2005, the Village Board of Trustees ‐‐ at the request of Lexjac

‐‐ formally declined Forealʹs 30‐year‐old offer of dedication (the ʺ2005 Resolutionʺ).  In

return, Entel agreed to install ʺscreen plantingʺ and later offered a conservation

easement in which Entel, Lexjac, and any future owner of Smallacre relinquished the
   

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right to develop Smallacre.  Entel was a member of the Board of Trustees but had

recused himself from the vote.

On July 10, 2007, following a contentious mayoral election between Entel

and incumbent and eventual winner Julianne Beckerman, the newly constituted Board

of Trustees adopted a resolution to rescind the 2005 Resolution declining Forealʹs offer

of dedication, and accepted the offer of dedication (the ʺ2007 Resolutionʺ).  The Village

thereafter appropriated Smallacre.   

In 2007, plaintiffs commenced this action below, alleging, inter alia,

violations of due process and equal protection.1  On March 18, 2011, the district court

(Seybert, J.) granted in part plaintiffsʹ motion for summary judgment.  In its decision,

the district court concluded that the 2005 Resolution was governed by New York

General Municipal Law (ʺNYGMLʺ) § 809 because it was not a contract.  Instead, the

court concluded that the 2005 Resolution ʺreflects a final (albeit belated) step in the

Villageʹs original approval of the subdivision plat in July 1969.ʺ  (J.A. at 1598).  The court

also rejected the Villageʹs argument that the 2005 Resolution was null and void

                                                            

1   Plaintiffs also brought suit in Nassau County Supreme Court alleging,

inter alia, that the 2007 Resolution constituted a breach of contract, and seeking a

declaration that the 2007 Resolution was a nullity and that Lexjac holds title to

Smallacre, as well as damages.  On March 31, 2008, the state court granted preliminary

injunctions precluding the Village from entering Smallacre or intervening in its use, and

precluding plaintiffs from alienating or encumbering Smallacre.  The preliminary

injunctions remained in effect until August 2011, when they were lifted to allow the

Village to deed back Smallacre to Lexjac and to permit Lexjac to grant an easement to

the Village.
   

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pursuant to NYGML §§ 801 and 804, which provide that a “contract” with a

municipality  is void if a “municipal officer or employee” has an interest in the contract.

In June 2011, the district court ordered the Village to deed Smallacre back

to Lexjac and Lexjac to grant a conservation easement preventing the development of

Smallacre.  The parties consented to the exercise of jurisdiction over the case by

Magistrate Judge Arlene R. Lindsay, pursuant to 28 U.S.C. § 636(c)(1), and the case

proceeded to trial on damages.  On September 13, 2013, the jury returned a verdict in

favor of plaintiffs in the amount of $1,450,000.  Defendants filed several post‐trial

motions, which were denied on July 30, 2014.  This appeal followed.

Discussion

We review the district courtʹs grant of a motion for summary judgment de

novo.  See Scaria v. Rubin, 117 F.3d 652, 653 (2d Cir. 1997) (per curiam).   

A contract is defined under NYGML as ʺany claim, account or demand

against or agreement with a municipality, express or implied.ʺ  N.Y. Gen. Mun. Law

§ 800(2).  The term ʺcontractʺ is construed broadly.  See, e.g., People v. Pinto, 387 N.Y.S.2d

385, 388‐89 (City Ct. of Mt. Vernon 1976) (defining an application for a building permit

and subsequent issuance thereof as a contract).  NYGML § 801 provides that no

municipal officer shall have an interest in any contract with the municipality.  NYGML

§ 809 provides that a municipal officer with an interest in an application, petition or

request for a variance, amendment, change of zoning, etc., ʺshall state the name,
   

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residence and the nature and extent of the interest . . . .ʺ  Any contract willfully entered

into in violation of NYGML §§ 801 or 809 is null, void, and wholly unenforceable.  See

N.Y. Gen. Mun. Law § 804.

The district court erred when it concluded that the 2005 Resolution was

not a contract, and that therefore it was governed by NYGML § 809, rather than

NYGML § 801.  The court explained that the 2005 Resolution was the ʺfinal (albeit

belated) step in the Villageʹs original approval of the subdivision plat in July 1969.ʺ  

Accordingly, the court concluded, because the 2005 Resolution related to an

ʺapplication, petition, or request submitted for . . . approval of a plat,ʺ that it constituted

a land use application under § 809, rather than a contract under § 801.  See N.Y. Gen.

Mun. Law § 809.  The court then held that Entel satisfied the notice requirement by

alerting the Board to his interest and recusing himself from the vote to adopt the 2005

Resolution.   

The 2005 Resolution is a contract within the meaning of NYGML, and not

merely a land use application.  The 2005 Resolution provided that the Village would

give up a valuable property interest in Smallacre in exchange for Entelʹs commitment to

provide adequate care of Smallacre.  It is well settled that the relinquishment of a

valuable right in exchange for a promise of services constitutes a contract.  See, e.g., In re

Transit Cas. Co., 79 N.Y.2d 13, 18 (1992) (noting that a valuable property right is a

distinct contractual right deserving of protection); City of Buffalo v. Chadeayne, 7 N.Y.S.
   

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501, 502 (City of Buffalo Super. Ct. 1889) (holding that defendant assumed contractual

obligations by acquiring valuable property rights).   

Because the district court concluded that the 2005 Resolution was not a

contract, it did not consider whether the Resolution was null and void pursuant to

NYGML §§ 801 and 804 notwithstanding Entelʹs recusal.  Accordingly, we vacate the

judgment of the district court and remand the case for the district court to consider the

issue in the first instance, and for further proceedings consistent with this summary

order.  See CILP Assocs., L.P. v. Pricewaterhouse Coopers LLP, 735 F.3d 114, 127‐28 (2d Cir.

2013) (exercising discretion to remand question for district court to address in first

instance).

* * *

In light of our disposition of this case, we do not reach the remaining

issues on appeal.  Accordingly, we VACATE the judgment of the district court and

REMAND the case for further proceedings.

     FOR THE COURT:

     Catherine OʹHagan Wolfe, Clerk