Scott E. Mollen
Scott E. Mollen ()

Judge Fines Attorney $10,000 for Filing SLAPP Lawsuit—Neighbor Created an Online Internet Petition to Oppose a Proposed Subdivision

The defendants in the subject case asserted that the plaintiffs’ action is a SLAPP suit, i.e., a strategic lawsuit against public participation that is intended to censor, intimidate and silence critics by burdening them with the cost of legal defense until they abandon their criticism or opposition. The court dismissed the suit, awarded attorney fees and costs against the plaintiffs and sanctioned the plaintiffs’ counsel $10,000.

The case arose from a “relatively common and generally unremarkable application to a local zoning authority.” The plaintiffs signed a contract to sell the subject property. The sale was contingent upon obtaining the village’s permission to subdivide the lot into two parcels. The plaintiffs alleged that prior to signing the contract, they had obtained the opinion of the village’s building inspector that the lot was large enough to “accommodate two houses, without the need for a variance; the clear implication was that there was no obvious impediment to approval of the subdivision into two lots.” The purchaser filed a subdivision application with the village. “[A]bsent such approval the contract was to expire” on Dec. 31, 2013. However, the contract was extended.

The defendants, residents of the village, learned of the application and opposed the subdivision and construction of two homes. A defendant had created an “online internet petition.” The petition noted the hearing date and invited the public to attend and express opposition. The petition stated, inter alia, that the proposed “[t]wo structures crammed onto this one lot will be an eyesore that can never be removed if approval is granted” and that 311 signatures had been acquired and more were being sought. At the hearing, several residents, including the defendants, opposed the application.

The plaintiffs had commenced the subject action, alleging that “the defendants [were] attempting to undermine them for no legitimate reason.” They claimed that the defendants had “a personal interest in the outcome, that they are friends of the Mayor and certain Trustees of the Village, that there is no sound basis for rejecting their application, and that the online petition, containing signatures of persons outside the community, was set up to create the ‘impression’ that there was significant and justifiable opposition.”

SLAPP suits “are legislatively disfavored” and the Civil Rights Law (CRL) sections 70-a and 76-a provide for “an action, claim, cross claim or counterclaim to recover damages from any person who commences or continues such a lawsuit. The prospect of such damages…is meant to protect members of the public who choose to speak out on public issues.” The court noted that “once a party seeking relief based on the foregoing has demonstrated that the case involves public petition and participation, CPLR 3212(h) provides that it is the plaintiff, not the moving defendant seeking dismissal of the SLAPP suit, who bears the burden on the summary judgment motion.” Thus, the plaintiff could “avoid dismissal of the action only if…the suit has a substantial basis in fact and law, or is supported by a substantial argument for an extension, modification or reversal of existing law.”

The CRL “requires not only that all necessary elements of the claims made can be established; there also must be a factual showing, by clear and convincing evidence, that any communications giving rise to the suit were made with knowledge of falsity or with reckless disregard of whether it was false, where truth or falsity is material to the cause of action.”

The court found that the subject action was in fact, “a SLAPP suit,” the plaintiffs were “public applicants” under the statute and the suit was “‘materially related’ to the defendants’ efforts in opposing the subdivision, as the plaintiffs’ causes of action accuse them of wrongful conduct in pursuing that opposition, and seek money damages therefor.” The court further held that the plaintiffs had not met their burden. The purchase/sale contract had not been abandoned or canceled and therefore, the plaintiffs could not establish that a breach had been procured by the defendants. Additionally, the plaintiffs had not alleged “defamatory words,” since the subject language was “not reasonably susceptible of a defamatory meaning.” Moreover, “the hearing was held as part of the Village’s role as decision-maker on the application, which is quasi-judicial in nature,” and therefore, “statements made there enjoy an absolute privilege.”

Additionally, New York does not recognize a separate common law claim for punitive damages and “nothing” in the papers indicated the type of “truly egregious behavior and necessary mental state on defendants’ part that would justify such a result.” There was “no evidence of any kind, let alone clear and convincing evidence, that the statements and other communications made by defendants” with respect to “the deleterious effect on the appearance/character of the neighborhood surrounding the subject lot…were false.” The court opined that “given the inherently subjective nature of this opposition it would be difficult for any plaintiff to make that showing.”

The plaintiffs had emphasized “the defendants’ allegedly selfish and venal motives, and the conflicts of interest of the decision makers.” The court found that such allegations were “essentially irrelevant” and “might be advanced in an Article 78 proceeding to overturn a negative decision by the Village….” They had no bearing on the applicable provisions of the CRL. Additionally, in a SLAPP suit, the defendants’ motivation and “even the influences on the decision makers simply are not factors to be weighed under the…statutory standards.”

The plaintiffs cited an “alleged deliberate misrepresentation by defendants of the application as being one for permission to build houses, instead of one that was for the subdivision only.” The court characterized such allegation as, “to be charitable, disingenuous, and ultimately insubstantial.” “[T]he ultimate goal of plaintiffs’ vendee, and…the reason for the application…, was…to build a house on each of the newly created lots.” Moreover, the petition referred to “the subdivision…as being the issue before the Village.” Thus, the plaintiffs “failed to show that the defendants were engaged in a deliberate attempt to mislead the public regarding the nature of the application.” Additionally, the plaintiffs could not “demonstrate that there was a substantial basis in fact and law for their action” and no argument had been made for a change in the law.

Although the plaintiffs had also requested that a final determination of this matter “be held in abeyance” pending discovery, the court held that the proceedings should not be delayed “where there is no more than a mere hope that” helpful facts will be discovered. The plaintiffs had made a “general request to pursue discovery” involving “‘other inflammatory statements’ made by defendants.” Such request was “not a substitute for some evidence that defendants may have made additional and allegedly false public statements…beyond what is complained of…, and that discovery…is needed.” Accordingly, the court granted summary judgment dismissing the complaint.

The court then granted summary judgment to the defendants on their counterclaim for attorney fees and costs pursuant to CRL §70-a(1)(a), but dismissed the counterclaim for “compensatory and punitive damages.” The defendants had not demonstrated that the plaintiffs’ action had been “commenced or continued for the sole purpose or harassing, intimidating, punishing or otherwise maliciously inhibiting the free exercise of speech, petition or association rights.” Here, the plaintiffs’ motivation “was at least partially, and likely mainly, economic gain.”

Additionally, there is no separate common law tort for punitive damages, the defendants had failed to make out a prima facie showing and the record was devoid of any evidence that the defendants had “suffered additional losses above and beyond attorney’s fees and costs.” The court also dismissed the defendants’ counterclaim for violation of First Amendment rights since such claim was not encompassed by the pertinent sections of the CRL and must be based on some form of governmental action.

Since the defendants are entitled to attorney fees and costs pursuant to the CRL, the court declined to award attorney fees and costs as a separate sanction. However, the court found that “the attorney’s conduct was ‘frivolous’ within the meaning of 22 NYCRR §130-1, and that sanctions [were] appropriate.”

The court considered the fact that the defendants’ counsel had written to the court after the defendants’ motion had been made “offering plaintiffs ‘safe harbor,’ a withdrawal of the motion and the requests for fees, sanctions and punitive damages in exchange for withdrawal of the action and related protections for the defendants.” That offer was declined. The court explained that “[t]he refusal to recognize the inherent weakness of plaintiffs’ action and to continue to press forward notwithstanding this offer from defendants, after he was in possession of their motion papers, supports a sanction.”

Moreover, an evidentiary hearing on whether to award sanctions was not necessary since the quest for sanctions “was a separate and distinct prayer for relief” on the subject motion. The attorney had been given an opportunity to respond and had “not requested a hearing on the subject.” Additionally, there was some evidence that the plaintiffs’ attorney “understood, or certainly believed, that suppressing the defendants’ opposition would aid his clients’ ultimate goal.”

The court found it compelling, that the plaintiffs’ attorney had written “a full-page letter to a local newspaper,…, specifically naming and accusing the defendants to this action of propounding an ‘inaccurate petition,’ attributing to them ‘self-serving’ motives and describing a denial of plaintiffs’ application as being ‘comparable to theft’ and ‘outrageous.’” His letter further stated that the “defendants ‘might be attempting to leverage their close connections to the mayor and board members to accomplish this’” and noted that in an effort to “dissuade” defendants from further conduct and to further hold the defendants “accountable for what they were attempting to accomplish,” the plaintiffs had commenced an action and “it will be determined if they went too far in their zeal to prevent the subdivision.”

The court found that the “clear statement that the lawsuit was intended to silence defendants, amplified by the public nature of that statement, the public naming of the defendants, and the intemperate description of the defendants’ alleged motivations and actions, all by a member of the Bar who must be charged with knowledge of the law, calls for a strong response from this Court.”

The court sanctioned the attorney in the amount of $10,000. It explained that it took “no pleasure in directing the sanction, but the proper functioning of our courts, including the regulation of an attorney’s behavior, requires that the Uniform Rule under which this direction is made be given meaning.”

Bennett v. Towers, 600049/14, NYLJ 1202647369697, at *1 (Sup., NA, Decided March 13, 2014), Palmieri.

Land Use—Court Denies Asphalt Green Injunctive Relief to Stop the City From Proceeding With Demolition Work Relating to Marine Transfer Station—Lease v. License

The plaintiff, Asphalt Green, had moved for a preliminary injunction to remain in place until the court decides “the merits of the Plaintiffs’ underlying action, preventing the City defendants and their contractors from (1) entering onto the Asphalt Green campus (AG campus)” without the plaintiff’s “permission to cut down trees along the access ramp to the East 91st Street Marine Transfer Station (MTS), (2) installing a construction fence on the AG campus, and (3) demolishing any portion of the existing MTS access ramp.”

The plaintiff asserted that there was “an emergency.” The city planned to remove “the access ramp which necessitates a safety construction fence.” The city plaintiff argued that “it did not know about the tree removal and acceleration of the construction schedule” and that pursuant to a December 2011 agreement (license agreement), the city had granted the plaintiff “the right ‘to possess and solely to use, operate control and manage (the ‘Services’) [of] the Property.’” The property was defined in the license agreement as “the City-owned property more particularly described on Exhibit ‘A’ hereto and now commonly known as ‘Asphalt Green.’” Exhibit A described the land on which the AG campus is located and did not include the “MTS access ramp.”

The plaintiff asserted that its rights were “akin to that of a leaseholder.” In rejecting such argument, the court explained that the December 2011 agreement was titled “License Agreement.” Moreover, “it contained a section entitled ‘No Lease,’” which provided that “It is expressly understood that the City has title to the Property and that no land, building, space, or equipment is leased to [plaintiff] but that during the term of this Agreement, [plaintiff] shall be allowed the use of the Property only as herein provided.” The license agreement further stated that the plaintiff may “improve the property, but ‘[a]ll…improvements installed in or on the Property at any time by [plaintiff] shall, upon installation, become the property of [the] City….’”

The court noted that, at the time that the License Agreement had been executed, the plaintiff “had been opposing the construction and operation of the MTS for years through community protests, lobbying, and litigation” and the plaintiff had offered “no rationale for why the City would convey rights which would permit the licensee to dictate conduct to or restrict the rights of the licensor.” The plaintiff contended that the license agreement was “comparable to the 1989 Agreement between [plaintiff] and the City.” However, “[t]he earlier agreement was not called a ‘License Agreement,’…, and did not include a ‘No Lease’ provision.”

The court concluded that the plaintiff had failed to establish “irreparable harm” and denied the plaintiff’s application for an injunction. The court emphasized that the access ramp was “not subject to the license agreement and so [plaintiff] has no rights with respect to its demolition.” The court further observed that “[t]he land where the construction fences will be erected and the trees removed are the City’s property: the land, because the City never conveyed a property interest to [plaintiff]; and the trees because the License Agreement provides that any [plaintiff] improvements become City property.”

Moreover, the plaintiff had failed to establish that removal of the trees and installing a safety construction fences would interfere with its ability to perform services under the license agreement. The construction fence was to be placed “within a landscaped strip and will not encroach on [plaintiff's] running track or playing field.” Thus, “Children’s safety will not be endangered by construction of the fence” and “[t]he NYC Department of Design and Construction will secure the area.” Additionally, the court noted that “the construction of a safety fence around the ramp” and removal of the trees will be done for the “sake of safety.”

Finally, the court stated that “[e]ven if the construction fence and tree removal did impinge on Plaintiff’s rights under the License Agreement—and it does not—the harm would not be irreparable.” The court further explained that “[a]ny fence could be taken down in the event that the Court later finds for Plaintiffs on the merits, and the trees are already required to be replanted in restitution as a condition for the City’s permit with the City of New York Department of Parks and Recreation.” Thus, the court denied preliminary injunctive relief.

Comment: Generally, courts will not necessarily accept the parties’ “label” or description of an agreement. Issues involving the nature of a document often arise with respect to disputes involving, inter alia, assignments, sublets and management agreements.

Of course, how sophisticated parties characterize an agreement is certainly relevant as to the intent of the parties. Here, the court noted that not only did the parties call the agreement a “License Agreement,” but they explicitly provided that it was not a lease. However, the court did not stop there. It also examined the actual terms of the agreement and concluded that the city appeared to be acting within its rights under the document, regardless of how the document was characterized.

Kellner v. U.S. Army Corps of Engineers, 12 Civ. 8458, NYLJ 1202645164283, at *1 (SDNY, Decided Feb. 26, 2014), Crotty, J.

Scott E. Mollen is a partner at Herrick, Feinstein and an adjunct professor at St. John’s University School of Law.