Nixon Peabody faces an $8.8 million malpractice lawsuit alleging it bungled a long-running eminent domain dispute while representing the sewer district of New York’s Rockland County against property owners who had hoped to sell a parcel of land to developers.
The suit, first reported by the Rockland County Times, arises out of an underlying case that traces its roots back to 2004. In that dispute, Nixon Peabody represented the Rockland County Sewer District against a group known as the Split Rock Partnership that once owned property near the village of Hillburn, New York.
The land in question was for the most part steep, rocky and heavily wooded, but there was a portion of it that the Split Rock group viewed as suitable for development, according to a 2012 court ruling in the underlying suit. The partners entered a $10 million contract in November 2004 with a Boston-based developer—The Wilder Cos. The developer hoped to build an office park on the site with views of New York and New Jersey. The contract contained a contingency clause that would void the development agreement if the county asserted eminent domain and reclaimed the land in a condemnation proceeding.
Looking to build a wastewater treatment plant in the area, the county sewer district did, in fact, end up retaking the land in February 2005 in an eminent domain action, paying less than $250,000 for the land and voiding Split Rock’s development contract, according to the 2012 ruling. The Split Rock partners then sued, starting a lengthy court proceeding that eventually went to trial and resulted in a loss for the county.
A New York state court ordered the county sewer district, which had been represented by Nixon Peabody throughout the case, to pay $8.1 million plus interest going back to 2005. In March 2015, the county reached a settlement with Split Rock that took account of the judgment and other costs, ultimately costing Rockland County almost $16.3 million, according to the county’s malpractice suit. A local news report earlier this year estimated that the eminent domain dispute and its fallout has wound up costing Rockland County taxpayers roughly $18 million.
Now, the county’s sewer district, represented by Eric Dranoff of Saretsky Katz & Dranoff, is looking to recoup all legal fees, costs and expenses it paid to Nixon Peabody. The malpractice suit, filed Sept. 12, alleges that the firm made a host of mistakes during the land dispute and seeks damages of nearly $8.87 million.
The suit criticizes Nixon Peabody’s decision to have an associate handle much of the case, and alleges that the firm failed to gather evidence that would have rebutted the landowners’ claims about the property’s true value. Nixon Peabody allegedly failed to tap a zoning expert who could have countered Split Rock’s argument that the land could be rezoned to accommodate a commercial office building development, the suit said.
The county also alleges that Nixon Peabody ignored basic rules of civil procedure with respect to another potential expert witness in the field of civil engineering and site planning, a mistake that led the court in the eminent domain case to prevent that expert from testifying, according to the suit.
“[Nixon Peabody] failed to marshal evidence, including but not limited to expert testimony, questioning … Split Rock’s proof in the condemnation proceeding that commercial development of the property, by construction of an office complex, was physically possible and economically feasible,” the suit said.
Nixon Peabody, in response to questions about the lawsuit, provided an emailed statement stating, “We believe these claims are without merit and we plan to defend them vigorously.”