The president of Amagansett Springs Aquifer Protection filed suit on Thursday, December 4, against a family who halted the sale of land above the Stony Hill aquifer to East Hampton Town for preservation.Anthony Pasca, the attorney for Alexander Peters, who is the owner of the Amagansett property as well as the president and founder of the not-for-profit aquifer protection organization, said this could well be the first case in the nation in which someone used a right of first refusal to thwart a sale for preservation.
Mr. Peters hopes to sell a 7.2-acre, three-lot tract in Amagansett’s former Bell Estate to the town. The Town Board voted unanimously to tap the Community Preservation Fund to make the $3.6 million purchase, and the deal was set to close in September.
However, when Mr. Peters first purchased two of the three lots, totaling 3.5 acres, in 1992, the owner at that time, Richard Smolian, retained a right of first refusal—according to Mr. Peters, specifically to prevent Mr. Peters from later selling the land for development.
Now, although Mr. Smolian has waived that right to pave the way for the town purchase, other members of his family have stated their intention to exercise it. That could move them ahead of the town in the line to buy the property, and it clouds a clear transfer of ownership that the town would need to go through with the transaction.
According to the suit filed in State Supreme Court last week, those members of the Smolian family want to buy the two lots on La Foret Lane at the same price Mr. Peters offered to the town—a discount in the millions, he said—and then sell them for development at full market value.
Jonathan Smolian, who is Mr. Smolian’s son and named prominently in the suit along with Richard, Randy and Darielle Smolian, did not reply to email and phone requests for comment, and Richard Smolian’s Amagansett phone line was repeatedly busy on Friday.
Documents filed with the court last week included a November 2 email exchange between Jonathan Smolian and Ian E. Warburg, whom Mr. Peters described on Friday as “my cousin.” In the emails, Mr. Smolian declines an offer from Mr. Peters of $100,000 to settle the matter, saying, “The loss to me and my partners would be far too substantial to decline the purchase” of the two lots.
For his part, Mr. Warburg indicates that Mr. Peters offered a “deep discount” exclusively to the town “because he’s passionate about seeing the land conserved and the aquifer protected.”
Mr. Warburg says it would make “no economic sense” for Mr. Peters to sell the land at the same price to Mr. Smolian, and that he would not do so “under any circumstances.”
“It’s outrageous that one greedy family would hold up the conservation of an aquifer for 50,000 people,” Mr. Peters said on Friday, the day after the suit was filed by Mr. Pasca of Esseks, Hefter & Angel. Mr. Peters was referring to the aquifer’s role as a town-designated “critical watershed area” that provides drinking water to residents of Amagansett, Springs, Montauk and some parts of East Hampton.
The suit challenges the claim to the right of first refusal on the part of Richard Smolian’s family members, arguing that it is invalid and unenforceable because they are “strangers” to the original transactions, meaning that they were never direct parties. It also argues that even if they did have a legitimate right of first refusal, to exercise it they would be required to adhere to all the terms in the contract with the town—that is, not only to enjoy the discounted price the town was going to pay, but also to meet conditions ensuring that the property would be preserved rather than developed.
“We’d much rather work this out, but they’re not willing,” said Mr. Peters, who founded Amagansett Springs Aquifer Protection in 1987 to protect groundwater through preservation of open space.
He added that an earlier contract to preserve the land, in which the county would have split the cost, had languished on the desk of then supervisor Bill McGintee, who resigned amid disclosures that the town had misappropriated its CPF revenues, and after that was dropped during Bill Wilkinson’s two terms as town supervisor, despite the town’s Comprehensive Plan recommending “that the town should buy every lot in the Stony Hill woods” to protect its drinking water, with many of those lots instead being developed during those years.
“The town has voted—they clearly want to buy this land for conservation—and the Smolians are blocking it,” Mr. Peters said. “That’s the sum total.”
Mr. Pasca said he was confident that the plaintiffs would prevail in the suit, which seeks a determination about the legitimacy of the Smolian family members’ right of first refusal as well about whether a sale contract with the Smolians would have to mirror that with the town if the right of first refusal were in fact determined to be legitimate.
“It’s obviously important to him—he could have sold this at market value,” Mr. Pasca said of Mr. Peters. “It’s just too bad Alex has to spend extra time and money on a lawsuit when he’s already selling this to the town at a discount … no good deed goes unpunished.”
on Dec 8, 2014