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Oct 20, 2010 11:51 AMPublication: The Southampton Press

Lawsuit Targets One Of Region's Oldest Farm Families

Oct 20, 2010 11:51 AM

Fifteen years ago, one of the East End’s oldest families entered into a deal with a trusted tenant, one they thought would help them preserve their remaining farmland for the family and for the community.

Now, that deal might end up costing them the very land they had hoped to protect.

Anthony G. Petrello, the head of Houston-based oil drilling and exploration conglomerate Nabors Industries, is suing John C. White, the patriarch of one of Sagaponack’s founding families, claiming the rights to 24 acres of oceanfront property owned for more than three centuries by the White family, and to two family homes on Sagg Main Street. Mr. Petrello and his wife, Cynthia, are also seeking more than $5 million that they claim is lost rental income and costs incurred because of delays in closing on the purchase of another portion of the Whites’ property—the subject of yet another nine-year lawsuit.

The White family and their attorney have refused to comment on the lawsuit, but friends and neighbors lamented that the Whites were betrayed by their trust in a longtime acquaintance.

“John Sr. is a Christian, and the man trusted what he thought was the good in someone else,” Lee Foster, whose family operates the farm neighboring the bulk of the Whites’ property, said of the patriarch of the family. “That was woefully naive, I’m afraid. Sadly, human beings aren’t like that.”

According to family history, the Whites have lived in Sagaponack since 1695, when Ebenezer White became the first pastor of the Presbyterian Church there.

“The White family history is Sagaponack history,” said Sagaponack Village Mayor Donald Louchheim. “As far as I know, the Whites owned most of Sagaponack when it was first settled.”

That claim has dwindled over the centuries to just under 100 acres today—including a large parcel on Bridge Lane currently for sale.

The family’s war with the Petrellos began as an effort to keep as much of that land in the family as possible. With property values climbing in the 1990s the family faced the possibility of mountainous estate taxes when Mr. White and his wife, Elizabeth, died.

In 1995, Mr. Petrello, an attorney who rented a house in Sagaponack from the Whites for many years, agreed to handle Mr. White’s estate planning in exchange for the opportunity to purchase 9.5 acres of the family land in Sagaponack for about $2 million.

The contract of sale on the original deal was delayed for several years because it was part of a broad subdivision plan that segmented out various other parcels, including the ones to be preserved as open space. By the time the sale was ready to be effected, the 9.6-acre parcel had ballooned in value to more than $15 million, and Mr. White attempted to back out of the deal, claiming fraud on the part of Mr. Petrello, alleging that he acted as attorney for both the Whites and himself in setting up the financial arrangement.

The Petrellos sued, and the Whites lost. A judge ruled that since the Whites were represented by an attorney during the framing of the agreement, Ed Reale of Twomey, Latham, Shea and Kelley, Mr. Petrello had not acted on behalf of the family. The Whites, however, claim that Mr. Reale had acted only as a go-between and simply memorialized an agreement for which Mr. Petrello was the chief architect.

“Petrello was always the brains behind the whole thing,” a source close to the family said.

The sale of the land was completed last year—with the value of the oceanfront land involved in the $2 million deal having continued to soar: an oceanfront parcel off nearby Gibson Lane recently sold for more than $40 million.

The more recent legal wrangling was triggered by a separate clause in the 1995 agreement that gave the Petrellos the right of first refusal when any of the family’s remaining land goes up for sale. The suit claims that Mr. White violated this agreement when he transferred much of his remaining land, including a 24-acre oceanfront parcel, into various trusts in the names of his children. The Petrellos also filed a second claim seeking a still indeterminate amount—at least $5 million—in lost rent on the house the Petrellos claim they would have built on the property years ago, as well as added costs for construction, money spent on landscaping and a variety of other expenses.

The White family has claimed in court that Mr. Petrello manipulated various contracts and agreements in his favor, and that the elder Mr. White had no idea about the right of first refusal and other restrictions placed on his distribution of his land.

“Mr. Petrello told them that if they ever wanted to sell the property, he’d like to have the first opportunity to buy it, and they agreed ... in a contract,” said Mr. Petrello’s lawyer, Houston attorney David Berg. “The idea at first was to keep everything in the family. They were all very close then, including Tony. Then they refused to sell him the property he had coming to him. That took 15 years to deal with, and along the way hard feelings developed.”

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"Money, what makes a man act funny..."

~Marshall Mathers
By Mr. Z (11697), North Sea on Oct 20, 10 8:00 PM
This article makes no sense.
By Hambone (514), New York on Oct 20, 10 11:28 PM
The entire article--which I think is much clearer--is available in the print edition of The Southampton Press Eastern Edition this week.
By Joseph Shaw, Executive Editor (206), Hampton Bays on Oct 21, 10 9:33 AM
Obviously after the buyer stole the property from the Whites he wants more. By Stole i mean look at the price paid even in ten years ago rates. The lawsuit is baseless except he knows that the legal fees will bury the little guy. Not even the biggest of houses could have rented for that much each and every year to get to that value. The true east enders should take up a collection to help the Whites and we shuld protest any building or subdividng on this site by the bully buyer.
By North Sea Citizen (564), North Sea on Oct 21, 10 6:21 AM
I agree. The article is incoherent. Don't write and text at the same time!
By V.Tomanoku (788), southampton on Oct 21, 10 8:30 AM
27 East: Unless you post this article in it's entirety, it just dosen't make sense. What am I missing here - please string these thoughts together in a more coherent manner. I want to read this story. Or, was this drunk-written at 3am??
By SisBoomBonacker (106), Hamptons on Oct 21, 10 11:16 AM
Tough article to sum up in a few paragraphs. We took another run at it--see if the revised version sums up the major points of a very interesting article a little better.

Sorry, folks, but to get the whole article, you're going to need to buy the paper--or subscribe so you can read the article in its entirety online, as our subscribers can do.

By Joseph Shaw, Executive Editor (206), Hampton Bays on Oct 21, 10 12:04 PM
Joe,
I indeed subscribe to this paper
I have logged in
I still don't get the whole article.
By North of Highway (280), Westhampton Beach on Oct 22, 10 10:37 PM
What a scumbag.

If he was a scrupulous attorney he would have advised Mr. White to get his own attorney to review the contract he was entering into.

Sounds crooked as hell but it was probably 'legal'.
By C Law (351), Water Mill on Oct 21, 10 1:06 PM
I believe Mr. White had a local attorney who did review the agreements. The problem may be that notice was not properly taken of the right of first refusal language in the agreement. The language is what Petrellos are basing their lawsuit on, i.e., if the Whites sell, the Petrellos have the right to buy the property first at a discounted price.

Stripped of the legal mumbo jumbo, this is a tragic story.
By CommonSense (71), Southampton on Oct 21, 10 1:47 PM
1 member liked this comment
I'd be interested to hear more about Petrello's "help" with the White's estate planning and to what extent the White's could be characterized as "clients" of Petrello. An attorney entering into a contract with a client faces more scrutiny then an attorney entering into a conract with a non-client.
By Good Ground (24), Hampton Bays on Oct 21, 10 2:07 PM
1 member liked this comment
if he was a scrupulous attorney? excuse me? you mean if he was less crooked. scrupulous attorney...funny!
By yessiree (78), Southampton on Oct 21, 10 3:50 PM
White originally agreed to sell a 9 acre property to Petrello for what turned out to be an undervalued price. There was years of litigation over the contract language and whether Petrello acted properly as White claimed Petrello engaged in fraud. The courts ruled against White and the closing for the 9 acre property went forward 10 years after the original agreement.

The next big issue will be the right of first refusal language for the rest of the White farm. If the courts already ...more
By CommonSense (71), Southampton on Oct 21, 10 3:51 PM
Is this simply a case of seller's remorse?
By Good Ground (24), Hampton Bays on Oct 21, 10 4:28 PM
http://people.forbes.com/profile/anthony-g-petrello/55480
By bridgewoodsmom (14), bridgehampton on Oct 21, 10 4:46 PM
He holds a B.S. degree, alright...
By Mr. Z (11697), North Sea on Oct 22, 10 1:57 PM
As the French say: " Quel dique!"
By V.Tomanoku (788), southampton on Oct 21, 10 9:20 PM
Typical of a lawyer who stand to personally gain from a transaction.
By Deb B (8), Hampton Bays on Oct 22, 10 7:12 AM
The Whites are wonderful people and one of our East End first families. I hope the judge throws this whole mess right out!
By artizt101 (29), Hampton Bays on Oct 22, 10 10:38 AM
I love this quote:

"The system assumes a certain minimum level of ethical behavior and civic instinct over and above what is spelled out by the regulations. If those ethics are absent — well, this thing isn't going to work, no matter what we do. Sure, mugging old ladies is against the law, but it's also easy. To prevent it, we depend, for the most part, not on cops but on people making the conscious decision not to do it."

~Matt Taibbi (Rolling Stone, March '10)
By Mr. Z (11697), North Sea on Oct 22, 10 1:46 PM
he traded $9 million dollars of property rights for some estate planning? is that what we are supposed to believe? look, the problem with this is that a judge will have to see that the unethical conflict of interest is also unlawful. as my grand-dad said, if it stinks like poop, looks like poop, feels like poop....its poop.
By mackt (73), montauk on Oct 24, 10 1:34 PM
Thank you for publishing the photo of the petrellos I'll be at the post office later anyway so it won't be any inconvenience to post it on the wall.
By bambi (76), bridgehampton on Oct 26, 10 8:50 AM
1 member liked this comment
It guys likes this that give credence to the joke that starts off; What is 20,000 lawyers at the bottom of the sea?
By ICE (1214), Southampton on Oct 26, 10 10:23 PM
.... a small step in the right direction.

When a lawyer is involved, there is no such thing as a straight deal.
By Noah Way (450), Southampton on Oct 27, 10 6:17 PM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By Adrian (8), Southampton on Oct 28, 10 10:53 AM
This is incredible! Petrello is suing his neighbor down in Houston for refusing to sell his house to him!

http://www.chron.com/disp/story.mpl/business/realestate/6318014.html
By Adrian (8), Southampton on Oct 28, 10 11:09 AM
More about the Houston case: http://www.morelaw.com/verdicts/case.asp?n=08-20718&s=TX&d=41816

By Adrian (8), Southampton on Oct 28, 10 11:12 AM
In an echo of the Hamptons case, Petrello asserts a Right of First Refusal ORAL contract was agreed with his neighbor, who then breached it by selling to a third party. Petrello also claims that the refusal to sell to him was a violation of Fair Housing laws, as it was discriminatory against his disabled daughter.
By Adrian (8), Southampton on Oct 28, 10 11:16 AM
Wow this guy is a slimball of epic proportions! Watch out Petrello Karma is coming for you!
By ICE (1214), Southampton on Oct 28, 10 12:41 PM
Is this a great country or what?
By Noah Way (450), Southampton on Nov 4, 10 11:57 AM
I used to stay at the White farm as a teenager in one of the camps on the ocean as a guest. The boys grew corn and the setting was idyllic!

It makes me SICK to hear someone would hoodwink Mr. White. I hope he dispenses with these hoodlums ASAP!
By Questinia (1), sharon on Dec 30, 10 12:47 PM
hopefully Sagaponack village will deem the property historic and of value to the historic nature of the village and the assho e won't be able to tear it down; but wait for the fire!! Bad legal advise for 25 years.. hope they sue the lawyers for the current value vs the court's value which is miniscule. and win.. the best lawyer won and the local lawyer is a .JOKE
By xtiego (698), bridgehampton on Apr 27, 18 7:18 PM
let's make Petrello an outcast in our village and town and make him unwanted everywhere. we can do it we're locals!!!!
By xtiego (698), bridgehampton on Apr 27, 18 7:20 PM
let's make Petrello an outcast in our village and town and make him unwanted everywhere. we can do it we're locals!!!!
By xtiego (698), bridgehampton on Apr 27, 18 7:35 PM