Updated, 6:43 p.m.: Comment from Mario Coppola, additional information, copy edits; 8:45 a.m.: Copy edits, revised headline
NORWALK, Conn. – Lawyers squabbled Wednesday in Stamford Superior Court over a request Tuesday by the Norwalk Redevelopment Agency and the City of Norwalk.
The Redevelopment Agency and City have asked Judge Charles Lee to allow them to amend their complaint in the lawsuit against real estate broker Jason Milligan and Richard Olson of POKO Partners. Redevelopment Attorney Joseph Williams in an email characterized the changes as “relatively minor in nature,” but Lee in court admonished Williams that he had essentially conceded that the original complaint was “badly drawn.”
The Redevelopment Agency and the City of Norwalk are suing entities controlled by Milligan and Olson because Olson sold Milligan properties slated for use in the Wall Street Place project, commonly known as “POKO.” The City is involved because it contributed a former municipal parking lot at 23 Isaac St. as land for the development.
The hearing on the plaintiff’s request for an injunction was scheduled to continue Wednesday and probably through the week, but Lee instead hit the pause button to give Milligan’s attorney, David Rubin, time to study the amended complaint and decide how to proceed. The next gathering will be a Jan. 15 status conference that will determine if the hearing process resumes the next day.
“Hashtag: winning,” Milligan said, after the brief court event.
Rubin explained the plaintiffs’ actions by saying, “First they claimed they had a right to the property through a fraudulent conveyance. That was a sham and that was withdrawn. Then they bring an action claiming they’re entitled to injunctive relief predicated on a likelihood of success enforcing the LDA (Land Disposition Agreement). Now they have withdrawn all of that as to the Milligan defendants; now they are trying to come up with a third way to be able to wedge their claim in. They are looking to shoehorn the facts into a legal claim that just doesn’t exist.”
The “first” action referred to by Rubin was an application for a prejudgement remedy and hearing, which was withdrawn in early September and replaced by the lawsuit.
“Amendments to pleadings are made in the normal course of litigation, particularly in cases involving complex transactions such as this case,” Corporation Counsel Mario Coppola wrote in a Wednesday email. “The subject Amendment makes minor changes to the original complaint in order to clarify the parties against which the particular remedies are sought, add additional claims, expands upon certain claims, etc… Mr. Milligan’s characterization of the subject Amendment reflects his lack of understanding of the Amendment itself, and appears to be part of his continued attempt to perpetuate a false and self serving narrative about the public parties in the local media. You can simply match up the original and amended pleadings for yourself in order to confirm the minor changes in the Amendment from the original pleading.”
RDA Complaint ILSR WSOF 18-0914
‘Trial by ambush’
Rubin last week filed a “motion to strike,” alleging that major sections of the plaintiffs’ complaint were faulty in their legal reasoning.
Williams and Assistant Corporation Counsel Darin Callahan submitted an amended complaint Tuesday afternoon. Rubin described this to NancyOnNorwalk as “trial by ambush,” saying he’d spoken to Williams at 11 a.m. Tuesday and wasn’t told about the coming request to change the lawsuit. Williams in his Wednesday email said the amended complaint was filed “in hopes of removing {the motion to strike} as a distraction from the hearing.”
Williams explained:
“The proposed amendments are relatively minor in nature and do not change the basic story or the plaintiffs’ approach to the case. The new claim against the contracting parties (Count Two – breach of the covenant of good faith and fair dealing) works in tandem with the breach of contract claim against them, relies on the same allegations and seeks similar damages. The new count for declaratory judgment (Count Six) simply states in a separate count our request for a declaratory judgment that was already contained in the original complaint. We added a few minor factual details that correspond to the evidence admitted in the court hearing, and incorporated into the complaint the elements for injunctive relief that are contained in our application for temporary injunction. We have also requested that the court order Mr. Milligan and his companies to act consistently with the LDA.
“Otherwise, the essential facts of the case demonstrating the defendants’ wrongful conduct remain unchanged. Likewise, the principal relief that the plaintiffs are seeking from the court — to unwind the improper conveyances and uphold the integrity of the LDA — also remains unchanged. We continue to seek an award of monetary damages, punitive damages, and costs and attorneys’ fees against the defendants as well.”
Williams had to defend the changes to Lee on Tuesday morning, explaining that the amended complaint “alleges nothing new” and there are “labelling changes” to some of the counts.
“You can request (to amend the complaint) and per se it’s not improper,” Lee replied. He noted that it’s his discretion whether he should grant the request.
“Would it be better for me to do it after the hearing concluded and then hear ‘I think that whole hearing is moot and it’s a waste for me to restart it?’ To me, it made more sense to put it out there while the hearing is open,” Williams replied.
“I am going to make darn sure that there’s due process here and I am not going to prejudice one side because you’ve decided that your pleading, your complaint, was badly drawn, which you apparently did,” Lee said. “I mean, you essentially accepted their points and what they have been saying… you corrected a lot of things, which perhaps it would have been better if they were right from the beginning.”
Subpoenas
Redevelopment and the City have also issued subpoenas to Milligan and other financial entities involved in the complicated case, demanding, among other things, a “participation agreement” that would illuminate the reasons two entities claim to have mortgages on Milligan’s “POKO” properties, debt that totals $11 million on property appraised at $4.2 million.
Rubin and Williams debated the request. Rubin claimed that he’s trying to work out confidentiality issues on the participation agreement and Williams retorted that Milligan’s promise to maintain his partners’ confidentiality means nothing in court.
Rubin promised that the document would be provided. “We are working through the confidentiality, {and} may have to file a motion. It doesn’t mean they don’t get it, just means there are objections from the parties that have to be taken into account.”
The plaintiffs accuse Milligan, Olson and others of unfair trade practices in the transfer of the properties.
Milligan’s financial arrangements are muddy, as the purchase and sales agreement for the properties – 21, 23 and 31 Isaac St. and 83 and 97 Wall St. – said that a $5.8 million loan issued by CC Rivington would be paid off, but there’s no evidence that it was, according to testimony delivered Tuesday.
CC Rivington assigned the mortgage to a Milligan-controlled LLC, Komi Ventures, and Komi also has a $5.2 million mortgage on the properties.
The participation agreement was noted in the documents, Lee said Wednesday.
“It’s … possible there was a deal made with Rivington to participate in a bigger equity reward later. The papers are pretty opaque at this point,” Lee said.
Subpoenas also sought assignments of leases or rents from ILSR to MC Credit, the previous owner of the $5.8 million mortgage on the properties, according to court testimony.
Confronting Sheehan and complaining about the expense to taxpayers
After the hearing adjourned, Milligan approached Redevelopment Agency Executive Director Tim Sheehan, who was sitting in the back of the courtroom as he’d been scheduled to testify.
Williams protested to Rubin that he should admonish his client not to hound Sheehan.
Rubin declined. “He’s a grown man,” Rubin said.
Milligan told Sheehan he wanted to talk, asking him to “imagine” what they could do if they were working together to improve the Wall Street area.
“Imagine if you didn’t do this and you went through the process the right way,” Sheehan replied.
Leaving the courtroom, Milligan and Rubin talked of the City’s legal expenses.
“There was one day here they had three lawyers from Shipman. That’s $1,200 to $1,500 an hour, or $1,000 to $1,500 an hour. Now they have two lawyers here nonstop and the City has lawyers here nonstop,” Rubin said.
Draft minutes for the Nov. 13 Redevelopment Agency meeting indicate that there are $17,299 in “unforeseen unbudgeted ongoing litigation” expenses. The Agency approved a $150,000 transfer from deferred revenue to the professional fees-legal expenditure line item, with the minutes saying Sheehan “can’t guarantee that that is going to be the total cost, but it should be a good chunk” of what is needed.
Rubin on Wednesday said, “They spent $200,000 and they are not one day closer to the relief they are seeking in a tenable cause of action then they were when they brought the fraudulent transfer action in June.”
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