‘POKO’ news: Lawsuit(s)

Updated, 8:52 a.m.: Copy edits

NORWALK, Conn. – There have been some significant developments related to “POKO,” a.k.a. Wall Street Place:

• Milligan says judge ‘sanctioned’ Norwalk and the Redevelopment Agency on Tuesday
• Milligan demands that Citibank clear easement, cites ‘sloppy’ project
• Milligan claims Rilling lied; source confirms Rilling’s statement

ILSR/WSOF hearing again on pause, to resume Feb. 6

Judge Charles Lee on Tuesday “sanctioned” Norwalk and the Norwalk Redevelopment Agency on Tuesday, and ordered them to pay some of defendant Jason Milligan’s legal fees, according to Milligan.

Attorney Joseph Williams, representing Redevelopment, disagreed with that interpretation and emphasized that all the defendants in the case have been ordered to produce documents.  David Rubin, Milligan’s attorney, called Williams’ response “spin” and wrote in an e-mail to NancyOnNorwalk that Lee looked at Milligan and said, “You are entitled to some money Mr. Milligan.”

The City of Norwalk and the Norwalk Redevelopment Agency are suing ILSR Owners and Wall Street Opportunity Fund, two LLCs that are managed by Richard Olson and Milligan, respectively, because Olson sold Milligan properties that had been slated to be part of “POKO Phases II and III,” a redevelopment project in which the City is involved.  At particular issue is 23 Isaac St., a former municipal parking lot. Parking spaces that were originally part of Phase I were moved to Phase II, making Phase I noncompliant with Zoning regulations and presenting a major obstacle to resuming the stalled project.

The plaintiffs are seeking a temporary injunction, which would bar Milligan from doing anything with the properties.

Rubin in December filed a motion to strike, asking Lee to dismiss the case as legally invalid; Williams responded by submitting an amended complaint. Lee said Williams had essentially admitted that the original complaint was badly done and ordered the hearing to pause until Tuesday.

The plaintiffs issued subpoenas in December which requested the participation agreement between Milligan and CC Rivington in search of the reasons the two entities claim to have mortgages on Milligan’s properties — debt that totals $11 million on property appraised at $4.2 million. The agreement was provided by Rubin on Jan. 4, according to a Monday brief filed by the plaintiffs.

The Monday brief also explains what the plaintiffs want Lee to do: void the sale of the properties and order ILSR (Olson) to “perform its contractual obligations and prevent the Milligan Defendants from taking any further harmful actions with respect to the redevelopment area properties.”

Rubin on Tuesday filed a motion to dismiss the case as “moot,” claiming that Williams’ amended complaint “substantively and materially alters both the legal basis” for the request for an injunction. Plaintiffs did not file a new injunction application based on the amended complaint, Rubin wrote.

Milligan on Tuesday afternoon contacted NancyOnNorwalk and said that Lee had sanctioned the plaintiffs, awarded him attorney’s fees and “kicked this out” until February.

Williams on Tuesday evening wrote in an e-mail to NancyOnNorwalk that Lee had neither sanctioned the plaintiffs nor awarded fees. He offered this characterization of events:

“Since the last court hearing, after delaying as long as possible, the Milligan defendants produced certain documents in response to our subpoena that the public parties believe provide important support for our case.  Yesterday, the judge denied defendant CC Rivington, LLC’s request to revise our complaint, and he denied defendant ILSR Owners, LLC’s request for an extension of time to respond to our discovery requests.  As a result, all defendants are required to produce documents and responses to us by next Monday.

“Today in court the judge granted the Agency and City’s request for leave to amend our complaint.  The court rule governing amendments to pleadings gives a judge the discretion to evaluate whether such an amendment occasions “inconvenience to the other party.”  If so, the court may award costs in favor of the other party.  In granting the amendment, the judge stated that he would award costs to the Milligan defendants caused by the plaintiffs’ amendment — if the Milligan defendants can prove those costs.  The public parties believe that the amendments to our complaint caused the Milligan defendants no costs, and we intend to vigorously contest their petition for costs once it is filed.  The judge warned their counsel to use restraint in their request and noted that none of the evidence presented in the hearing thus far would have been any different due to the amendment.

“Finally, the Milligan defendants today announced their intent to file a motion to dismiss our application for injunction on grounds of mootness, which motion they have now filed.  This led the judge to continue the hearing to allow for that motion to be considered, and he scheduled argument on the motion for February 6th at 2 pm.  If the motion is denied, the court will schedule the evidence to continue at a later date.  The public parties view this motion as yet another technical maneuver by the Milligan defendants seeking to delay their being held accountable in open court for their wrongful acts.  Such unnecessary tactics unfortunately make the case more expensive to win for the taxpayers, but they also increase the plaintiffs’ claim for attorneys’ fees from the Milligan defendants should we prevail at trial.”

Milligan responded that this is the third major change to the City and Redevelopment Agency’s legal strategy and “anyone with eyes can see” the huge improvements he’s made to the Wall Street area in the six months since he acquired the properties.

“The judge demanded they pay some of my legal expense NOT the other way around,” he wrote. “Crony Joe is starting to sound like Bagdad Bob…”

Regarding the allegation of a “third” change to legal strategy: the plaintiffs originally filed an application for a prejudgement remedy and hearing, which was withdrawn in early September and replaced by the lawsuit.

Rubin on late Tuesday responded to Williams account by saying he read it with bemusement. Lee had ordered Milligan’s costs to be covered and required Rubin to file a claim for the costs, Rubin wrote, which in is opinion is a sanction and something he hasn’t seen in nearly 30 years of practicing law.

His full statement:

 “{Williams’} spin on the events of the last month is that Jason is delaying and ‘there is nothing else to see here so let’s all move on’. To the contrary, the Court’s actions over the course of the last month are predicated on The Agency’s and City’s utter failure to advance lawful claims against Jason, and the Court’s recognition that Jason has been damaged by the Plaintiff’s conduct.

“One month ago, the Agency and City completely abandoned the entire legal theory upon which their sworn Complaint and the Application for Injunctive Relief were predicated. Full, complete and total abandonment. That caused quite a significant problem for the Plaintiffs as, in order to be successful in connection with the pending injunction application, the law requires the Plaintiffs to prove that there is a ‘likelihood of success on the merits’ on their legal claims. Suffice it to say, it is difficult to prove a likelihood of success on the merits on legal claims that have been withdrawn.

“This was second time since June that the Agency and the City have brought claims against Jason and his entities that they subsequently voluntarily withdrew after it became clear that they would be unsuccessful in the Courts as a matter of law. That is anything but normal in the context of litigation.

“The Agency and City have now gone ‘back to the well’ to allege a new third set of legal theories against Jason in support of their claim for injunctive relief, which now seeks an order that Wall Street quit claim the properties back to ILSR. As an aside, the new relief sought has just about the same chance of success as the prior two sets of legal theories, and we soon will be moving to strike the new Complaint, as well.

“Normally, parties have the right to amend their pleadings, including Complaints, at any time during legal proceedings, sometimes even after a trial is completed. Under normal circumstances, a new Complaint would be accepted by the Court with few questions asked. In this case, however, the Court has spent many days and much effort hearing the Plaintiffs’ preliminary inunction application, which incorporates by reference, and mirrors, the original Complaint. Jason has spent a lot of time and money defending an injunction claim on what are now abandoned legal theories.

“The Court recognized today that Mr. Milligan has been harmed by the mistakes of the City and Agency in prosecuting a claim that, by their own admission, lacked legal merit.  ‘Mistakes have consequence’ the Judge said in his Order. He then looked at Jason and said, ‘You are entitled to some money Mr. Milligan’ and the Court requested that I file a claim for costs. Contrary to what Attorney Williams said, the Court ordered that costs be paid … the only issue to be determined is the amount. I have been practicing for almost 30 years, and I have never seen a Court order costs, which are really sanctions, against a party for filing an Amended Complaint.

“As a result of the Court allowing the new Complaint, the Court is now left with an Application for Injunction which does not reflect the legal theories of the new Complaint, but rather, reflects the legal theories that have been abandoned. As such, that Application is moot. We filed today a Motion to Dismiss the Injunction Application this afternoon on those grounds. That will be briefed and argued on February 6.

“The ‘spin’ on the Agency’s counsel that Jason is simply delaying is belied by the fact that the Judge stated to Attorney Williams in open Court that he did not believe that Attorney Williams understood the gravity of the situation that the City and Agency were currently in.

“This case eventually will be determined on the merits. But everything that is happening in connection with this matter over these months is based on the troubling conduct of the Agency and the City.”

Milligan: Fairfield County Bank property blocked by ‘Tyvek Temple’

Another Milligan attorney, Candace Fay, on Monday wrote to Citibank to complain that the partially constructed Wall Street Place thwarts Milligan’s ability to access an easement at Fairfield County Bank, a property he bought in December.

“You have interfered with our use as authorized and we hereby demand that you immediately cease and desist of all such interference,” she wrote.

“The easement is drawn on all of the approved maps and everyone should have been well aware of it,” Milligan wrote in an email. By phone, he explained that the easement is on the part of the property that was the bank’s drive-through and also a loading dock. He has a prospective tenant that would use the loading dock, he said.

A fence and building block the loading dock, Fay wrote.

“The POKO project was one of the sloppiest development projects ever designed or attempted to be built,” Milligan wrote.  He explained to NancyOnNorwalk by phone that the building as designed blocks the easement, that it’s not because construction stalled.

“The Tyvek Temple or at least a large portion of it will need to be removed to restore proper access to my loading dock,” he wrote.

Redevelopment Agency Executive Director Tim Sheehan did not respond to an email asking about the “sloppy” design.

A Citibank representative said the company would have no comment.

Milligan: It’s not true that mediation is ongoing

NancyOnNorwalk on Monday quoted Mayor Harry Rilling as saying that mediation is ongoing between Norwalk and Citibank, which owns the stalled Wall Street Place project.

Milligan on Monday accused Rilling of lying.  He pointed out that the mediation was said to have begun on Dec. 13 and on Dec. 28, the City filed a lawsuit, accusing the Citibank subsidiary that owns Wall Street Place, Municipal Holdings, of ignoring the blight citation on the property and being in violation of the Zoning regulations.

“The mediation is BS,” Milligan said. “If you are in mediation, you don’t initiate the full force of Planning and Zoning against the people you’re negotiating with.”

Rilling declined to comment.

A non-municipal source with knowledge of the situation called Rilling’s statement about mediation accurate. Citibank is working with the City and trying to move the project forward, the source said.

The lawsuit filed by the City requests an injunction, and asks that Municipal Holdings be ordered to remedy the situation within 30 days of its issuance.

To cure the Zoning violations, Municipal Holdings would have to:

• Remove the partially-built structure
• Apply for any and all Zoning approvals needed to go forward with the project
• Obtain any and all Zoning approvals required
• Obtain a Certificate of Zoning compliance

The City also requests that the court force Municipal Holdings to pay the accumulated blight fines, which were $5,500 on Dec. 18 and accruing at $100 a day. The Zoning fines are $150 a day, dating to Dec. 10. Municipal Holdings did not appear at a Dec. 18 Zoning hearing, and the hearing was continued.

Municipal Holdings has been ordered to appear in Stamford Superior Court for a Feb. 4 status conference. If the company does not appear, the judge will make a decision based on Norwalk’s submissions, the court order states.