Stamford judge keeps Norwalk POKO case moving

NORWALK, Conn. — The lawsuit filed in regard to “POKO” properties will resume Monday with cross examination of Redevelopment Agency Executive Director Tim Sheehan.

The “Milligan defendants” had been looking to join a motion to dismiss filed by POKO-derivative ILSR Owners. Judge Charles Lee on Wednesday rebuffed that request and ordered the scheduled hearing to go on as planned.

“I think this last gambit may be a bit much,” Lee said to Attorney David Rubin, representing Jason Milligan and assorted Milligan-managed LLCs.

Milligan and Richard Olson of POKO Partners are being sued by the City and the Norwalk Redevelopment Agency under their LLCS, Wall Street Opportunity Fund and ILSR Owners, respectively, because Olson sold Milligan properties that were slated to be used in “POKO Phase II,” the planned second phase of the Wall Street Place development, commonly referred to as “POKO.”

Under the Land Disposition Agreement, the Redevelopment Agency had the right to approve the sale by giving the potential buyer redeveloper status. That didn’t happen.

Construction on Wall Street Place phase I halted in mid-2016. The properties now owned by Milligan were slated to be used as parking for phase I.

The complicated lawsuit has grown to include CC Rivington and Komi Ventures, both mortgage companies, the latter managed by Milligan. Komi foreclosed on Wall Street Opportunity Fund, in what the plaintiffs call part of unfair trade practices. CC Rivington assigned the $5.8 million loan to Komi but land records showed, as of December, that CC Rivington still had a $5.2 million mortgage on the property.

At this point, Lee is holding a hearing on the plaintiff’s request for temporary injunctive relief – a trial would come later. Lee paused the hearing in December, and it’s been set to resume Monday. This was after the plaintiffs amended their complaint; the plaintiffs have issued subpoenas in an effort to understand the financial arrangements between the parties and who is actually involved. Milligan was told he could submit a bill to the Redevelopment Agency to cover his legal costs in preparing a defense to a complaint that Lee called “poorly drawn.” Those costs are $21,519.25, Rubin said in an affidavit.

ILSR on Feb. 15 filed a motion to dismiss “for lack of subject matter jurisdiction,” alleging that because the Redevelopment Agency did not exercise the methods to “cure the default,” as outlined in the LDA, it has no right to sue.

Milligan last week said the motion to dismiss halts the discovery process.

“He is wrong again.  The deposition of CC Rivington went forward last week notwithstanding the ILSR motion to dismiss.  Written discovery has also gone forward although it is not yet complete,” Attorney Joseph Williams, representing the Redevelopment Agency, wrote Wednesday to NancyOnNorwalk.

Lee said Wednesday’s status conference was inspired by “four substantive motions” from the defendants: one requesting that Lee making a ruling without a trial, two requests that some of the charges be dropped, and the attempt to have the case dismissed.

Lee was concerned, he said, that much time could be spent on testimony, only to come to the conclusion that the LDA defined “exclusive” remedies, not “permissive” ones, invalidating the case.

Williams indicated that the plaintiffs want to move ahead, calling the motion to dismiss “incorrect on several points” and promising to file responses soon.

The Redevelopment Agency will be presenting proof of a need for emergency injunctive relief, he said.

“That ability has been put off for a few months now by motions by the defendant, which we believe have become increasingly merit-less, especially when people who are not party to the contract are continuing to make arguments under a contract they are not party to,” Williams said.

Rubin said he planned to file a motion to dismiss, because although WSOF is not party to the LDA, the relief sought by the plaintiffs – to have the property sale revoked – affects WSOF as well as ILSR.

“I believe that if the court hears these motions, this injunctive hearing will not be going forward,” Rubin said. “… I think that motion to dismiss needs to be heard before anything else can be heard.”

“I disagree,” Lee said, asserting that the City anticipated ILSR’s action by saying the default cannot be cured, and he will rule on that.

It’s left to be decided whether the LDA spelled out relief that could be used, or should be used, he said.

ILSR could seek mediation but hasn’t done so, Williams said, adding that it still could.

The request for a temporary injunction is scheduled to be heard over the course of four days, Monday to Thursday. Lee has said he hopes that it will wrap up at that point.

Legal costs to the Redevelopment Agency through Dec. 31 were $108,725.31, Sheehan said in a Tuesday email to NoN, explaining that, given the hearings held over several days in December and the 30-day billing cycle, “I anticipate a large increase in the Legal Line Item of the Operating Budget in the forthcoming January Statement to be presented {to the Agency} next month.”