A New York State Appellate Court judge threw out the Randall's Island Aquatic Leisure's latest breach of contract claim against the City for terminating its agreement to build a controversial $ 168 million dollar 26 acre water park and private beach club on the island.
The project finally began to collapse in 2007 when Comptroller William C. Thompson Jr. sent a letter to Mayor Bloomberg stating the developer had failed to meet the city’s deadline to arrange financing.
Opponents of the sole-source water park deal had argued the massive complex - which had grown to 26 acres - would have privatized public parkland during its 35 year proposed license and charged a prohibitive $ 37 per ticket for a facility located between Harlem and the South Bronx.
Randall's Island Aquatic Leisure poster. Randall's Island Opening in 2008.
By Geoffrey Croft
On Tuesday an Appellate Court judge threw out Randall's Island Aquatic Leisure's breach of contract claim against the City for terminating its agreement to build a controversial 26 acre water park and private beach club on the island, A Walk In The Park has learned.
The court sided with the city ruling that plaintiffs did not comply with its obligation to obtain financing. Plaintiffs' had alleged oral promises to extend their financing deadlines were made. The court was not swayed. The decision stated that the record "demonstrates that all extensions granted by the City were in writing, and reserved to the City all of its rights under the agreement, including the right to terminate if plaintiffs failed to meet certain financing conditions. Obtaining loan commitments by a date certain was a contractual obligation. Plaintiffs failed to meet the condition, and the City terminated the agreement. Thus, the breach of contract claim was correctly dismissed as against it," the decision read.
On July 22, 2010 New York Supreme Court dismissed the case which Randall's Island Aquatic Leisure appealed.
Randall's Island Aquatic Leisure was hoping to build the largest indoor waterpark in the country, with seven-acre indoor space open year-round and an 18-acre outdoor facility. The Randall's Island Sports Foundation would have received a sizable fee from its operation estimated to be $1 million dollars annually.
In an embarrassing statement at the time, Warner Johnston, a spokesman for the Department of Parks and Recreation said, “In the event that the concessionaire is unable to fulfill its financial commitments under the agreement, the city will take appropriate steps to ensure that development of this major community improvement continues.”
When Randall's Island Aquatic Leisure failed to meet its first construction deadline, the Parks Department quietly granted Aquatic chief Herbert Ellis a seven-month extension which they also failed to meet.
Given the track record of some Ellis companies," the Daily News wrote in 2007, "city officials should listen for a change. After all, Aquatic's disclosure filings to the city neglected to mention a 1998 bankruptcy involving another publicly financed project of his upstate. And Steuben Place Partners, another Albany venture connected to Ellis, failed to repay a $1.5 million development loan to that city.
Juan Gonzalez pointed out that Herbert Ellis and his Aquatic Development Group, the parent group of Aquatic Leisure LLC, was for a time financed by Jerry Abbruzzese, an Albany businessman and friend of Republican Senate Speaker Joe Bruno.
Abbruzzese, a major contributor to state and national Republican leaders, lobbied the Giuliani administration to choose the Ellis group for the aquatic park back in 1999, former Parks Commissioner Henry Stern said, according to Gonzalez.
The project was cancelled before opponents had an opportunely to file a lawsuit.
Repeated requests seeking comment from the Plaintiffs' attorney John D. Hoggan, Jr. were not returned.
"We are pleased that the Court agreed that this lawsuit was without merit and should not proceed," the NYC Law Department said in a statement to A Walk In The Park.
RANDALL'S IS. AQUATIC LEISURE, LLC v. CITY OF NEW YORK 2012 NY Slip Op 00843 RANDALL'S ISLAND AQUATIC LEISURE, LLC, ET AL., Plaintiffs-Appellants,v.THE CITY OF NEW YORK, ET AL., Defendants-Respondents. 111146/09, 6747, 6748. Appellate Division of the Supreme Court of New York, First Department. Decided February 7, 2012.
Law Office of John Hoggan, PLLC, Albany (John D. Hoggan, Jr., of counsel), for appellants.
Michael A. Cardozo, Corporation Counsel, New York (Victoria Scalzo of counsel), for The City of New York, The New York City Department of Parks and Recreation and The New York City Economic Development Corporation, respondents.
Weil, Gotshal & Manges LLP, New York (Jonathan Bloom of counsel), for The Randall's Island Sports Foundation, respondent.
Before: Saxe, J.P., Friedman, Catterson, Freedman, Manzanet-Daniels, JJ.
Defendant New York City Economic Development Corporation (EDC) and plaintiffs Aquatic Development Group, Inc. (ADG) and Recreation Development, Inc. (RDI) are not signatories to the "Waterpark Concession Agreement" between plaintiff Randall's Island Aquatic Leisure, LLC (RIAL) and the City (through the Department of Parks and Recreation), which governs this dispute. Thus, ADG and RDI are not proper plaintiffs, and EDC is not a proper defendant, which alone is a sufficient ground on which to dismiss the complaint as against it. There can be no breach of contract claim against a non-signatory to the contract (Nuevo El Barrio Rehabilitación de Vivienda y Economía, Inc. v Moreight Realty Corp., 87 A.D.3d 465, 467 ). There can be no claim of breach of the implied covenant of good faith and fair dealing without a contract (American-European Art Assoc. v Trend Galleries, 227 A.D.2d 170, 171 ). And there can be no quasi-contract claim against a third-party non-signatory to a contract that covers the subject matter of the claim (Bellino Schwartz Padob Adv. v Solaris Mktg. Group, 222 A.D.2d 313, 313 ).
The breach of contract claim against the City for terminating the agreement to build a recreation center fails because plaintiffs did not comply with the obligation to obtain financing. Plaintiffs' allegation of a course of conduct and oral promises extending their financing deadlines is belied by the record, which demonstrates that all extensions granted by the City were in writing, and reserved to the City all of its rights under the agreement, including the right to terminate if plaintiffs failed to meet certain financing conditions. Obtaining loan commitments by a date certain was a contractual obligation. Plaintiffs failed to meet the condition, and the City terminated the agreement. Thus, the breach of contract claim was correctly dismissed as against it (see Jericho Group, Ltd. v Midtown Dev., L.P., 32 A.D.3d 294, 298 ). The good faith and fair dealing claim fails because the City's termination of the agreement was consistent with the agreement's express terms (Phoenix Capital Invs. LLC v Ellington Mgt. Group, L.L.C., 51 A.D.3d 549, 550 ). The promissory estoppel claims fail because the statement that "possible loans" were being "considered" is not an allegation of clear and unambiguous promises upon which plaintiffs could reasonably have relied (see New York City Health & Hosps. Corp. v St. Barnabas Hosp., 10 A.D.3d 489, 491 ). The estoppel claims fail for the additional reason that they do not allege "dut[ies] independent of the agreement" (see Celle v Barclays Bank P.L.C., 48 A.D.3d 301, 303 ).
We have considered plaintiffs' remaining arguments and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
New York Daily News - By David Saltonstall
New York Times - September 18, 2007 - By Timothy Williams
New York Daily News - September 21, 2007
NY1 News - January 12, 2006