Trump Rebuffed on Jones Beach Dispute

This story, in slightly different form, originally appeared in the New York Law Journal.

ALBANY-The New York State Office of Parks and Recreation did not breach its lease with developer Donald Trump when it required a variance for the construction of Trump on the Ocean, a proposed catering hall on Jones Beach, a state appellate court has ruled. A unanimous panel of the Appellate Division, Third Department, concluded this past Thursday that the parks and recreation office can only issue construction permits for plans that conform with New York State Building Code.

Since Trump on the Ocean did not contend that its building plan was in conformance, the panel said in Trump on the Ocean LLC v. State of New York, “it cannot complain that a variance was required. Nor can it complain that [Office of Parks, Recreation and Historic Preservation] failed to obtain the variance on its behalf, as claimant concedes that it had sole responsibility for construction, including obtaining any and all approvals required.”

The decision came the same day as the Appellate Division, Second Department, granted leave to appeal to the Court of Appeals its September decision overturning a variance denial for the project. With pending litigation, building plans for the 85,000-square-foot catering hall, once the site of the Boardwalk Restaurant, remain on hold.

The parks office and Trump signed a 40-year lease for the project in 2006. About a year later, the office determined the proposed design did not comply with the building code and required a variance from the Department of State. When the department’s regional review board denied the variance, Trump brought suit in the Court of Claims, alleging breach of the lease and the implied covenant of good faith and fair dealing.

The Third Department’s ruling last week affirms an August 2009 Court of Claims decision by Judge Francis Collins that dismissed Trump’s claims for $500 million in damages from the state, owing to delays in the project. Thursday’s ruling found the plaintiff failed to show the lease required the Parks Department to authorize an alternative design.

In September, a 3-1 Second Department panel in separate litigation affirmed that a Department of State review board was “arbitrary and capricious” when it denied a variance for the Trump project. That ruling remitted the building application to the board to grant the variance subject to any conditions it determined appropriate.

Steven R. Schlesinger of Jaspan Schlesinger in Garden City, NY represented Trump. He did not return a call for comment. Assistant Attorney General Owen Demuth represented the parks department, which did not return a call for comment. A spokesperson for the Attorney General’s Office said the decision was being reviewed.

Ronald J. Rosenberg of Rosenberg, Calica & Birney in Garden City, who represents a community activist fighting the project and was not involved in the Third Department litigation, praises the ruling. “It confirms the meritlessness of the action Trump brought against the state,” he says.

Andrew Keshner can be reached at akeshner@alm.com.