16‐3357‐cv(L)
Lexjac, LLC v. Bd. of Trs. of Muttontown
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE
OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A
SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A
PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED
BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 8th day of September, two thousand seventeen.
PRESENT: RALPH K. WINTER,
DENNY CHIN,
SUSAN L. CARNEY,
Circuit Judges.
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LEXJAC, LLC, RICHARD ENTEL,
Plaintiffs‐Counter‐Defendants‐Appellants,
v. 16‐3357‐cv (L)
16‐3844‐cv (Con)
THE BOARD OF TRUSTEES OF THE
INCORPORATED VILLAGE OF MUTTONTOWN,
INCORPORATED VILLAGE OF MUTTONTOWN,
Defendants‐Counter‐Claimants‐Cross‐
Defendants‐Appellees,
CARL JUUL‐NIELSON, J. RANDOLPH
BARTHOLOMEW, STEVEN FINE,
PAT MILLER, individually and in their official
capacity as Member of the Board of Trustees of the
Incorporated Village of Muttontown, JULIANNE W.
BECKERMAN, individually and as Mayor of the
Incorporated Village of Muttontown,
Defendants‐Counter‐Claimants,
BONNIE OʹCONNELL,
Defendant‐Counter‐Claimant‐
Cross‐Claimant.
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FOR PLAINTIFFS‐APPELLANTS: E. CHRISTOPHER MURRAY, Ruskin Moscou
Faltischek, P.C., Uniondale, New York.
FOR DEFENDANTS‐APPELLEES: STEVEN G. LEVENTHAL, Leventhal
Mullaney & Blinkoff, LLP, Roslyn, New York.
Appeal from the United States District Court for the Eastern District of
New York (Lindsay, M.J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiffs‐counter‐defendants‐appellants Lexjac, LLC (ʺLexjacʺ) and
Richard Entel appeal the district courtʹs October 27, 2016 judgment granting summary
judgment in favor of defendants‐counter‐claimants‐cross‐defendants‐appellees the
Board of Trustees of the Incorporated Village of Muttontown (the ʺBoardʺ) and the
Incorporated Village of Muttontown (the ʺVillageʺ), dismissing plaintiffsʹ complaint and
directing plaintiffs to cancel their deed and convey title of a 1.1 acre parcel of land
(ʺSmallacreʺ) to the Village. We assume the partiesʹ familiarity with the underlying
facts, procedural history, and issues on appeal.
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On July 2, 1969, the Village Planning Board approved a 28‐home
residential subdivision plan proposed by Foreal Homes, Inc. (ʺForealʺ), conditioned
upon Forealʹs offer to dedicate Smallacre to the Village as parkland, pursuant to N.Y.
Village Law § 7‐730(4). Foreal irrevocably offered Smallacre to the Village on July 27,
1972. The offer was recorded on August 22, 1972. The Village, however, did not accept
the offer until 2007, as described further below.
Lexjac, Entelʹs wholly owned company, purchased Smallacre, which
abutted Entelʹs home, from Foreal for $90,000 in December 2003. On October 17, 2005,
at plaintiffsʹ request, the Village formally declined Forealʹs offer of dedication (the ʺ2005
Resolutionʺ), giving plaintiffs unencumbered title to Smallacre. At the time of the vote,
Entel was a member of the Villageʹs Board of Trustees but recused himself from the
vote. On July 10, 2007, after Entel was defeated in a mayoral race by incumbent
defendant Julianne Beckerman, the new Board of Trustees passed a resolution
rescinding the 2005 Resolution and formally accepting the offer of dedication (the ʺ2007
Resolutionʺ).
Plaintiffs filed this action in 2007, alleging, inter alia, that their due process
and equal protection rights were violated by the 2007 Resolution. The district court
(Seybert, J.) granted in part plaintiffsʹ motion for summary judgment, holding that the
2005 Resolution did not constitute a contract and that Entel had complied with § 809 of
the New York General Municipal Law (the ʺNYGMLʺ) by disclosing his interest in
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Smallacre and abstaining from voting on the resolution. Lexjac, LLC v. Inc. Vill. of
Muttontown, No. 07‐CV‐4614 JS, 2011 WL 1059122, at *4‐5 (E.D.N.Y. Mar. 18, 2011). The
district court subsequently ordered the Village to deed Smallacre back to plaintiffs
subject to plaintiffsʹ grant of a conservation easement preventing development of
Smallacre.
The case proceeded to trial on damages before Magistrate Judge Arlene R.
Lindsay on the consent of the parties, and the jury returned a verdict of $1,450,000 for
plaintiffs. Defendants appealed, and we concluded that the 2005 Resolution constituted
a contract, vacated the district courtʹs grant of partial summary judgment, and
remanded for the district court to consider whether the 2005 Resolution was null and
void pursuant to NYGML §§ 801 and 804 notwithstanding Entelʹs recusal. See Lexjac,
LLC v. Beckerman, 616 F. Appʹx 435, 438 (2d Cir. 2015). On September 1, 2016, the district
court granted defendantsʹ motion for summary judgment, holding that the 2005
Resolution was null and void. Plaintiffs timely appealed. We review a district courtʹs
grant of summary judgment de novo. Hill v.
Del. N. Cos. Sportservice, Inc., 838 F.3d 281, 287 (2d Cir. 2016).
Section 801 provides that
Except as provided in [§ 802], (1) no municipal officer or employee shall
have an interest in any contract with the municipality of which he is an
officer or employee, when such officer or employee, individually or as a
member of a board, has the power or duty to (a) negotiate, prepare,
authorize or approve the contract or authorize or approve payment
thereunder . . . .
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NYGML § 801. If a municipal officer has such an interest in a contract ʺwillfully entered
into by or with a municipality,ʺ the contract is ʺnull, void, and wholly unenforceable.ʺ
NYGML § 804.
Four questions are presented: first, whether § 801 was implicated here;
second, whether Entelʹs recusal from the vote on the 2005 Resolution obviated any
violation; third, whether the Village waived any violation; and finally, whether
plaintiffs were entitled to notice and an opportunity to be heard before the 2007
Resolution was passed. We address each issue in turn.
1. Applicability of NYGML § 801
As a board member, Entel had the power to ʺnegotiateʺ and ʺapproveʺ the
2005 Resolution. Entel had the power and the duty, as a member of the Board of
Trustees, to negotiate, prepare, authorize, or approve contracts, including contracts to
convey interests in real property implemented through resolutions. See N.Y. Village
Law § 4‐412(1)(a) (ʺ[T]he board of trustees of a village . . . may take all measures and do
all acts, by local law, not inconsistent with the provisions of the constitution . . . which
shall be deemed expedient or desirable for the good government of the village.ʺ); accord
Karedes v. Colella, 740 N.Y.S.2d 526, 528 (3d Depʹt 2002), revʹd on other grounds, 100
N.Y.2d 84 (2003) (ʺThe power to contract with respect to the management of village
property is vested in the Board.ʺ).
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Although title to Smallacre was taken by Lexjac, as Entel was the sole
owner of Lexjac, he had an interest in the transaction. NYGML § 800(3) (ʺ[A] municipal
officer or employee shall be deemed to have an interest in the contract of . . . (d) a
corporation any stock of which is owned or controlled directly or indirectly by such
officer or employee.ʺ). Accordingly, § 801 was implicated.
2. Entelʹs Recusal
Plaintiffs argue that the 2005 Resolution is not void under §§ 801 and 804
because Entel recused himself from voting on it. NYGML § 802 enumerates
circumstances in which the § 801 prohibition on conflicts of interest does not apply, and
recusal is not among them. Moreover, § 801 was intended to eliminate the mere
ʺpossibility of wrongdoing.ʺ Dykeman v. Symonds, 388 N.Y.S.2d 422, 426 (4th Depʹt
1976). Accordingly, it is irrelevant whether the board member actually exercises his or
her power to negotiate or approve the agreement. See Dykeman v. Symonds, 380
N.Y.S.2d 567, 568 (Sup. Ct. Monroe Cty. 1976), affʹd, 388 N.Y.S.2d 422 (concluding that
respondent could not concurrently serve as a county legislator and motor vehicle
supervisor, and noting that ʺ[n]either the fact that she has refrained in the past from
participating in negotiations with the collective bargaining agent, nor that she is willing
in the future to abstain from voting on any and all salary matters that come before the
legislative body relieves her of the ʹpower or dutyʹ referred to in section 801 of the
General Municipal Lawʺ); Opinion No. 77‐714, 1977 WL 4486, at *1 (N.Y. Comp. Oct. 7,
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1977) (ʺ[I]t is immaterial that the trustee dissociates himself from board proceedings
relative to the transaction. The § 801(1) prohibition stems from the power or duty of the
trustee to approve or authorize the contract, etc., and it is irrelevant that he refrains
from the exercise of that power or the performance of such duty.ʺ). Even if Entel
recused himself from the vote, he was in a position to influence the Boardʹs decision by
virtue of his board membership. Thus, Entelʹs recusal does not cure the violation.
Plaintiffs also argue that Entel did not act willfully within the meaning of
§ 804 because he did not act in bad faith or believe that the 2005 Resolution would
violate § 801. Although the Article 18 of the NYGML does not define ʺwillfully,ʺ the
New York State Comptroller addressed its meaning in a 1985 opinion. Considering
whether a town board should approve a voucher for services rendered by the spouse of
a town supervisor, the Comptroller concluded:
Section 804 of the General Municipal Law provides that ʺany
contract willfully entered into by or with a municipality in which there is
an interest prohibited by this article shall be null, void and wholly
unenforceable.ʺ In our opinion, a contract is ʺwillfullyʺ entered into by a
party if, at the time of making the contract, he has knowledge of facts
which, under General Municipal Law, Article 18, constitute a prohibited
interest in the contract on the part of a municipal officer or employee. . . .
Clearly, the former supervisorʹs spouse was aware that her husband was
the supervisor of the town when she agreed to prepare the report for
compensation. As a result, the claim of the former supervisorʹs spouse . . .
is rendered null and void by . . . § 804 and should not be paid by the town.
Opinion No. 85‐9, 1985 WL 25802, at *1 (N.Y. Comp. Feb. 14, 1985) (citing Landau v.
Percacciolo, 412 N.Y.S.2d 378 (2d Depʹt 1978), affʹd, 50 N.Y.2d 430 (1980)). Entel knew the
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relevant facts at the time the contract was formed: It is undisputed that Entel, via
Lexjac, pursued the contract with the Village knowing that he was both a trustee and
the sole owner of Lexjac. Therefore, under § 804, the 2005 Resolution was ʺ[a] contract
willfully entered intoʺ by Entel ʺin which there is an interest prohibited by [§ 801],ʺ as
discussed above, and the contract is void. NYGML § 804.
We reject plaintiffsʹ argument that the contract is void under § 804 only if
Entel was aware that he was violating § 801. Unlike § 804, NYGML § 805, which makes
certain violations of § 801 misdemeanors, has the added requirement that the violation
be ʺknowing.ʺ See NYGML § 805 (ʺAny municipal officer or employee who willfully
and knowingly violates the foregoing provisions of this article shall be guilty of a
misdemeanor.ʺ). That language does not appear in § 804. Accordingly, we are not
persuaded that a contract is void under § 804 only when a party to the relevant contract
knows that the contract he or she is entering into violates § 801.
Thus, for the reasons stated above, the 2005 Resolution is void under
NYGML §§ 801 and 804.
3. Waiver
Plaintiffs also argue that the Village waived its claim that the 2005
Resolution is void because the 2007 Resolution acknowledged the 2005 Resolution
without specifying that it was void. We disagree. The New York Court of Appeals has
observed that § 804 bars waiver of conflicts under § 801. See Landau, 50 N.Y.2d at 434
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(ʺAs to contracts in which . . . an interest [prohibited by § 801] exists, section 804 of the
General Municipal Law works as a statutory nullification, thereby providing for
municipal taxpayers the protection of a bar to any waiver of the prohibited conflicts of
interest through consent of the governing body or authority of the municipality.ʺ).
Plaintiffs cite no authority to support the proposition that a contract prohibited by §§
801 and 804 can be ratified by subsequent acts of the parties.
4. Procedural Due Process
Finally, plaintiffs argue that because Lexjac was the fee owner of
Smallacre, they were entitled to notice and an opportunity to be heard before the offer
of dedication could be accepted. ʺA lapse of time does not extinguish an offer of
dedication, which may be accepted at any time prior to a valid revocation by all
interested parties . . . and remains enforceable against subsequent purchasers.ʺ
Underhill Ave. Corp. v. Vill. of Croton‐on‐Hudson, 919 N.Y.S.2d 67, 69‐70 (2d Depʹt 2011).
As the district court noted, ʺby the time Lexjac purchased the land from Foreal, the
partiesʹ respective interests in Smallacre had already been unequivocally determined by
the [state] courts,ʺ which rejected Forealʹs attempt to revoke the offer of dedication and
concluded that Foreal held Smallacre subject to the offer of dedication. Lexjac, LLC v.
Bd. of Trustees of the Inc. Vill. of Muttontown, No. CV 07‐4614 (ARL), 2016 WL 8138987, at
*8 (E.D.N.Y. Sept. 1, 2016); see also Foreal Homes, Inc. v. Inc. Vill. of Muttontown, 71 N.Y.2d
821, 822 (1988).
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Plaintiffs had at least constructive knowledge of the offer of dedication at
the time they acquired Smallacre from the Village: the offer was recorded with the
County Clerk, and the Village Attorney expressly clarified to plaintiffs by letter that
plaintiffsʹ purchase of Smallacre would be ʺsubject to the outstanding offer of
dedication.ʺ Appʹx 70. Accordingly, they were not entitled to any additional process
before the 2007 Resolution was passed.
We have considered all of plaintiffsʹ remaining arguments and conclude
they are without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
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