In the latest twist to a long-running dispute between East Hampton Town and Marc Rowan, the billionaire investor and financier who owns Duryea’s Lobster Deck in Montauk, a New York State Supreme Court judge has granted the town and the town board’s motion to vacate a 2019 stipulation of settlement with Mr. Rowan, and directed that the status quo be maintained pending determination of the various proceedings and appeals before the court.
Mr. Rowan bought the wholesale and retail fish market and eatery on Fort Pond Bay in 2014.
The Jan. 24, 2019, stipulation of settlement, intended to resolve multiple lawsuits Mr. Rowan filed against the town, had been signed by the then-town attorney and not by the supervisor at the time. The town board, the judge agreed, had not authorized the town attorney to execute the stipulation of settlement on the town’s behalf.
Mr. Rowan’s lawsuits sought to have the court compel the town to issue a certificate of occupancy to legalize existing uses and structures on the property; assert that the town had no jurisdiction over the property’s dock, underwater lands, or shoreline fortification structures, and change the zoning for a portion of the property from residential to waterfront business.
Neighbors had grown frustrated with Duryea’s under Mr. Rowan’s ownership, fearing expanding use on the property, which they said already encroached on their own properties in the form of increased traffic, pollution, and environmental damage. An attorney for Mr. Rowan, however, charged that Mr. Rowan had in fact inherited a decades-long “blood feud” between neighbors and Duryea’s Lobster Deck.
Extensively citing case law, Justice David T. Reilly wrote on May 20 that “the court does not contest that the town attorney acted with a good faith belief that his actions were approved by the town board, but nevertheless concludes that such good faith belief is insufficient to bind the town to the stipulation of settlement.” The record, he continued, “firmly establishes that the town attorney signed the agreement before any formal resolution was adopted (indeed, no such resolution was adopted in this case).” Therefore, the town, he ruled, “is not bound by the stipulation of settlement.”
Attorneys for Sunrise-Tuthill L.L.C., Mr. Rowan’s company, argued that the signature of the then-town attorney, Michael Sendlenski, on the stipulation of settlement constituted proof of the town’s agreement to settle, and pointed out that the town acted on terms of the settlement: The Building Department issued a certificate of occupancy; the Planning Department and planning board accepted a site plan application for Duryea’s in February 2019, and the planning board held a work session on the site plan application the following month.
“For seven years, the town has fought to vacate a stipulation that should never have been entered into,” Supervisor Kathee Burke-Gonzalez, who was a councilwoman at the time of the stipulation of settlement, said in a statement on Tuesday. “This decision confirms what we have said all along: No one gets to bypass our laws because they are powerful, connected, or wealthy. East Hampton is a community, not a commodity, and I will not hesitate to take on billionaires when that is what it takes to protect our residents.”
Mr. Rowan bought the property at 65 and 66 Tuthill Road around 80 years after Perry Duryea Sr. bought into the business with a partner, Capt. E.B. Tuthill. The 2014 sale was another manifestation of Montauk’s mom-and-pop businesses changing hands as investors have flooded the hamlet with money in recent years. Food prices at Duryea’s skyrocketed.
The new owner’s 2015 proposal to remove all of the structures on the site and replace them with a 6,350-square-foot restaurant and an open deck with a total capacity of 353 patrons was tabled before the planning board could consider it.
Under the now-vacated 2019 settlement, Mr. Rowan, the co-founder of the private equity firm Apollo Global Management, was to apply to the planning board for a restaurant use, legalizing table service where it was technically disallowed, and for installation of an innovative/alternative septic system on the landward side of Tuthill Road. Mr. Rowan, who previously served on the board of Norwegian Cruise Lines, agreed that no portion of the property would permit the landing of cruise ships or ferry services, putting to rest a persistent rumor. He also agreed to donate the property at 120 Tuthill Point Road, along with half of the area of Tuthill Pond and its bottomlands, to the town or an environmental organization, and contribute to a fund for road improvements to mitigate flooding at the intersection of Tuthill and Manor Roads.
For its part, the town was to deliver a certificate of occupancy for structures on the property pertaining to the complex’s ice manufacture, sale, and storage facility; fish processing, preparation, and cleaning; fish market; wholesale and retail seafood shop with ancillary areas; an accessory dining patio; a cottage and garage, and outdoor decks, as well as a house and attached garage that was once the Duryea family’s residence. The town agreed to honor state patents granted to the Duryeas long ago, acknowledging that it had no jurisdiction over a pier repaired after Superstorm Sandy in 2012.
But after a Springs resident, David Buda, harshly criticized the settlement at a town board meeting in February 2019, the board voted to hire outside counsel to advise it on all litigation involving corporations affiliated with Mr. Rowan. In April 2019, Justice Reilly issued a temporary restraining order suspending implementation of the settlement. In May of that year, he directed that the property’s certificate of occupancy remain in place pending further order of the court, and that Duryea’s “is ordered and directed to operate that facility in the same manner that it has operated it over the last two years.” Mr. Sendlenski announced in April of that year that he would resign effective the following month.
In August 2019, the town’s zoning board of appeals voted to revoke the certificate of occupancy issued earlier that year, although Justice Reilly’s May 2019 order directed that it remain in effect pending further order.
A new quarrel arose in April 2021, when Mr. Rowan notified the town and State Supreme Court of his intention to enter into an agreement with a boat share company to use an existing dock at the site. Later that month, Mr. Rowan’s counsel notified the town that he intended to expand the dock to bring it into compliance with the Americans With Disabilities Act of 1990.
The town recorded its objection to those plans, arguing that it would constitute a change of use in violation of the May 2019 decision ordering the business to operate in the same manner in which it had been operated over the previous two years.
Last summer, the town asked Justice Reilly to hold Mr. Rowan in contempt of the court’s May 2019 orders allowing a certificate of occupancy to remain in effect; order the removal of a new parking lot and deck that were constructed without proper permits, and to permit the town to resume enforcement of its ordinances.
In vacating the stipulation of settlement this month, Justice Reilly wrote that “this protracted litigation to untie the Gordian knot of the 2019 agreement effectively puts both parties back at square one. Therefore, the court orders and directs that the status quo be maintained by the parties herein in all actions and proceedings currently before this court related to this subject matter herein, pending the determination of the various Article 78 proceedings before this court, or the determination of any appeal from this order, whichever is later.”
Steven Stern, outside counsel for the town, said on Tuesday that “After taking depositions of all the board members and requesting extensive document discovery from them — emails, communications, etc., over a long period of time — the answer was what we said all along: This is an invalid settlement agreement. It wasn’t approved by the board, it was not signed by the town supervisor. . . . We’re glad that the court, after reviewing all the evidence that they presented, extensive briefings, all of the discovery, came to the right answer.”
Michael Walsh, an attorney for Mr. Rowan, called Justice Reilly’s order “a well-reasoned decision by a very well-regarded jurist,” and said, “We respect his decision.” Mr. Rowan’s legal team is reviewing it, he said. “We’d like to move forward with the town on an amicable basis,” he added, “but if it involves further litigation, we’re prepared to resolve it in that manner.
A conference is scheduled for June 8.
