March 28, 2015
New York

Appellate court reverses ruling that Hounsfield must pay attorneys $160k

By BRIAN KELLY, TIMES STAFF WRITER | PUBLISHED: SATURDAY, MARCH 28, 2015 | www.ogd.com

SACKETS HARBOR – A state appellate court has unanimously reversed a lower court’s ruling that the town of Hounsfield must pay a Watertown law firm $160,615 in legal fees related to the defunct Galloo Island Wind Farm development.

Friday’s ruling by the state Appellate Division, Fourth Department, sends the matter back to state Supreme Court, where it had been determined in January 2014 that the town owed the money to Schwerzmann & Wise PC.

The firm had sued Hounsfield in January 2013, claiming it was never paid for work done between December 2009 and July 2012. The firm was representing the town in 2007, when Upstate NY Power Corp. proposed building a 246-megawatt wind farm on Galloo Island, which is within the town. In 2008, the town and Upstate NY Power reached an agreement calling for the company to pay Schwerzmann & Wise’s bills in connection with the project’s development, up to $75,000.

In early February 2010, the town of Henderson sued Hounsfield over the project, contesting the placement of a transmission line through Henderson; later that month the Hounsfield board passed a resolution authorizing Schwerzmann & Wise to defend Hounsfield in the action. Hounsfield prevailed, but Schwerzmann & Wise’s legal bills exceeded the $75,000 that Upstate NY Power agreed to reimburse. The town contended it never received bills for the additional legal work and assumed Upstate was still paying Schwerzmann & Wise’s fees.

In January 2014, Judge James P. McClusky granted Schwerzmann & Wise’s motion for summary judgment, determining that even though at some point it became evident the developer no longer was going to be reimbursing the town for legal bills related to the project, this did not relieve the town of its responsibility for the law firm’s subsequent bills. He entered a judgment against the town in the full amount due, plus interest, making the total amount owed $182,138. The Town Council voted to appeal the ruling in February 2014.

In its decision Friday, the appellate court concluded that “there is an issue of fact whether (the town’s) silence upon receiving the bills may be construed as acceptance of the amount due,” reversing the Supreme Court’s decision and denying Schwerzmann & Wise’s motion for summary judgment.

The appellate court stated that Schwerzmann & Wise submitted bills to the town between January 2010 and August 2012, bills to which the town did not object, but also did not pay. However, some of the bills during the period were sent directly to Upstate, with a “copy” sent to the town. The court noted that none of the bills contained a running total, but showed a “balance due” on each bill that represented fees for a particular month.

“(The town) could thus reasonably have concluded that Upstate was paying the bills all along,” the court wrote in its decision.

The court said that it was not until October 2012, after the town had terminated Schwerzmann & Wise’s services, that the law firm presented the town with a bill showing the accumulated amount of allegedly unpaid fees. The court said that the law firm failed to establish in its motion for summary judgment that “the only rational inference to be drawn from (the town’s) retention of the bills was its agreement to pay them,” ruling that this remains an issue of fact that must be resolved in Supreme Court.

Upstate’s plans for a wind farm on Galloo Island never materialized, but recently Albany-based Hudson Energy Development has proposed placing 32 turbines on the island. While the project would consist of fewer turbines than called for in Upstate’s 82-turbine project, Hudson Energy’s turbines could be up to more than 200 feet taller than those proposed by Upstate, possibly setting the stage for another legal challenge from Henderson.