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Ruling recommends dismissal of condo project suit

A federal magistrate judge has recommended the dismissal of a lawsuit filed against the City of Lockport by the developers of a failing condominium project.

Lockport Condominium Associates sued the city for $5 million in 2009, charging that the city undermined the project through the slowdown tactics of the Building Inspection Department.

The city's attorneys at the Sugarman Law Firm of Buffalo fired back that Victorian Village, as the Park Lane Circle development was to have been known, failed because of imprudent spending.

Because of unpaid property taxes, the city has foreclosed on the 7.37-acre site, including a vacant four-unit condo, the only one ever erected.

Corporation Counsel John J. Ottaviano said last week the city intends to auction the site as one parcel, although the developers had split it into four lots.

U.S. Magistrate Judge Jeremiah J. McCarthy issued a report on the case to U.S. District Judge Richard J. Arcara, advising him to grant the city's request for summary judgment.

"Any other recommendation, I feel, would have had a stifling effect on the operations of city government," Ottaviano said.

"We think the judge didn't understand our position," said Michael F. Perley of the Hodgson Russ law firm, representing Lockport Condo and its principal, Edward E. Lewis.

Perley filed a brief urging Arcara not to follow McCarthy's recommendation to hand the legal victory to the city without a trial.

McCarthy wrote that Lockport Condo couldn't show any violation of its constitutional rights and suggested that the firm could have brought suit in State Supreme Court in what's known as an Article 78 proceeding, which tries to overturn acts by a state or local government agency.

Perley said the city never made an overt decision that could have triggered an Article 78 suit. Instead, it allegedly just kept stringing the project along with new requests, taking months to issue a building permit.

"The city lulled us into a position where an Article 78 [suit] wasn't appropriate," Perley said. "We never had a flat denial. We just had a failure to issue [a building permit]."

"We went out of our way to facilitate the project," Ottaviano insisted.