Amended Complaint NRP v. Brown et al

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK NRP HOLDINGS LLC and NRP PROPERTIES LLC Plaintiffs, v. Civil No.: 11-CV-00472(WMS) CITY OF BUFFALO, BYRON W. BROWN, STEVEN M. CASEY, DEMONE A. SMITH, RICHARD A. STENHOUSE, BUFFALO JEREMIAH PARTNERSHIP FOR COMMUNITY DEVELOPMENT, INC., JOHN DOE 1 – 10, and JOHN DOE COMPANIES 1 – 5. Defendants.

AMENDED COMPLAINT

NRP Holdings LLC and NRP Properties LLC (collectively "NRP"), through

their attorneys Webster Szanyi LLP, state as follows:

Introduction

1. This is an action seeking recovery for actual and treble damages

caused by the conduct of the individual defendants who participated in the affairs of the

defendant City of Buffalo ("Buffalo") through a pattern of racketeering activity in violation

of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961

et seq. This action also seeks recovery for defendants’ tortious conduct and for Buffalo’s

breach of a contract concerning NRP’s plans to develop, construct and manage (50) units

of single-family homes in the Masten Park and Cold Springs neighborhoods of the City of

Buffalo. Simply put, the individual defendants conspired to kill the project when NRP

refused to comply with their illegal demand to pay monies to Reverend Richard A.

Case 1:11-cv-00472-WMS Document 22 Filed 12/23/11 Page 1 of 29

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Stenhouse and/or affiliated organizations in order for the Project to proceed. The illegal

demands by the individual defendants are commonly known as a "pay to play" scheme.

Parties

2. Plaintiff NRP Holdings LLC is an Ohio limited liability company with

its principal place of business in Ohio.

3. Plaintiff NRP Properties LLC is an Ohio limited liability company with

its principal place of business in Ohio.

4. Defendant City of Buffalo is a municipal corporation operating under

the laws of the State of New York.

5. Defendant Byron W. Brown ("Brown") is a resident of the State of

New York.

6. Defendant Brown was and is the Mayor of Buffalo.

7. Defendant Steven M. Casey ("Casey") is a resident of the State of

New York.

8. Defendant Casey was and is the First Deputy Mayor of Buffalo.

9. Defendant Demone A. Smith ("Smith") is a resident of the State of

New York.

10. Defendant Smith was and is a member of the Buffalo Common

Council.

11. Defendant Richard A. Stenhouse ("Stenhouse") is a resident of the

State of New York.


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12. Defendant Buffalo Jeremiah Partnership for Community

Development, Inc. ("Jeremiah Partnership") is a domestic corporation operating under the

laws of the State of New York.

13. Defendant Stenhouse was and is the president of the Jeremiah

Partnership.

14. Defendants John Doe 1 – 10 and John Doe Companies 1 – 5

represent individuals and entities which plaintiffs believe exist and may have acted

individually, together, and/or in concert with the defendants herein. Defendants John Doe

1 – 10 include both individuals employed by the City of Buffalo and within the private

sector. The allegations set forth below are incorporated as and against each John Doe

and John Doe Company as if fully set forth against him, her, or it.

Jurisdiction and Venue

15. This Court has federal question jurisdiction under 28 U.S.C. § 1331,

18 U.S.C. § 1964(a), and 42 U.S.C. §1983.

16. This Court has jurisdiction based on diversity of citizenship pursuant

to 28 U.S.C. §1332.

17. Venue is proper in this judicial district pursuant to 28 U.S.C. §1391

and 18 U.S.C. § 1965(a).

Factual Background 18. NRP are affiliates of the NRP Group LLC, an Ohio limited liability

company that develops, builds and manages apartments and housing across the United


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States. Among other honors, the National Association of Home Builders named the NRP

Group LLC as the 2009 multifamily development firm of the year.

19. In November 2007, NRP was invited by representatives of Buffalo to

participate in a meeting to discuss affordable housing initiatives within the City of Buffalo.

During this meeting, these representatives expressed their desire to work with NRP and

associated companies to build single family homes within the City of Buffalo.

20. Effective February 21, 2008, NRP entered into agreements with

associated companies to develop, construct and manage fifty (50) homes in the Masten

Park and Cold Springs neighborhoods of the City of Buffalo (the "Project"). (NRP and its

associated companies are hereafter collectively referred to as the "Development Team.").

21. By letter dated February 25, 2008, Buffalo agreed and committed

itself to participate in the Project by, among other things, extending to the Project its usual

Low Income Housing PILOT agreement, providing $1,600,000.00 of its HOME funds to

assist in the construction and, in addition, providing fifty-one (51) buildable vacant lots at

a price no greater than $2,000 per buildable lot, and not to exceed a total price of

$100,000.00.

22. Buffalo’s agreement and commitment to the Project was subject to

one condition -- the Development Team’s success in securing 2008 Low Income Housing

Tax Credits (“LIHTC”) to complete the Project. (A copy of Buffalo’s February 25, 2008

agreement and commitment is attached hereto at Exhibit "A".)

23. In the February 25, 2008 agreement and commitment letter, Buffalo

stated, among other things, that "[w]e are also supportive of the feature of the


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development, which allows for homeownership conversion at the end of the tax required

compliance period. The lease to own component provides future homeownership

opportunities to residents who are not currently prepared to become homeowners, while

providing them with clean, state-of-the-art housing today."

24. As of February 25, 2008, Buffalo knew that under applicable law, the

tax compliance period referenced in the February 25, 2008 agreement and commitment

was thirty (30) years.

25. By letter dated August 20, 2008, the Development Team received a

commitment from the New York State Division of Housing and Community Renewal

(“DHCR”) for the necessary LIHTC. The DHCR commitment required "closing on

construction financing sufficient to complete the Project” on or before March 15, 2010."

(A copy of the DHCR August 20, 2008 agreement and commitment is attached hereto at

Exhibit "B".)

26. By letter dated November 5, 2008, the DHCR notified the

Development Team that the amount of the LIHTC was increased from $794,363 to

$922,954. (A copy of the DHCR November 5, 2008 agreement and commitment is

attached hereto at Exhibit "C".)

27. By letter dated November 5, 2008, the New York State Housing Trust

Fund Corporation ("HTFC") notified the Development Team that the HTFC approved a

low interest loan in the amount of $2,200,000.00 in support of the Project. (By letter

dated March 19, 2009, the HTFC issued its agreement and commitment for the loan. A


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copy of the March 19, 2009 agreement and commitment is attached hereto at Exhibit

"D".)

28. After receiving the agreements and commitments from Buffalo and

the DHCR, Buffalo moved forward with its participation in the Project in accordance with

its February 25, 2008 commitment and agreement.

29. For example, Buffalo issued letters in support of the Project and the

application to the DHCR.

30. Buffalo also selected the sites to be used for the single-family homes.

31. In addition, the City of Buffalo Planning Board "approved as

presented", the site plan, design, and elevations submitted by the Development Team.

32. In early 2009, however, Brown, Casey, Smith, Stenhouse and the

Jeremiah Partnership conspired and started demanding that the Development Team

contract with Stenhouse and/or organizations connected to Stenhouse (including the

Jeremiah Partnership) to participate in the Project.

33. On March 10, 2009, City of Buffalo officials responsible for moving

the Project forward met with Brown, Casey and Smith. During the March 10, 2009

meeting, Brown stated that the Project could proceed but with significant stipulations.

One of the stipulations required that the Development Team "find a role for . . . the

Jeremiah Partnership from the East Side."

34. In a subsequent e-mail, these demands were presented to the

Development Team: "Now tomorrow I meet with the Mayor. Would it be possible to get


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something signed that says you folks agree to . . . work with the locally based, not-for-

profit Jeremiah Partnership on this project . . . ".

35. On March 30, 2009, Brown’s office contacted the Development Team

and demanded that it let them know within "the next 1 and ½ hours" whether the

Jeremiah Partnership would be provided a service contract on the project.

36. At the same time, the Development Team was told by Smith that it

needed to "make Stenhouse happy" for the project to proceed.

37. Later that day, Stenhouse sent an e-mail instructing the Development

Team that he required "a contract to provide mwbe and section 3 subcontractors for the

fifty houses. Cost $30,000 and an agreement with [the Development Team] to do

management training for a year for the Jeremiah Partnership. These items would need

to be formally signed before we will sign off." (Emphasis added). Stenhouse

provided no elaboration on the details of what he would provide the Development Team

in exchange for the demanded $30,000.00 fee.

38. Over the course of the next several weeks, Stenhouse issued a

series of escalating demands to the Development Team.

39. As of March 31, 2009, every possible requirement for the NRP

project had been satisfied. That is – every requirement except for the need to find a way

to have Stenhouse and the Jeremiah Partnership "sign off" on the Project.

40. As a result of this one outstanding requirement, the Project was

stalled by Brown’s office.


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41. The Development Team began to reach out to others in the

community who could provide assistance moving the Project forward.

42. By e-mail dated April 15, 2009, one of these individuals advised NRP

that “I am providing a proposal for project management services as we discussed . . . As

I mentioned earlier today, Reverend Stenhouse is ready to place his call to the Mayor

endorsing our approach, provided I can show him an executed agreement with

your firm.” (Emphasis added). As reflected by the e-mail discussion, Stenhouse's

proposal increased the required demand from $30,000.00 to $60,000.00.

43. An e-mail dated April 27, 2009 notes a subsequent conversation

between this individual and Casey. As shown by this e-mail, Casey "had not gotten back

to Stenhouse" and thus it was unclear whether Stenhouse had exercised his apparent

authorization as to whether the NRP project would be permitted to proceed.

44. The Development Team was told that the participation of Stenhouse

was allegedly required in order to assure adequate minority involvement in the Project.

45. The Development Team was specifically instructed by Brown, Casey,

Smith, and/or other employees of Buffalo that it was necessary to "find a role for

Stenhouse" and "make Stenhouse happy" in order for the Project to proceed.

46. Initially, Stenhouse simply indicated an interest to make sure that

there was adequate minority involvement in the Project. Thereafter, Stenhouse

communicated a series of escalating demands. Instead of unofficial input, Stenhouse

then demanded a series of tasks involving ever increasing payments to him and later the

Jeremiah Partnership. Eventually, Stenhouse asked whether he could be a partner on


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the Project similar to the arrangement he had on the Packard project, a previous project

in the City of Buffalo, where he was paid a "developer’s" fee. Stenhouse then demanded

that the Development Team accept his response to a Request for Proposal, discussed

below, even though it was grossly inferior to the bid selected by the Development Team.

47. The Development Team was told that, because Stenhouse did not

have an acceptable contract on the Project, several items promised by the City of Buffalo

were being held up in Brown’s office.

48. The Development Team eventually determined that the demand

being made by numerous City of Buffalo officials that Stenhouse and the Jeremiah

Partnership receive a contract was illegal.

49. In late April 2009, the Development Team issued a Request for

Proposal ("RFP") for certain services to be provided on the Project.

50. The RFP advised proposed bidders (including Stenhouse and the

Jeremiah Partnership) that the "Type of Project" was scattered site and concerned the

"development and construction of 50 single family homes and one community building in

the Cold Springs and Masten Park neighborhoods on the east side of Buffalo, Erie

County, New York."

51. The RFP was mailed to over thirty (30) organizations and an

advertisement was placed in the Buffalo News.

52. Stenhouse and the Jeremiah Partnership were advised of the RFP

and invited to respond.


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53. The Development Team received three proposals including one from

Stenhouse on behalf of the Jeremiah Partnership.

54. The Stenhouse proposal was inferior in substance and content when

compared to the other two proposals.

55. Amazingly, Stenhouse proposed a total budget of $80,000.00 for his

work and set forth numerous questionable and suspect budget items. For example,

Stenhouse proposed $12,000.00 as a rental fee for twelve meetings that presumably

would take place at Jeremiah Partnership owned locations. Stenhouse proposed

$3,600.00 for refreshments at these twelve meetings and $35,000.00 as an

"administrative fee" for postage, telephone and "Jeremiah involvement." Lastly,

Stenhouse proposed $5,000.00 for undefined "services after completion of the project."

56. Stenhouse’s proposal was facially deficient and, therefore, rejected in

favor of the University of Buffalo proposal dated May 7, 2009, prepared by Dr. Henry

Taylor and James W. Pitts which included a total budget of $40,524.00.

57. During the RFP process, an e-mail dated May 6, 2009, reflected a

conversation concerning comments made by Stenhouse and his response to the RFP.

The email noted that Stenhouse said "the list of deliverables was far greater than what he

anticipated doing for $30k and so his fee would be higher." Stenhouse also noted that

certain items would need to be addressed in an agreement, "assuming he is selected

[pursuant to the RFP] because the Rev. will need to be 'on board'" as a condition for

the Project to proceed. In other words, Stenhouse made it well known that his support of

the Project was still required for it to move forward.


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58. On May 12, 2009, the Development Team sent correspondence to

Buffalo Commissioner Reilly and reported that an agreement was reached with the UB

Team based on its superior response to the RFP.

59. As demonstrated by the May 12, 2009 letter, there were no other

outstanding issues concerning the Project. Despite this, the Project remained stalled in

Mayor Brown’s office.

60. As of May 2009, the City of Buffalo issued site plan approval and a

permit ready letter for the Project.

61. As of May 2009, the DHCR issued environmental and plan approvals

for the Project.

62. As of May 2009, the Development Team had incurred considerable

expense and performed all tasks necessary to move forward with the Project.

63. The Development Team’s efforts included the selection of the UB

Team to satisfy the requests for additional minority participation and involvement in the

Project.

64. Likewise, the City of Buffalo’s Departments and Agencies and the

DHCR were also performing their necessary functions for the Project to proceed.

65. However, after selecting the UB Team and rejecting the proposal

submitted by Stenhouse and the Jeremiah Partnership, the Development Team’s efforts

to proceed with the Project were ultimately killed by the defendants.

66. In May 2009, the Development Team retained another individual to

intervene with the City of Buffalo concerning the Project. As reflected in an e-mail dated


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May 26, 2009, the Development Team’s representative advised NRP that he "heard back

from [Deputy Mayor] Casey who said the deal is dead without Stenhouse."

67. Another member of the Development Team received the same

message from City of Buffalo officials. As reflected in a contemporaneous e-mail, this

person was told "that everything was ready to go on Tuesday until Stenhouse called

and said he was not happy."

68. These statements are further reflected in an e-mail dated May 29,

2009, which noted that Brown and Casey delivered the message to this same member of

the Development Team in a face to face meeting. "They stated the same tag line they

have for a while now, if Stenhouse is not happy, it is not going anywhere and

seemed pessimistic about the chances of this going forward."

69. In April – June, 2009, yet another representative of the Development

Team spoke with Brown directly on several occasions in an effort to move the Project

forward. During these conversations, Brown informed the representative "If you do not

hire the right company, you do not have my support for the project."

70. Brown also stated "Make Stenhouse happy or the deal will not go

through" and that he was "sick of seeing those fucking white developers on the

East Side with no black faces represented."

71. In another conversation following the selection of the UB Team,

Brown stated "I told you what you had to do and you hired the wrong company."


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72. As reflected above, Brown, Casey, Smith, and/or Stenhouse stated

to at least six different individuals that the Project would not proceed unless Stenhouse

"signed off" or "was made happy."

73. Stenhouse’s approval, of course, depended on monetary payments

for services that Development Team member Belmont was clearly able to provide and,

particularly so, after the Development Team engaged the services of the UB team.

74. After supporting the Project for over eighteen months, Brown, Casey,

Smith, Stenhouse and the Jeremiah Partnership used their positions and influence to

cause Buffalo to breach its February 25, 2008 agreement and commitment to the Project

by, among other things, individually taking action to prevent completion of the Project and

by directing City Departments, Agencies, and employees to either stop working on the

Project or to take action to prevent the Project from proceeding forward.

75. Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership

conspired to cause Buffalo to breach its agreement and commitment to the Project

because the Development Team refused to comply with the illegal demand that they pay

monies to Stenhouse and/or affiliated organizations in order for the Project to proceed.

76. All of the defendants made certain statements in furtherance of their

illegal scheme, to each other and others, by U.S. mail, wire, telephonic, e-mail, and/or

other electronic means.

77. Upon information and belief, Stenhouse and the Jeremiah

Partnership demanded a role on the Project because of their past endorsement of Brown

as Mayor and in consideration for their future endorsement of Brown.


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78. Upon information and belief, Brown and the other defendants

intended to reward Stenhouse and the Jeremiah Partnership for their past endorsement

and support and, because of their position in the community, viewed the continuing

endorsement by Stenhouse and the Jeremiah Partnership as integral to Brown’s re-

election efforts in 2009.

79. Calendar year 2009 was an election year for Brown.

80. The illegal schemes developed and implemented by Brown, Casey,

Smith, Stenhouse and the Jeremiah Partnership are commonly known as a "pay to play"

and "pay for votes" scheme.

81. Upon information and belief, Brown, Casey, Smith, Stenhouse and

the Jeremiah Partnership conditioned Buffalo’s support for other development projects

that proceeded within the City of Buffalo on those projects finding a role for and/or the

payment of monies to Stenhouse, the Jeremiah Partnership, and/or companies

associated with Stenhouse.

82. Upon information and belief, in situations where development

projects found a role for Stenhouse and/or the Jeremiah Partnership on their teams,

Buffalo honored its agreements and commitments on those projects.

83. Upon information and belief, the role of Stenhouse and/or the

Jeremiah Partnership in certain other development projects was essentially a "no show"

job where Stenhouse and/or the Jeremiah Partnership added little or no value to the

projects.


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84. Upon information and belief, Stenhouse did not have development

experience. As a result, the Mayor’s office often directed City employees to work directly

with Stenhouse at City expense to provide the expertise that he lacked and to perform

services that Stenhouse was being paid to perform on these other development projects.

85. Upon information and belief, the Packard project, commenced in or

about 2006, is another example where the individual defendants conspired to demand a

role for Stenhouse as a condition for approving a development project in Buffalo. In the

Packard project, Stenhouse became a "partner" on the development project and earned a

developer’s fee despite his lack of qualifications as a developer. Indeed, upon

information and belief, Stenhouse provided no services of value to the Packard project.

86. Upon information and belief, East Side Housing Opportunities, Phase

I is another example of where the individual defendants conspired to demand a role for

Stenhouse and/or his affiliated companies as a condition for approving a development

project in Buffalo. NRP was not involved in this Phase I project but has learned that

Stenhouse’s participation in the project added little to no value. Despite the lack of any

meaningful contribution to this project, Stenhouse was paid a significant fee at the

insistence of the defendants.

87. Prior to filing this complaint, NRP submitted a Freedom of

Information Law request to Buffalo requesting, among other things, documents in

Buffalo’s possession concerning Stenhouse and the Jeremiah Partnership. This request

was intended to determine the precise involvement of Stenhouse and the Jeremiah

Partnership concerning other development projects in Buffalo.


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88. In response, Buffalo first delayed and then failed and refused to

produce documents in its possession concerning Stenhouse and the Jeremiah

Partnership.

89. Discovery is necessary to determine the full extent of the precise role

played by Stenhouse and the Jeremiah Partnership in the Packard project, East Side

Housing Opportunities Phase I, and other development projects in Buffalo.

90. Upon information and belief, the Federal Bureau of Investigation

and/or the United States Attorney for the Western District of New York are currently

investigating one or more of the defendants’ conduct with respect to the Project and/or

other development projects in Buffalo.

91. As a direct and proximate result of the tortious and illegal conduct of

Buffalo, Brown, Casey, Smith, Stenhouse, and the Jeremiah Partnership, NRP was no

longer able to claim the benefits of their agreements with members of the Development

Team, the DHCR, the HTFC and others who issued loan commitments and, in turn, the

City of Buffalo.

92. Buffalo, Brown, Casey, Smith, Stenhouse and the Jeremiah

Partnership have failed to offer any good faith or legitimate reason for causing Buffalo to

breach its agreement and commitment to the Project.

93. Like their conspiracy to kill the Project, defendants conspired to

contrive an identical story to defend their illegal conduct in this case. Each defendant

claims that he did not support the project because: (1) the houses were scattered


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throughout the selected neighborhoods; and (2) the 30 year rent-to-own period was too

long.

94. Defendants’ objection to scattered site housing is meritless because

the City selected the sites for the homes.

95. Defendants’ objections are also nonsensical because the rent-to-own

aspect of the project was well known to them since 2008.

96. In fact, the City of Buffalo endorsed the rent-to-own feature in the

February 25, 2008 agreement stating "We are also supportive of the development, which

allows for homeownership conversion at the end of the tax required compliance

period. This lease to own component provides future homeownership opportunities to

residents who are not currently prepared to become homeowners, while providing them

with clean, state of the art housing today."

97. The Development Team met with Brown personally on June 24, 2008

– almost one year before he began making demands that the Development Team find a

role for Stenhouse on the Project. At this meeting, Brown was advised of the precise

details of the Project including the tax credits that would be used and the rent-to-own

requirement to use the tax credits.

98. At the June 24, 2008 meeting, Brown voiced no objection to this type

of Project. Nor did he object to the scattered sites.

99. Both before the Project and since, the City endorsed similar projects

using the same type of tax credits and compliance periods that were to be used here.


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100. Following the June 2008 meeting, Buffalo and Brown communicated

their support for the Project and requested an award of the low income housing tax

credits from the DHCR.

101. In August 2009, when Brown raised a question about the length of

the tax compliance period for the first time, his question was quickly addressed by the

DHCR which agreed to reduce the required period to fifteen years. The fact that this

reduction did not satisfy Brown revealed his true motivations for killing the project.

102. Brown’s objections are also flatly contradicted by the City’s own

programs and plans created apart from the Project in conjunction with developing a

strategy for dealing with the City’s deficient housing supply.

103. Likewise, Stenhouse and the Jeremiah Partnership fabricated

objections to the Project. In March 2009, these defendants vigorously pursued a role in

the Project. Their expressed desire was to ensure adequate minority hiring. They never

objected to the scattered sites or the rent-to-own feature of the Project.

104. Stenhouse and the Jeremiah Partnership later submitted a proposal

in response to the RFP. In its introduction, the proposal stated: "Jeremiah Partnership is

pleased to submit the following proposal to East Side Housing II, L.P. in association with

Belmont Shelter Corp. and the NRP Group LLC to provide professional outreach

resources for the construction of 50 single family homes and one community

building in the Cold Spring and Masten Park neighborhoods on the east side of

Buffalo."


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105. Stenhouse’s objections to the Project came only after it was made

clear that neither he nor his affiliated companies would be contracted for any purpose.

106. Simply put, Brown, Casey, Smith, Stenhouse and the Jeremiah

Partnership conspired to tortiously and illegally kill the Project because the Development

Team refused to comply with the illegal demand that it pay Stenhouse and/or the

Jeremiah Partnership money as a condition for their role in determining whether Buffalo

would honor the February 25, 2008 agreement and commitment.

107. A notice of claim was filed and served upon the municipal defendants

on June 14, 2010, and more than 30 days have passed since the filing of the notice of

claim with the municipal defendants failing to adjust or otherwise pay for the damages

identified within the notice of claim. A copy of the notice of claim is attached as Exhibit

"E."

108. On November 18, 2010 the municipal defendants conducted the

examination of plaintiffs pursuant to the terms of the General Municipal Law.

109. Plaintiffs have satisfied all conditions precedent under the General

Municipal Law for commencing an action against the municipal defendants.

110. Upon information and belief, the limitations of liability set forth in

Article 16 of the CPLR do not apply to this action.


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COUNT I

Breach of Contract Against Buffalo

111. NRP repeats and re-alleges the allegations set forth in paragraphs 1

through 110 above.

112. NRP is the assignee of all rights and benefits concerning the

February 25, 2008 agreement and commitment.

113. The February 25, 2008 agreement and commitment is an

enforceable contract between Buffalo and NRP.

114. The Development Team satisfied the one condition precedent in the

February 25, 2008 agreement and commitment when they secured the 2008 LIHTC to

complete the Project.

115. Buffalo breached the February 25, 2008 Agreement by, among other

things, failing to: perform the tasks required of it to move the Project forward, extend to

the Project its usual Low Income Housing PILOT agreement, provide $1,600,000.00 of its

HOME funds to assist in the construction of the Project and provide fifty-one buildable

vacant lots by the Project deadline of March 15, 2010.

116. Consequently, NRP is entitled to recover compensatory and other

damages in excess of $450,000.00 together with prejudgment interest.


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COUNT II

Promissory Estoppel Claim Against Buffalo, Brown, Casey, and Smith


through 116 above.

118. As set forth above, defendants Buffalo, Brown, Casey, and Smith

made clear and unambiguous promises to participate in the Project by, among other

things, extending to the Project its usual Low Income Housing PILOT agreement,

providing $1,600,000.00 of its HOME funds to assist in the construction and, in addition,

providing fifty-one (51) buildable vacant lots at a price no greater than $2,000 per

buildable lot, and not to exceed a total price of $100,000.00.

119. NRP reasonably and foreseeably relied upon the municipal

defendants’ promises and has been damaged as a result of their negligent and wrongful

failure to perform as promised.

120. Consequently, NRP is entitled to recover compensatory and other

damages in excess of $450,000.00 together with prejudgment interest.

COUNT III

Tort Claims Against Buffalo, Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership


through 120 above.

122. NRP is a party to agreements with associated companies concerning

the development, construction and management of homes in connection with the Project.


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123. NRP is the assignee of all rights and benefits concerning the

agreements and commitments that are attached hereto at Exhibits "A" – "D".


Partnership knew or should have known of the agreements secured by the Development

Team in order to perform the Project.


Partnership employed an unlawful and improper "pay to play" scheme and otherwise

engaged in wrongful and illegal conduct set forth above designed to interfere with the

Development Team’s rights under the agreements attached hereto at Exhibits "A" – "D",

other agreements to be entered into in connection with the Project, and the economic

advantages that would have been realized under all such agreements.

126. Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership

intentionally procured Buffalo’s breach of the agreement attached as Exhibit "A" and all

defendants expected and understood that all other contracts referenced herein would not

be performed as a result of their intentional and wrongful conduct set forth in detail above,

all without justification.

127. The defendants intended to and did in fact cause an actual breach of

the contracts and/or non-performance thereof and NRP sustained damages as a result.

128. Through their course of dealing with NRP and the Development

Team, the defendants were all aware that prospective contractual and business

relationships were reasonably certain by and between plaintiffs and Buffalo and third-

parties, and with this awareness interfered with the business relationships with the sole


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purpose of harming NRP or by means that were unlawful or improper. Specifically,

defendants Buffalo, Brown, Casey, and Smith represented to NRP that NRP would be

selected to complete future housing projects within the City of Buffalo. Moreover,

defendants Buffalo, Brown, Casey, and Smith were certainly aware of the existence of the

agreements attached as Exhibits "B" through "D" and the agreements entered into

between NRP and other members of the Development Team.

129. Each defendant, in pursuance of a common plan or design to commit

a tortious act, actively took part in it, or furthered it by cooperation or request, or provided

aid and encouragement to each of the other defendants, or ratified and adopted each of

the other defendant’s acts done for their benefit, and are therefore liable with each of the

defendants. Each defendant acted tortiously and one or more of the defendants

committed an act in pursuance of the common plan, design or agreement which

constitutes a tort.

130. The wrongful and illegal actions and conduct of Buffalo, Brown,

Casey, Smith, Stenhouse and the Jeremiah Partnership described in detail above are

actionable under the common law theories of tortious interference with contract and/or

prospective contractual relations, tortious interference with prospective economic

advantage and/or economic relations, and concerted action theory and/or civil conspiracy.

131. Buffalo is not responsible for the claims set forth in paragraph 130

above concerning the agreement attached at Exhibit "A" because it is a party to that

agreement. However, Defendants Brown, Casey, and Smith are responsible for the

claims set forth in paragraph 130 above concerning the agreement attached as Exhibit


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"A" because, as detailed above, defendants Brown, Casey and Smith failed to act in good

faith and committed independent torts and predatory acts directed at NRP for personal

pecuniary gain and/or for wrongful purposes. Buffalo is responsible for the claims set

forth in paragraph 130 above concerning the agreements attached hereto at Exhibits "B"

through "D" and the agreements entered into between NRP and other members of the

Development Team. Buffalo is also responsible for the wrongful conduct of Brown,

Casey, Smith, and its other employees pursuant to the doctrine of respondeat superior.

132. Consequently, NRP is entitled to recover compensatory damages of

at least $1,000,000.00 as permitted by law against Buffalo, Brown, Casey, Smith,

Stenhouse and the Jeremiah Partnership.

133. The conduct described herein was reckless, wanton, and carried out

in total disregard for the rights of NRP. As a result, NRP is entitled to recover punitive

damages against Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership in an

amount to be determined.

COUNT IV

RICO Claims Against Brown, Casey, Smith, Stenhouse, and the Jeremiah Partnership


through 133 above.

135. As described above, Brown, Casey, Smith, Stenhouse and the

Jeremiah Partnership conspired in various respects including to illegally demand a role

for Stenhouse on certain projects and later to decide whether to cause Buffalo to breach

its agreements and commitments for land development projects depending on whether


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the subject land developer complied with their unlawful and illegal demands to pay

monies to Stenhouse and/or affiliated organizations in order for such projects to proceed.

136. Pursuant to the RICO, the "enterprise" is Buffalo.

137. Pursuant to the RICO, Brown, Casey, Smith, Stenhouse and the

Jeremiah Partnership committed multiple acts of "racketeering activity," as set forth

above, in furtherance of the illegal scheme. Such activities, as described in detail above,

involved interstate commerce and include, but are not limited to, violations of the Hobbs

Act, 18 U.S.C. § 1951, 18 U.S.C. § 1341, 18 U.S.C. § 1343, and New York Penal Law §

200 et seq.

138. Pursuant to the RICO, the illegal activities of Brown, Casey, Smith,

Stenhouse and the Jeremiah Partnership constitute a pattern of racketeering activity as a

closed ended and/or open ended continuity and/or because they were used on NRP and,

upon information and belief, other developers involved in certain other projects that

proceeded within the City of Buffalo.

139. Even if the "pay to play" or "pay for votes" practice has ended,

Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership developed and

implemented this practice against NRP and, upon information and belief, others through

numerous threats and demands over a period of more than two years.

140. The illegal activities of Brown, Casey, Smith, Stenhouse and the

Jeremiah Partnership constitute a pattern of racketeering activity because, left

unchecked, it is reasonable to expect that such acts were the regular manner in which

such persons exercised their authority within the enterprise and implied a threat of


26

continuing improper activity. Moreover, left unchecked, the illegal activities of defendants

are likely to occur in the future.

141. In addition, the illegal activities of Brown, Smith, Stenhouse and the

Jeremiah Partnership constitute a pattern of racketeering activity based on the escalating

demands concerning the role of Stenhouse and the Jeremiah Partnership on the Project

and other development projects in Buffalo. Such escalating demands implied a threat of

continuing criminal activity.

142. Pursuant to the RICO, Brown, Casey, Smith, Stenhouse and the

Jeremiah Partnership participated in the affairs of the enterprise through the pattern of

racketeering activity described above.

143. By reason of NRP’s refusal to comply with the illegal demands and

"pay to play" scheme employed by Brown, Casey, Smith, Stenhouse and the Jeremiah

Partnership, NRP has been injured in its business and property in the amount of at least

$1,000,000.00.

144. By reason of the foregoing, NRP is entitled to a judgment against

Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership for their monetary

damages, plus treble damages, costs and reasonable attorneys’ fees and disbursements

incurred in prosecuting this action.


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COUNT V

42 U.S.C. §1983 Against Buffalo, Brown, Casey, and Smith


– 144 above.

146. Buffalo had and/or has an official custom or policy established by

Brown, Casey, and/or Smith that required NRP to comply with the illegal demand to pay

monies to Stenhouse and/or affiliated organizations in order for the Project to proceed.

147. In applying this official custom or policy to NRP, Buffalo, Brown,

Casey, and Smith were acting under color of state or local law and were "policymakers"

responsible for the custom or policy.

148. Application of this official custom or policy to NRP resulted in

depriving them of their rights protected by the Equal Protection and Due Process clauses

of the United States Constitution.

149. NRP was treated differently than other developers of projects in

Buffalo. When other developers found a way to pay monies to Stenhouse and/or

affiliated organizations, Buffalo, Brown, Casey, and Smith allowed their projects to

proceed to completion. Because NRP refused to make such payments, Buffalo, Brown,

Casey, and Smith maliciously and in bad faith intended to injure NRP and actively took

steps to kill the Project.

150. NRP had a federally protected property right. As alleged above, as

of May 2009, NRP had a binding agreement and commitment from Buffalo and, in

addition, fulfilled all necessary conditions and expended considerable sums, time and


28

resources included but not limited to architectural drawings, engineering and

environmental reviews etcetera in order for the Project to proceed. Likewise, as of May

2009 there were no outstanding issues concerning the Project when defendants Buffalo,

Brown, Casey, and Smith used their positions and influence to stall and ultimately kill the

Project. As a result, NRP was denied due process solely because it refused to comply

with the illegal demand to pay monies to Stenhouse and/or affiliated organizations.

151. The above actions of Buffalo, Brown, Casey, and Smith have

resulted in a denial of NRP’s rights under federal law pursuant to the Equal Protection

and Due Process clauses of the United States Constitution.

152. By reason of the foregoing, NRP is entitled to recover compensatory

damages in an amount in excess of $1,000,000.00 and attorney’s fees against Buffalo,

Brown, Casey, and Smith, and punitive damages in an amount to be determined against

Brown, Casey, and Smith.

PRAYER AND DEMAND FOR RELIEF

WHEREFORE, NRP respectfully requests that the Court:

a) On Count I: Enter judgment on behalf of NRP against Buffalo for

compensatory damages in excess of $450,000.00 together with prejudgment interest;

b) On Count II: Enter judgment on behalf of NRP against Buffalo,

Brown, Casey, and Smith for compensatory damages in excess of $450,000 together with

prejudgment interest;


29

c) On Count III: Enter judgment on behalf of NRP against Buffalo,

Brown, Casey, Smith, Stenhouse and the Jeremiah Partnership for compensatory

damages in excess of $1,000,000.00 and punitive damages;

d) On Count IV: Enter judgment on behalf of NRP against Brown,

Casey, Smith, Stenhouse and the Jeremiah Partnership for compensatory damages in

excess of $1,000,000.00 together with prejudgment interest, an award of treble damages

and attorneys’ fees and costs pursuant to the RICO;

e) On Count V: Enter judgment on behalf of NRP against Buffalo,

Brown, Casey, and Smith for compensatory damages in excess of $1,000,000.00,

attorney’s fees and punitive damages;

f) Awarding NRP its costs, disbursements, interest, and attorneys’ fees;

and

g) Awarding NRP such other and further relief as the Court deems just

and proper.

DEMAND IS HEREBY MADE, for a trial by Jury.

Dated: December 23, 2011 WEBSTER SZANYI LLP

Attorneys for Plaintiffs

By: s/ Thomas S. Lane

Thomas S. Lane Nelson Perel 1400 Liberty Building Buffalo, New York 14202 Telephone: (716) 842-2800 [email protected] [email protected]


mailto:[email protected]

mailto:[email protected]

Documents

Amended Complaint NRP v. Brown et al