Lost Lake Holdings LLC v. Town of Forestburgh

Background

Lost Lake Holdings LLC, Mishconos Mazah LLC, Rabbi Mordechai Halberstam, and Rose Halberstam sued the Town of Forestburgh, the Forestburgh Town Board, the Forestburgh Zoning Board of Appeals, and several Town officials and employees. The plaintiffs allege that the defendants prevented construction of the Lost Lake Resort housing development and violated rights under the federal and New York Constitutions, the Fair Housing Act, 42 U.S.C. § 1982, and the New York State Civil Rights Law. They also assert claims for trespass, interference with a prospective business advantage, and a request to annul the zoning board’s permit decision under New York’s Article 78 procedure.

The plaintiffs purchased the Lost Lake project in 2020. After the Town’s building inspector denied several permit applications, the Zoning Board of Appeals affirmed those denials. The plaintiffs allege the defendants’ actions were motivated by hostility toward Hasidic Orthodox Jews. The defendants contend, among other things, that the plaintiffs’ proposed development differed substantially from the project previously approved by the Town and that construction proceeded without required permits. The parties also dispute whether the plaintiffs’ infrastructure work was authorized.

Motion and jurisdiction

The plaintiffs moved for a preliminary injunction, which is a temporary court order intended to prevent ongoing harm while a case continues. They asked the court to stop the Town from enforcing orders prohibiting development, requiring supplemental environmental review under New York’s State Environmental Quality Review Act, and continuing a state-court action seeking to stop construction.

The defendants argued that the claims were not ripe, meaning the dispute was not sufficiently final for federal review. The court rejected that argument. It concluded that the parties had taken clear positions, that further applications or appeals would be a useless and perfunctory exercise, and that the plaintiffs were not required to file an Article 78 proceeding in state court before bringing their federal claims.

Standard for a preliminary injunction

The court explained that a preliminary injunction is an extraordinary remedy. The moving party must show irreparable harm—harm that cannot be adequately repaired with money damages—and either a likelihood of success on the merits or sufficiently serious legal questions combined with a balance of hardships strongly favoring the movant. Because the requested order would change the status quo by allowing construction to continue, the plaintiffs had to make a clear or substantial showing that they were likely to succeed.

Irreparable harm

The court held that the plaintiffs had not established irreparable harm. Regarding their constitutional claims, the court found that the record did not show that the defendants had prevented the plaintiffs from freely practicing their religious beliefs. The court characterized the alleged injury as economic loss connected to a secular development project, which could be compensated with money damages if the plaintiffs ultimately prevailed. The court also stated that the plaintiffs had not adequately explained how an injunction would cure the alleged stigma.

The court likewise rejected the plaintiffs’ claim that construction delays and the supplemental environmental review were irreparable. The plaintiffs did not allege that the delay would make future development impossible or infeasible, and the court found no showing that monetary damages could not make them whole.

The court also declined to presume irreparable harm based solely on the plaintiffs’ Fair Housing Act and Section 1982 claims. It distinguished cases involving immediate threats of homelessness or organizations providing urgently needed housing. The court found that the plaintiffs had not sufficiently shown that the development was intended primarily to serve Hasidic Orthodox Jews, that there was an immediate unmet housing need, or that the proposed injunction would remedy such a need.

Disposition

The court denied the motion for a preliminary injunction. Because the plaintiffs had not shown irreparable harm, the court did not decide whether they had established a sufficient likelihood of success on the merits. The defendants were ordered to answer, move, or otherwise respond to the amended complaint by January 29, 2024.