NEWS

Costco dispute heading to court

Posted 9/8/21

By DANIEL KITTREDGE The fight over a proposed Costco in Cranston is heading to court. Massachusetts-based developer Coastal Partners last week filed suit in Superior Court, following through on its vow to pursue litigation if the city failed to meet the

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NEWS

Costco dispute heading to court

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The fight over a proposed Costco in Cranston is heading to court.

Massachusetts-based developer Coastal Partners last week filed suit in Superior Court, following through on its vow to pursue litigation if the city failed to meet the terms outlined in a June “demand letter,” which served as a procedural precursor to a lawsuit.

The complaint, prepared on Coastal Partners’ behalf by attorneys Robert Clark Corrente and Christopher N. Dawson of Wheelan Corrente & Flanders LLP, reiterates the central allegation laid out in the June letter – that the city’s current and immediate past mayors, Ken Hopkins and Allan Fung, engaged in “improper and unlawful interference” related to a zoning change necessary for the Costco project to proceed.

Their alleged goal, according to the suit, was steering Costco away from Coastal Partners’ planned Cranston Crossing development at the New London Avenue property that currently houses Mulligan’s Island Golf & Entertainment. Instead, the document alleges, the two men sought to direct Costco “to a different, and vastly inferior, site on Sockanossett Crossroad owned by Carpionato Group, a long-time political supporter and donor to both administrations.”

“The conduct of former Mayor Fung and current Mayor Hopkins was willful, wanton, and malicious,” the suit alleges.

In the June letter, Coastal Partners and its attorneys advised they were seeking $46 million in damages from the city. The recently filed Superior Court complaint does not explicitly reference that figure, although it mentions the general terms of the June letter and indicates Coastal Partners did not receive any response to that document from the city.

The “demand letter” was required under a section of state law that governs claims against cities and towns. The law provides municipalities with a 40-day window in which to respond.

“On or about June 7, 2021, Coastal, pursuant to [state law], delivered a letter to the City Council, Mayor Hopkins, and the City’s solicitor, in which Coastal provided a particular account of its claim, and demanded that the City pay Coastal its damages,” the complaint reads. “As of the date of this Amended Complaint, Coastal has not received a response to its June 7, 2021 letter.”

The Superior Court complaint sets out four specific counts against the city, alleging that Coastal Partners’ “procedural” and “substantive” due process rights were violated and that it was the victim of both “intentional” and “tortious” interference with contractual relations.

Online court records show a conference in the case is scheduled for the morning of Sept. 10 before Associate Justice Brian P. Stern.

Reached via email last week, Michael DiGuiseppe, managing partner of Coastal Partners, declined to comment further on the suit or the circumstances surrounding it.

Reached Tuesday, the Hopkins administration had no comment.

Fung, who left office as mayor in January, previously described the complaint letter from Coastal Partners’ attorneys – and the allegations made within the document – as “absolutely ridiculous,” “unfounded” and “from left field.”

“Mr. DiGuiseppe has not listened from day one, in the couple of meetings that I’ve had with him, and now wants to take a scorched earth approach with ridiculous allegations,” Fung said at the time.

Gregg Perry, a spokesman for Carpionato Group, also previously rejected the accusations in Coastal Partners’ demand letter as “ridiculous.” He acknowledged Carpionato at one point had discussions with Costco officials about bringing the wholesale club to Sockanosett Cross Road, but said a finalized agreement never materialized.

The Cranston Crossing project was the subject of a lengthy public hearing process that began during the summer of 2020 and continued into the early months of this year.

Coastal Partners, which had reached an agreement to purchase the roughly 55-acre Mulligan’s property, formally applied last year for a major amendment to the Mixed Use Planned District, or MPD, zoning that currently governs the site.

The MPD zoning is more specific and restrictive than the city’s general zoning districts. The current MPD at the site was adopted roughly two decades ago to allow for the transformation of the property from the undeveloped, state-owned “Cornfields” to its current use.

After a handful of delays and many hours of public hearings across several months, the city’s Planning Commission in December 2020 voted 6-1 to issue a negative recommendation on the zoning change request. In a memo to the commission, the Planning Department’s staff made no recommendation on the request, finding instead that a lack of clarity existed over whether the project was consistent with the city’s Comprehensive Plan.

Later in December 2020, just before the full City Council was set to vote on the matter, Coastal Partners withdrew the zone change application. That initiated a two-year window in which the Cranston Crossing proposal could not be reintroduced without a finding of “substantial” changes, as outlined in the city’s charter.

Coastal Partners sought such a finding earlier this year, filing a petition asking the City Council to approve new consideration of an altered version of the Cranston Crossing plan. In May, however, the council’s Ordinance Committee denied that petition on a 5-1 vote, halting any new review of the zone change.

The June letter and the recent Superior Court complaint outline the case DiGuiseppe and supporters of the project have made throughout the review process.

Both documents tout the purported economic benefits Cranston Crossing would provide to the city, including “hundreds” of construction jobs, up to 450 permanent jobs, and an estimated $800,000 annual increase in property tax revenue. The developer has also pointed to Costco’s reputation as a high-paying, high-quality employer.

The documents present Cranston Crossing as a “long-term, highly-productive use” of the Mulligan’s site. The owners of the entertainment complex have publicly said the current operation is financially unsustainable.

The complaint alleges that votes against the Cranston Crossing proposal came “after the prior and current mayoral administrations acceded to pressure from a powerful donor and unlawfully directed City personnel to deny Coastal’s application.”

“In doing so, the City violated Coastal’s constitutional rights and interfered with Coastal’s contractual and prospective business relationships,” it continues. “As a direct and proximate result of the City’s unlawful conduct, Coastal has suffered damages.”

The complaint also reads: “Simply put, the Ordinance Committee and Plan Commission process and decision were fundamentally and unlawfully flawed.”

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