By Mara Certic
In an April 21 decision, New York State Supreme Court Justice Paul J. Baisley Jr. ordered former East Hampton Town Justice Catherine Cahill to pay back over $1 million of funds her late husband, Marvin Hyman, an attorney, had deposited into their personal joint account from a land sale shortly before his death in December 2005.
Under the decision, Ms. Cahill, the first woman to serve on the town’s justice court, must pay $1,045,400 plus interest to Nelson Gerard, her late husband’s former partner in Buckskill Farm, LLC.
In June 2003, Mr. Hyman and Mr. Gerard created the limited liability corporation and purchased a 9.6-acre parcel of vacant land in East Hampton. According to court records, Mr. Gerard contributed $2 million and Mr. Hyman $350,000 toward the purchase.
According to a civil suit brought by Mr. Gerard, the agreement between Mr. Hyman and Mr. Gerard required Mr. Hyman to “take all steps necessary or desirable at his own cost and expense” to get a subdivision of the parcel into as many as eight lots, including a required agricultural preserve, approved by the East Hampton Town Planning Board.
In the agreement, several different distribution scenarios were offered depending on how many lots the town permitted in the subdivision. If only four or five lots and a reserve area were allowed, all the lots were to be owned by Mr. Gerard, with Mr. Hyman receiving only the reserve area. In February 2004, Mr. Hyman wrote to Mr. Gerard stating that a proposed eight-lot subdivision plan had been submitted for approval and also mentioning that the town had shown interest in buying four of the lots as well as the agricultural reserve area—leaving Buckskill Farm, LLC with just four smaller lots.
In his letter, Mr. Hyman wrote, “if we continue to pursue the town purchase we should discuss the financial implications on the members that such a purchase would have. As we did not consider this possibility in the original agreement, we should address the same as soon as possible.”
According to Mr. Gerard’s suit, he offered his partner the option of receiving either $850,000 or one of the remaining four lots in exchange for his share of the LLC. Mr. Hyman presented Mr. Gerard with a proposed contract that would leave Buckskill Farm, LLC with the southern four lots of the property. For $1.9 million, the town would buy the remaining 6.8-acre area through a Community Preservation Fund purchase—all of which eventually became known as the agricultural reserved area – to lease to an organic farmer.
During the time of the town purchase, Ms. Cahill was serving as a town justice. She served on the bench for 20 years before retiring from the position last year.
In September 2005, Mr. Hyman closed the sale with the town, without his partner’s knowledge, according to Mr. Gerard’s suit. He deposited the money into the LLC’s bank account and then “drew a check on the Buckskill Farm account for virtually the entire amount of the sale proceeds, payable to himself, which he alone signed, and then deposited into a joint account he maintained with his wife, Catherine Cahill,” the suit states.
Shortly before his death, Mr. Hyman testified that he had thought, based on the operating agreement, that he was to receive all of the proceeds “because the operating agreement provided for him to receive the reserve area in a five or four-lot subdivision.”
The court ruled, however, that Mr. Hyman had adopted a “self-serving interpretation of the agreement.”
When Mr. Hyman died in 2005, Ms. Cahill inherited the case along with her husband’s estate. During a sworn deposition she invoked spousal privilege when asked questions about her husband’s business agreements, later waiving that right in trial. The court agreed with Mr. Gerard that “it is improper for a party to obstruct discovery by the assertion of a privilege at a deposition only to waive it and subject the opponent to surprise testimony at trial.”
The court found both Ms. Cahill’s deposition and trial testimonies “as a whole to be not credible,” in particular, her stated ignorance regarding certain matters “fully within the comprehension of any lawyer or judge.”
Ms. Cahill has been ordered pay Mr. Gerard 9 percent interest on the $1,045,400. Her attorney, Stephen Angel, of Riverhead, could not be reached for comment by this paper’s deadline.