A Nassau County corporation is suing a Westhampton Beach attorney, seeking $8.6 million in damages, alleging that he duped investors into buying nearly 6 acres of undevelopable land in North Sea earlier this year.
In a lawsuit filed this month in Nassau County Supreme Court, the partners of the corporation—listed only as U & Me Homes of Westbury—are charging that Dwayne Wagner of East Quogue deceived them into buying the land on which they intended to construct a single-family house. The corporation acquired the landlocked property at 67 Laurel Valley Drive for $575,000 in January, spending more than 11 times what Mr. Wagner, who has a law office on Main Street in the village, had paid for the land when he acquired it a decade earlier under the name Route 58 Holdings LLC, according to Southampton Town records. He spent $50,000 on the land at the time, records indicate.
Building restrictions, however, prohibit all development on the property, and the lawsuit alleges that Mr. Wagner, as well as the title insurance agent, conspired to purposely hide the covenants placed on the deed to ensure that the deal would be completed. The lawsuit also lists the Stewart Title Insurance Company in Melville and its agent, Abstracts Inc. in Riverhead, as co-defendants, with U & Me Homes also seeking millions in damages from both of those parties.
“There is absolutely no merit to the allegations in the complaint,” Mr. Wagner wrote in an email on Friday, confirming that he had been served with the lawsuit. “I am engaging counsel to respond to the complaint and am very confident it will be expeditiously dismissed. I will be requesting that the court sanction the attorney who drafted the complaint for filing a frivolous lawsuit against me.”
Mr. Wagner, the former president of the Greater Westhampton Chamber of Commerce, did not respond to additional questions asking if he was aware of the restrictions placed on the land or why they were in place.
The lawsuit alleges that Mr. Wagner, as the principal of Laurel Valley Holdings Inc., directed Abstracts Inc. to issue U & Me Homes a title report for the property in September 2012. The corporation agreed to close on the sale in January, and the Stewart Title Insurance Company issued a Policy of Title Insurance at that time, according to the complaint.
It was not until after the sale was complete that U & Me Homes officials, while applying for permits from Southampton Town to begin construction on a house, learned that they could not build on the land. Lee Mondshein, the attorney representing the plaintiffs who has an office in Melville, said Tuesday that the title report made no reference to such building restrictions. Had his clients known about the restrictions, they would not have made the purchase, according to Mr. Mondshein.
When Suffolk County transferred the property in 2000 to its previous owner, BPC Holdings Inc., the deed contained a restriction that “there shall be no development rights as to this parcel other than the right to construct a 50-foot westward extension of Laurel Valley Drive … ” the complaint states. Mr. Mondshein said he still does not know why such restrictions were placed on the land.
Calls placed to the Stewart Title Insurance Company were not returned this week.
Officials from Abstracts Inc. declined to comment, citing the ongoing litigation.
The complaint also states that Mr. Wagner and Abstracts Inc. knew that the owners of the corporation were purchasing the property with the intention of building a home, and it alleges that employees of Abstracts Inc. conspired with Mr. Wagner to “conceal public records with the specific intent of defrauding, deceiving and misleading” the corporation into buying the property.
“The bottom line is, Wagner knew about it,” Mr. Mondshein said, referring to the building restrictions.
The attorney added that his clients, whom he would not identify by name, believe that the title insurance company was also deceived by Mr. Wagner and the company’s agent, Abstracts Inc. He added that the title insurance company is still at fault because it failed his clients and “refused to honor the loss.” Stewart Title Insurance Company, Mr. Mondshein said, has refused to pay claims that should be covered by the title insurance that it underwrote.
“I don’t believe Stewart Title had any knowledge,” he said. “They were equally a victim.”
The complaint seeks $12.6 million in damages and attorney fees from Abstracts Inc. for four causes of actions, $4.6 million from Stewart Title Insurance for two causes of action, and $8.6 million from Laurel Valley Holdings Inc. and Dwayne Wagner for three causes of action.
Online records show that Michael Axelrod of Westbury as the contact for U & Me Homes, though he could not be reached for comment.
Southampton Town records show that six years after Mr. Wagner first purchased the property in 2003 under Route 58 Holdings LLC, Suffolk County acquired the land for delinquent taxes. In 2010, Mr. Wagner paid the $22,276 in taxes owed on the property and then reacquired it from the county. In 2012, he transferred the land to Laurel Valley Holdings LLC.
Mr. Mondshein said his clients were not privy to such information at the time of the purchase. The title report, he said, simply certified that Laurel Valley Holdings had the ability to convey the title.
“Had we seen it, it might have raised a red flag,” he said. “But we relied on the title company and [Abstracts].”