The yearlong court battle between the Surf Lodge, Montauk's mecca for music and merriment, and the Town of East Hampton ended Monday afternoon in the courtroom of Town Justice Catherine A. Cahill, after the Lodge's new ownership group, Montauk Properties L.L.C., agreed during an early-morning conference in chambers to pay the town a record-setting $100,000 fine to cover 100 citations for town code violations. In return, the town has agreed to drop the remaining 500-plus citations against the business.
Richard Hammer of Biondo and Hammer in Montauk, an attorney for Montauk Properties L.L.C., now acting as lead attorney in the case, entered the court with the town's prosecutor, Robert Connelly, as well as East Hampton Town's director of public safety, Patrick Gunn. The three men sat in the front row, exchanging notes. Mr. Hammer was holding a check in his hand. Thomas Horn, who had represented the Surf Lodge's previous ownership group, Edgemere Montauk L.L.C., joined the three about 20 minutes later.
"Are you gentlemen ready on Edgemere?" Justice Cahill asked. The four men approached the bench.
They could be heard from the front row in court going over the details of the agreement. Even though a different ownership group is now in place, one of the keys to this settlement going forward, according to Mr. Connelly, who spoke to the press after the court session ended, was what he called "corporate substitution," allowed in this case because Montauk Properties L.L.C. had been a silent minority partner in the original ownership group.
"I think it is in your general interest to have this on file with the court," Justice Cahill could be heard telling Mr. Hammer. The justice then told Mr. Hammer that he had indeed, established continuity between the two ownership groups, and said, "You gentlemen initial it."
They signed a document indicating that the Surf Lodge had changed hands and that the new entity, Montauk Properties, was taking on its legal burdens and responsibilities.
The public portion of the session began with Justice Cahill asking about the sale. "Was it for the land or just the business?"
"The land," Mr. Hammer answered, adding that the transfer to Montauk Properties had taken place on April 27.
"The court has accepted the substitution," Justice Cahill said, and began the formal process of the Surf Lodge pleading guilty to 100 violations, each carrying a $1,000 penalty, with the town in turn dropping the remaining citations.
"And I sincerely hope we have a better season this year than we did last year, Mr. Hammer," she said.
When Mr. Hammer asked the justice whom to make the check out to, she replied, "The Town of East Hampton."
A few minutes later, he walked down the hall, check in hand, to the court clerk's office, making the settlement official.
The impetus to settle began on April 16, when Mr. Horn made a motion to the court to dismiss a number of the citations as illegally repetitive. During the 2011 season, the Surf Lodge was cited for more than 680 violations of town code, but many of those were repeat citations for the same uncorrected infractions.
On May 8, the East Hampton Town Zoning Board of Appeals voted 4-0 in favor of the Surf Lodge in its appeal of a determination by the town's senior building inspector, Tom Preiato, who had said that a mobile waiters' work station and dry-bar placed on the patio of the club would require a variance from the board before it could be legally used. Eric Bregman of Gilmartin and Bregman represented the Surf Lodge before the zoning board.
By reversing Mr. Preiato's determination, a number of the almost 700 citations the establishment had been hit with during the 2011 season would be rendered void, according to Mr. Bregman. Mr. Connelly confirmed Mr. Bregman's assertion last week.
The $100,000 fine is believed to be the highest ever paid in the town for zoning code infractions and matches the original settlement number that the town first offered to the previous ownership group, Edgemere Montauk L.L.C. in October.
"We don't expect to have these types of issues going forward," Michael Walrath, an Internet entrepreneur and head of Montauk Properties, said on Saturday.
Mr. Walrath, who owns a house in Montauk, recently purchased another restaurant in the hamlet, Lenny's, in the dock area, which he will reopen in the next couple of weeks as Swallow East, with James Tchinnis as chef de cuisine.
"It's never going to be about how do we make money this week, this year," Mr. Walrath said regarding the Surf Lodge, which first opened in 2008. "It's about the long haul."
Just as workers are now preparing for the new season by cleaning up and fine-tuning the Surf Lodge, Mr. Walrath said it was appropriate for the new ownership to clean up the legal mess it had inherited. The previous owners, which included Rob McKinley, Jamie Mulholland, and Steve Kamali, had frequent legal differences with the town, which snowballed over the course of 2011, degenerating into acrimonious confrontations in court early this year between Mr. Astarita and Justice Cahill.
"We want to work with the town, with the community," Jayma Cardoso, the maitre d' and face of the franchise (the lone holdover from the old ownership group), said during an interview last week. "Judge us by our actions," she said, "We want to live by the letter of the law."
“A repeat of last season and the town will be much more aggressive in exploring other avenues in [State] Supreme Court seeking injunctive relief,” Mr. Connelly said later that day. "The town won't stand for the flouting of the code and law." Going forward, he said, businesses that do so could expect quick proactive action from the town.