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Top court: Nassau Co. must pay MTA $26M after long-running lawsuit

New York’s top court on May 2, 2013

New York’s top court on May 2, 2013 dismissed a Nassau County lawsuit against the Metropolitan Transportation Authority, costing the county almost $26 million. (Nov. 5, 2012) Photo Credit: Faye Murman

ALBANY -- New York's top court dismissed a Nassau County lawsuit Thursday against the Metropolitan Transportation Authority, leaving the county on the hook for almost $26 million and sparking a war of words between two county executive candidates.

It's a tangled case that began in the Gulotta era of Nassau government and involved the fiscally strapped county getting a quick cash infusion -- in return for a promise to pay back double to the MTA.

Nassau in 1996 agreed to pay the MTA $102 million as reimbursement for projects that "benefited the county" and, in return, the MTA agreed to give Nassau $51 million immediately as a cash infusion, according to court documents. Then-County Executive Thomas Gulotta, a Republican, used the money to plug county deficits and Nassau issued bonds to raise the $102 million.

In 2001, Nassau stopped making payments to the MTA on the remaining amount of the debt -- after then-county Comptroller Fred Parola raised questions about the deal and filed a lawsuit claiming the 1996 agreement was illegal and unenforceable.

In 2008, the MTA filed a counterclaim against Nassau for breach of contract and violation of fiduciary duty.

In 2011, a trial court ruled in favor of the MTA, awarding $18.3 million for its counterclaims and authorizing it to proceed with other projects not to exceed $7.36 million -- with Nassau footing the bill. Last October, the midlevel Appellate Division affirmed the lower court ruling.

Thursday, the state's highest court dismissed Nassau's request for appeal.

"The MTA is gratified that the state courts are requiring Nassau County to live up to its obligations under our agreements," MTA spokesman Adam Lisberg said in an email.

An aide to County Executive Edward Mangano blamed the Republican's predecessor, Democrat Thomas Suozzi.

"This ruling by the Court of Appeals brings an unfortunate end to a major mistake by the Suozzi administration in allowing a dead litigation . . . to be resurrected and then spending the bond proceeds earmarked to pay these charges to fill a budget gap," County Attorney John Ciampoli said in an email. "The taxpayers are now stuck with a $26 million bill because of this ill-advised maneuver."

Suozzi, who is in a Democratic primary against businessman Adam Haber for the right to challenge Mangano this fall, said responsibility rested with Mangano and Gulotta. "They love to borrow money, push the costs on to future generations, claim they freeze taxes and then blame somebody else for their problems," Suozzi said.

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