This Petition and responding Motion to Dismiss present a classic case of conflicting statutory interpretation. Plaintiff is a developer suing the town for return of a $75,000 escrow account deposit. At issue are opposing interpretations of the governing town code ordinance, and the factual circumstances each party cites to support their respective positions.

The underlying facts are not in dispute.

Queen's Landing subdivision is a 150-lot residential development constructed by Petitioner on approximately 34 acres in the Town of West Seneca.

The town code requires a maintenance agreement for all stormwater management facilities (Section 102A-13 [D]), but permits, in lieu of a maintenance agreement, "dedication of any . . . future stormwater management facility . . . provided such facility meets all the requirements of this chapter . . . .The owner shall provide an engineer's report in order to establish a drainage benefit area (DBA) (emphasis added)(Section 102A-13[E]).

Subsection (2) further provides: "Estimate of cost: the net amount to be assessed on the lots or parcels for the total cost of maintenance and servicing for each fiscal year . . . . For future facilities the developer shall be required to pay an initial fee of $500 per lot or parcel in an escrow account that is created for said drainage benefit area; accruing interest shall remain with the escrow account (emphasis added).

Petitioner therefore deposited $500 for each of the 150 lots, for a total of $75,000 into an [*2]escrow account with the Town.

Further, to comply with the town code requirements, petitioner engaged Nussbaumer & Clark Inc. as project engineers to prepare the required engineer's report. The town's attorney at the time, Tina M. Hawthorne, Esq., provided direct guidance to the project engineers regarding the required form and content of the report. In fact, Ms. Hawthorne sent an e-mail to the project engineers stating: "I have attached a sample of the engineers report I am looking for. Let me know if you have already filed a report like this with the town." The email attachment from a different engineer's report concerning a different development read:

"In accordance with Town policy, [the developer] will be requiredto place $500 per lot . . . in an escrow account. The escrow account will cover expenses for operation and maintenance of the DBA, until all lots within the development have been sold (emphasis added)(page 3).

The engineer's report at bar incorporated the identical language provided by the Town's attorney: "Until all lots within the subdivision have been sold." Reading the engineer's report language in conjunction with the West Seneca Code, this was evidently a sunset provision meant to fade out after all 150 of the lots were sold, with the expense of the future stormwater management facility to be "assessed" to the 150 new lot owners.

Following completion of the engineers report, the town board held a public hearing to consider approval of the Queen's Landing DBA. Board Meeting Minutes reflect that the Supervisor moved to accept the Queen's Landing development, "with the exception of street lighting which will require the set up of an escrow account" (NYCEF doc # 6). Through an exchange between the Supervisor and Code Enforcement Officer, it became clear that the streetlights and retention ponds were to be funded by tax assessments on the DBA parcels. The supervisor asked how the "tax" is determined, and the Code Enforcement Officer replied there is a nominal fee per parcel. Thereafter, the Town Board unanimously approved the DBA.

Approximately 8 months later, petitioner completed the sale of all 150 parcels —now ready to be taxed to cover the expense of the stormwater management facility —and requested return of its $75,000 from the Town's escrow account. The Town refused. In correspondence with the petitioner, the Town Engineer and Town Attorney denied return of the monies from the escrow account, contending the monies were needed to cover future maintenance of the stormwater facilities. Moreover, they stated, return of the escrow account would be in violation of the Town Code.

The developer now sues. The Article 78 Petition claims arbitrary and capricious and illegal action; violation of lawful procedure; error of law; and operating in excess of jurisdiction.

In the first layer of analysis, Courts look to the plain meaning of a statute. As the Court of Appeals has held, "[o]ur cardinal function in interpreting a statute should be to attempt to effectuate the intent of the legislature, and where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used" (citations omitted, Matter of State of NY v. Ford, 74 NY2d 495 [1989], People of the State [*3]of NY v. Dennis Kleber, 168 Misc 2d 488 [Nassau County 1996]). Under the well-settled maxim of contra proferentem, if there is any doubt or uncertainty as to the meaning of the disputed language... all ambiguity must be resolved against the [drafter] who prepared it (citations omitted, Guy Graff v. Marvin Billet, 64 NY2d 899 [1985]).

Applying this fundamental concept of looking to the plain meaning of the words in statutory interpretation, it is unmistakable to find any intent of the part of the drafters to retain the money deposited into an escrow account by a developer after all the lots had been sold. In particular, Black's Law Dictionary (11th edition) defines the concept of "escrow" as an asset to be held "until the performance of a condition, and then . . . delivered to the grantee, promisee, or obligee." There is absolutely no reading of the definition that "escrow" means permanent, or anything other than non-temporary. In fact, the concept of escrow is utilized on a regular basis by most all real estate lawyers as a temporary hold on funds until their ultimate disposition can be determined.

Furthermore, the principles of contract construction provide additional guidance. As the Court of Appeals has held, in cases of doubt or ambiguity, the language must be construed most strongly against the party who prepared it, and favorably to a party who had no voice in the selection of its language (Jacobson v. Sassower, 66 NY2d 991 [1985]; accord Graff v. Billet, id.). Furthermore, if several constructions are possible, the Court can look to the surrounding facts and circumstances to determine the intent of the parties (67 Wall Street Co. v. Franklin National Bank, 37 NY2d 245 [1975]). And it is well-settled that any ambiguities in an agreement are to be interpreted "most strongly against the draftsman," as long as the particular interpretation would not lead to an absurd result (citations omitted, William A. White/Tishman East Inc. v. Stanislava Banko et al., 171 AD2d 401 [ 1st Dept. 1991]).

At bar, the Town's best-case scenario is that after all the lots are sold, the Town Code mandates retention of the escrow deposit, which by its definition it patently does not. But it's worst-case scenario is that the applicable provisions of the Town Code are ambiguous and debatable. In such a scenario, application of the case law above to the facts at bar mandates construction against the drafter of the Code, which is obviously the Town.

Next, it cannot be disputed that the Town itself, through the Town's own attorney, provided the exact language for the engineer's report and guidance for the form and content of the report. That language provided by the Town itself expressly stated: "The escrow account will cover expenses for operation and maintenance of the DBA, until all lots within the development have been sold" (emphasis added). First, the natural implication of that sentence is that the money is to be returned to the petitioner. But just as compelling is that this interpretation was provided by the Respondent Town itself. To provide one interpretation first and then a contradictory interpretation later is the Town refuting its own position. Such contradictory interpretations obliterate any reliability and credibility on the part of the Town. The Town is now talking out of both sides of its mouth.

Last, the Town Supervisor and Town Board confirmed that expenses for the DBA and stormwater management facility would shift from the developer's escrow account to the 150 new [*4]homeowners when the Supervisor asked the Code Enforcement Officer at the public meeting how the "tax" is determined. The CEO responded that there would be a "nominal fee per parcel," implying that each parcel owner would pay their fair share. The CEO did not respond that the money would come from the developer's escrow account or even that the already deposited $500 per parcel by the developer would be applied. In effect, this interchange between officers of the Town served to ratify the statutory interpretation that (a) this was a tax; (b) that the new amount would be "nominal" compared to the $500 already deposited; and (c) that it was the parcel owners to pay rather than the developer.

Finally, the Town contends that the Petitioner violated the four-month statute of limitations (NY CPLR Art. 78), contending that the Town's notification of denial to the developer occurred with the Town Engineer's letter dated December 3, 2024. The developers filed the Petition on May 30, 2025, 6 months later. However, the developers in effect appealed that denial by applying to the chief law enforcement officer of the Town, the new Town Attorney. He considered the appeal and denied it by letter dated February 25, 2025, some 3 months before the filing of the Petition. Accordingly, the Town Attorney's letter was the final administrative determination starting the time clock, and the four month statute of limitations was not violated (See also CPLR 2004 providing trial courts discretion to determine what is just and good cause, and A & J Concrete Corp v. Allen Arker, 54 NY2d 870 [1981], reaffirming the trial Court's discretion where the delay was neither willful nor lengthy—both cited by the respondent Town).

In conclusion, Petitioner has proven that the Town's action was arbitrary and illegal; a violation of lawful procedure; and constituted an error of law.

The Petition is therefore granted.

Petitioner is directed to submit an Order on notice to opposing counsel within 30 days. Respondents have 30 days therefrom to file a Notice of Appeal.