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Apr 27, 2018 3:28 PMPublication: The Southampton Press

Sagaponack White Family Loses More Land, And Family Home, In Court

The White and Petrello properties in Sagaponack.
Apr 27, 2018 3:36 PM

One of Sagaponack’s founding families was forced by a court to sell the family homestead to a Texas businessman last week in the latest upheaval stemming from a 20-year legal saga that has embroiled the family and a former friend.

Last week, with the court-ordered closing looming on Friday, the four children of the late John C. White and his wife, Elizabeth, emptied their belongings from the property and the farmhouse their great-grandfather, John E. White, had built in the 1880s, before it was turned over to Anthony G. Petrello, the president and CEO of Nabors Industries, a giant Houston-based oil and gas drilling company.

According to a March 8 ruling by federal District Court Judge Denis R. Hurley, Mr. Petrello will have to pay the family a little more than $1.3 million for the house and the approximately 3-acre parcel of the family’s land it sits on. The judge set that price because it was the appraised value of the land in November 2000, the point at which, Mr. Petrello’s attorneys argued in court, the Whites officially violated a right of first refusal agreement they had with Mr. Petrello regarding the future sale of any of their land.

“It is just so sad—stomach-turning,” said a woman who was walking on Sagaponack Main Street past the farmhouse on Thursday. She said she lived nearby but did not know members of the family and that she had heard of the situation from other neighbors. She asked not to be named because, she said: “I don’t want to get sued too.”

“To think that someone could be that vindictive, so … it’s almost evil, you know,” she added. “It’s just very disheartening.”

Members of the White family declined to comment on the recent ruling or their legal struggles with Mr. Petrello and his wife, Cynthia.

The Petrellos and the Whites have been locked in court battles since 2001 when then-family patriarch John C. White tried to back out of an agreement to sell 9.5 acres of the family’s land to Mr. Petrello, because during the long planning process to subdivide out the land for Mr. Petrello its value had soared to many times the agreed-upon sales price.

Mr. Petrello sued, and in 2009 won the right to execute the purchase of the land for the approximately $2 million price agreed to in 1998. The family counter-sued for fraud, saying the drafting of the contracts was orchestrated almost entirely by Mr. Petrello himself and that the late Mr. White had, naively, trusted verbal agreements with him to protect the family’s best interests. They lost the fraud case because they had been represented by an attorney—P. Edward Reale of Twomey, Latham, Shea & Kelley—in crafting the agreement. They have since also filed a suit against Mr. Reale’s firm for malpractice, which is still pending.

As part of the original deal, Mr. Petrello—who entered the sale negotiation in 1995 as a trusted friend who had long rented a tiny cottage on the land he was about to buy—had also secured a right of first refusal to the purchase of any other acres of the family’s holdings, guaranteeing him the right to match any other offer made for any of the family’s real property.

After the 2009 ruling that forced the family to sell the 9.5 acres to him, Mr. Petrello sued again, this time claiming the right to other parts of the family’s remaining farmland, by virtue of the first refusal clause in the original contract.

His attorneys presented arguments that a collection of trusts the family had set up, and amended between 2000 and 2006 to divide the remaining land holdings, had constituted transfers of the land that violated the first refusal clause.

Some had surmised at the time that Mr. Petrello might even be able to claim the land at no cost, since there had not been a sale price connected to the transfers into the trusts and the first refusal clause gave him the right to match whatever sale price had been offered by another potential buyer.

The March ruling by Judge Hurley pertains only to the Petrellos’ claim to the farmhouse parcel, known as Lot 1 in the subdivision, giving Mr. Petrello ownership now of four of the seven lots the family’s land was divided into.

In his ruling, Judge Hurley pointed to a particular phrase in the language of one of the trusts, that did, in his reading, violate the right of first refusal in the contract with the Petrellos. Along with naming the four children of the late Mr. and Ms. White, the trusts set up in 2000 also list unspecified “family and close family friends” as the beneficiaries of some 20 percent of the trust.

The judge said that while the family claimed the non-related members of the class of beneficiaries should only be calculated at 8.8 percent of the overall trust’s assets, nothing in the trust documents offers evidence that such a percentage is specific. And since the first refusal agreement would be triggered if the family’s percentage of ownership dropped below 90 percent of the land, the clause became effective when Lot 1 was transferred to it on November 28, 2000.

“While the defendants go to great lengths to minimize these beneficiaries of the [trust], the documentation submitted reveals that the family and close friends beneficiaries owned a 20 percent interest in the trust and had withdrawal and remainder rights,” the judge wrote. “In sum, under the unambiguous language of the contract, [the limited partnership] does not qualify as a ‘related’ party and therefore the November 2000 transfer triggered the Petrellos’ right of first refusal.”

The judge nodded in his ruling to the existence of more claims that may be forthcoming to court scrutiny as well. Mr. Petrello has also sued the family for damages, in the form of compensation for lost rental revenues on the houses he could have built on the 9 acres had the legal fight not blocked him from proceeding for so many years. The original claim cited damages of $5 million, an amount that is likely to have ballooned to well more than that if the case is pursued.

An attorney for Mr. Petrello, David Berg, declined to comment on the recent ruling or the still pending legal claims against the Whites.

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"...like all the local here I've had to sell my home, too proud to leave I worked my fingers to the bone..."
By Aeshtron (431), Southampton on Apr 27, 18 4:16 PM
The Whites keep losing court battles because they do dumb things and hire bad lawyers to get them out of it. It's a shame to watch the current generation greedily bumble their way to profound riches on the backs of their forefather's hard work.
By even flow (1023), East Hampton on Apr 27, 18 4:54 PM
1 member liked this comment
The remarks of a newbie who falls in line with a lying shark.
By summertimegal (97), southampton on May 4, 18 10:16 AM
1 member liked this comment
I'm glad I hit a nerve. It's because I'm right. Don't sell your land if you don't want to sell your land. The local old timers didn't work themselves to death so that our local laziest generation can waste the proceeds on crappy lawyers. Save your juvenile anger for the aarp website.
By even flow (1023), East Hampton on May 4, 18 10:38 AM
Disgusting NIMBYs. They bring nothing good to the area and cheat the locals. This soulless one aspires to be as foul as Rennart. He’ll tear down that historic family home to build some hideous monstrosity.
By localEH (427), East Hampton on Apr 27, 18 5:54 PM
hopefully Sagaponack village with deem historic and prevent it.. watch for the fire
By xtiego (698), bridgehampton on Apr 27, 18 7:37 PM
1 member liked this comment
There is something very wrong with the judge.
By pigroast (100), East Quogue on Apr 27, 18 9:11 PM
2 members liked this comment
Feels like a SLAPP in the face.
By Mr. Z (11847), North Sea on Apr 27, 18 10:21 PM
How much did Chris kelley and his firm get paid? Follow the money.
By mellowman (6), east hampton on Apr 27, 18 10:47 PM
Some times it’s better not to have too much riches.at least you do not have to deal with land grabbers and incompetent lawyers.
By watchdog1 (543), Southampton on Apr 28, 18 7:38 AM
How much of the $1.8 mil is Judge Hurley getting? Or maybe no money, just a couple weekends in the Hamptons put up by Petrello in the house.
By theman (5), southampton on Apr 28, 18 11:06 AM
Ummmm......who cares?
By DiseaseDiocese (668), Riverhead on Apr 28, 18 7:12 PM
Reading the article carefully . . .
.
.
.
.
It appears that the source of the problems here was the contract signed in 1998, perhaps without full and complete legal advice.

Hard to “un-do” a binding legal document, as sad as the result is.

Know the difference between a dead snake and a dead attorney on the road?

There are skid marks in front of the snake!

By PBR (4956), Southampton on Apr 29, 18 8:45 AM
1 member liked this comment
Well stated, PBR! We, Hamptonians abroad, are too familiar with such land clenching deals. Elderly, Infirm or Naïve land owners should not ever be placed in the unfortunate position of dealing directly with savvy outsiders...without the benefit of second opinion from younger members of their family. As they say, here, in The Republic of Ireland: Land is a Scarce Commodity: God's not making more of it, any time soon!" My Heart, as a rural Irish dweller, bleeds for all members of the White ...more
By Maia (2), Southampton on May 4, 18 2:18 PM
As I understand many people tried to assist the whites but whites daughter stood in the way.
By Summer Resident (251), Southampton Town, NY on Apr 29, 18 2:51 PM
Years ago, I got ripped off by an attorney I hired. It wasn’t a real estate matter, but a simple matter that I should’ve handled myself. I decided to take the easy route and pay someone to handle it for me. The result was disappointing as the case was closed due to the attorney’s negligence. I took the attorney to court, but because I didn’t know how to represent myself, I lost. I was angry. Then a relative of mine that is quite religious told me, “I know you think ...more
By pigroast (100), East Quogue on Apr 29, 18 11:22 PM
Please follow the story SH Press and let us all know when the Petrello family moves in. Hopefully, a nice demonstration of people like those who frequently picket and harass Republican donors who live on Meadow Lane can be there to welcome the scumbags to the neighborhood.
By BillWillConn3 (180), Southampton on Apr 30, 18 7:11 PM
2 members liked this comment
Each of you, hard working locals could take a leaf out of the revenge book from Ireland! What we, Locals, do when an outsider rips off one of our own (let alone, an Historic Family, salt of the earth, type like the Whites)...is to consistently over charge, ignore, freeze out, obstruct or generally inconvenience the "blow in" folks. In that way? The new property owners learn very quickly that they must forever "compensate" for their ill advised, original actions. Sometimes, indeed, such "freezing ...more
By Maia (2), Southampton on May 4, 18 2:32 PM
Absolutely the meanest thing!!!!!!!!!!!! Cannot put into words I am thinking about the latest robbery perpetrated upon the true locals of Sagaponac.
By summertimegal (97), southampton on May 3, 18 9:13 AM
1 member liked this comment
Beware of Strangers Bearing Gifts...
By knitter (1941), Southampton on May 3, 18 1:05 PM
There is no conspiracy here. The Whites sold their land and got cold feet after it was too late.
By even flow (1023), East Hampton on May 4, 18 10:41 AM