Huntington to pay Bethpage Federal Credit Union $2.7M to settle dispute over Thatched Cottage sale

The Town of Huntington is set to pay Bethpage Federal Credit Union $2.7 million to settle a lawsuit over the sale of the Thatched Cottage catering hall in Centerport, which closed in 2014 after declaring bankruptcy.

The credit union sued the town in 2016, alleging officials intentionally hindered the sale of the building during bankruptcy proceedings because of relationships some town employees had with Ralph Colamussi, the former owner of the venue. The suit was filed in State Supreme Court in Suffolk County.

In August 2022, a U. S. Bankruptcy Court judge for the Eastern District of New York ruled in favor of the credit union in the liability phase of the lawsuit after the case went to trial. 

Town Supervisor Ed Smyth said Oct. 2 it was in the town's best interest to settle the lawsuit with a mediator instead of waiting for a judge's decision. 

A court-appointed mediator in July helped the town and Bethpage reach a settlement, Smyth said.

Smyth, who was not in office when the lawsuit was filed, said Bethpage initially sought a settlement in excess of $6 million.

“The risk to the town of potential damages was great,” Smyth said.

The town board voted 5-0 at the Sept. 12 meeting to approve the settlement. Neither the town nor any officials admitted any liability, town officials said.

The town will tap into its fund balance to pay Bethpage, according to town documents.  The fund had a balance of $28 million at the end of last year, town officials said.

Darren Stakey, the attorney for the credit union, did not respond to requests for comment. 

Colamussi filed for Chapter 11 bankruptcy protection in 2014, citing storm damage to the property, Newsday has reported. 

The credit union alleged the engineering reports Colamussi provided to the town said the building was structurally unsound and led to the building being condemned — actions that interfered with the building being sold in a bankruptcy sale.

The town condemned the building four days before the sale, using the documents provided by Colamussi, Smyth said.

As its largest creditor, Bethpage stood to recover the largest portion of the debt had the sale gone through. 

Among the town officials named in the lawsuit were Colamussi's sister, Janet Rinker, who worked for the division of code enforcement. She is no longer is employed by the town, officials said. The only official who still works for the town who was named in the lawsuit is Joseph Rose, the town’s code enforcement bureau chief.

Rinker and Colamussi could not be reached for comment.

Town officials said Rose was not available to comment on the case.

Bethpage obtained the Thatched Cottage building in 2015. In 2016, the credit union sold it to Crest Group for $2.8 million and it reopened later as the Water’s Edge wedding venue under new management. 

The credit union lawsuit is one of two filed against the town over the condemnation.

R. Kenneth Barnard, the Chapter 11 trustee appointed in the bankruptcy case, also sued the town in 2016 alleging the condemnation interfered with the original sale. 

Barnard said he and the town settled for $117,500 in 2018 but declined to comment further.