City moves to vacate lawsuit over Costco

Posted 11/8/23

On October 16 the city filed for summary judgment in the $46 million lawsuit it faces over allegations that Mayor Ken Hopkins and former Mayor Allan Fung conducted “improper and unlawful …

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City moves to vacate lawsuit over Costco


On October 16 the city filed for summary judgment in the $46 million lawsuit it faces over allegations that Mayor Ken Hopkins and former Mayor Allan Fung conducted “improper and unlawful interference” of zoning changes, necessary for Costco to build on its originally planned site.

The lawsuit, filed by Massachusetts-based developer Coastal Partners in September of 2021, alleges Hopkins and Fung used their influence to steer Costco away from Costal Partners’ planned development site on New London Avenue, home of Mulligan’s Island, by using their influence to prevent necessary zoning changes for the project in order to redirect the deal from its proposed site to a new location on Sockanossett Crossroad owned by the Carpionato Group, which is a long-time supporter political supporter and donor to both the Fung and Hopkins administrations.

Summary judgement, according to is “a court order ruling that no factual issues remain to be tried and therefore a cause of action or all causes of action in a complaint can be decided upon certain facts without a trial.”

The city argues there is no substantial evidence presented by the plaintiff that would prove their case. The plaintiff, Coastal Partners, disagrees.

“From the city you’re not going to get any comment on pending lawsuits,” Chief of Staff Anthony Moretti said when asked about the pending motion. “After all, any information that gets out there can only hurt the case. The other side can say whatever they want but the city will have no comment on the case.”

What happened when it was filed?

“We were kind of surprised at the, what I consider, corrupt process that the city followed and that the mayors followed,” said Coastal Partners II LLC Managing Partner Michael DiGuiseppe. “It was so egregious and so in the open that it just didn’t make any sense.”

DiGuiseppe said that it appears Hopkins and Fung were supported politically by the Carpionato group, who made political contributions to both mayors’ campaigns. He said that for whatever reason Costco decided to sign a lease with Coastal on the Mulligan’s Island property, with which Carpionato was not happy with.

“He [Carpionato] stated I was an out-of-state developer from Massachusetts,” DiGuiseppe said of the situation in 2021. “Saying I was going to come into their territory and take their tenant, but he wasn’t going to let that happen. Carpionato is known for those sort of tactics, so it’s not that unusual”

“On or about June 7, 2021, Coastal, pursuant to [state law], delivered a letter to the City Council, Mayor Hopkins, and the City’s solicitor, in which Coastal provided a particular account of its claim, and demanded that the City pay Coastal its damages,” the complaint read when filed.

The complaint alleges Coastal Partners’ “procedural” and “substantive” due process rights were violated and that it was the victim of both “intentional” and “tortious” interference with contractual relations between itself and its client.

“Mr. DiGuiseppe has not listened from day one, in the couple of meetings that I’ve had with him, and now wants to take a scorched earth approach with ridiculous allegations,” Fung told the Herald at the time.

Gregg Perry, a spokesman for Carpionato Group, also previously rejected the accusations in Coastal Partners’ demand letter as “ridiculous.” He acknowledged Carpionato at one point had discussions with Costco officials about bringing the wholesale club to Sockanosett Cross Road, but said a finalized agreement never materialized.

Where it started

At the time of the supposed interference, Coastal was in the process of applying for a zoning change that would rezone the property Mulligan’s Island stands on so it would be an appropriate location for a business such as Costco to be placed on.

Coastal Partners, which had reached an agreement to purchase the roughly 55-acre Mulligan’s property, formally applied last year for a major amendment to the Mixed Use Planned District, or MPD, zoning that currently governs the site.

The MPD zoning is more specific and restrictive than the city’s general zoning districts. The current MPD at the site was adopted roughly two decades ago to allow for the transformation of the property from the undeveloped, state-owned “Cornfields” to its current use.

“It was a special zone to make this happen at Mulligan’s Island,” said Planning Director Jason Pezzullo when asked what he recalled about the issue. “Planning had already given it a negative recommendation. City Council would then hear it next at the ordinance committee, and we heard about eight hours of testimony at ordinance. Right before the council made their ruling the applicant was like ‘okay, we’re going to pull our application.”

That initiated a two-year window in which the Cranston Crossing proposal could not be reintroduced without a finding of “substantial” changes, as outlined in the city’s charter.

“You can’t just withdraw without prejudice that far into the process,” Pezzullo explained. “So, the City Council never denied it. I would have been curious to see if it could have gotten approved at that point, but it was the applicant’s action that pulled it off the docket.”

DiGuiseppe said that Coastal pulled its application after seeing the planning board disregard a petition signed by 700 union workers in favor of the project.

“We had all these people in support of the project, but just 15 people who were opposing it,” he recalled. “The Mayor and Anthony Moretti also used their influence in contacting Costco directly and suggested that they would support them in relocating to the Carpionato project.” 

Where we are

With the motion for summary judgement filed, the city and Coastal are waiting for the judge to decide on the motion and either dismiss the case or decide that there is enough evidence for it to continue forward.

Should a judge approve the motion, the case would end. However, DiGuiseppe feels acceptance of such a motion is unlikely and that the evidence that has been brought forth will be enough to prove their case.

“Carpionato is a big developer,” DiGuiseppe said. “When somebody is providing political favors to somebody, like Carpionato did to Hopkins to help him get elected, they expect something in return. Carpionato is a big developer in the state of Rhode Island. They do a lot of work in Cranston, and they said to Hopkins, ‘we want Costco on our property what can you do?’”

Despite DiGuiseppe’s firmly held opinion that the current administration used its influence to interfere with the zoning change, only the court can make that ruling.

Costco, lawsuit, zoning


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