Sagaponack Family Gets Cherished Homestead Back But Gives Up Oceanfront Cottages, Farmland

The White family of Sagaponack has taken back ownership of its historic family homestead from the Texas oil executive who had wrested it away from them in a protracted court battle, according to Suffolk County records.

But getting back the historic family plot appears to have come at a steep price.

At the same time the Whites took back title to the 3.3 acres on Sagaponack Main Street, where a family farmhouse has stood since the 1800s, the family gave up a 24-acre parcel that includes a swath of open farmland and five small cottages nestled in the oceanfront dunes. The valuable land was transferred to a limited liability company owned by Cynthia and Anthony Petrello, the Texas couple who have been locked in a legal war with the Whites for 18 years.

When the large parcel is combined with three lots the Petrellos already purchased from the Whites — which sparked the legal fight — the couple now will own more than 30 acres of oceanfront land to the east of Sagaponack Main Street.

The Whites sold the development rights on the farmland to Southampton Town and the Peconic Land Trust in 2005, for about $14 million, and at the time placed covenants on the existing oceanfront cottages that do not allow them to be expanded.

The Petrellos already have proposed constructing an approximately 9,000-square-foot house on the oceanfront portion of the lots, which they agreed to purchase in 1998. They have applied to Sagaponack Village for relief from village zoning that would allow them to build about 2,000 more square feet than village building restrictions currently allow, arguing that they should reasonably be allowed to build the house according to the zoning restrictions that were on the property when they agreed to purchase it rather than the current laws, which are more restrictive.

Members of the White family would not discuss the deal that led to the return of the homestead and relinquishing the acreage between it and the ocean, and a local attorney for Mr. Petrello, Nica Strunk, did not return a call seeking comment.

But deed transfers recorded by Suffolk County in June show that a limited liability company called 1035 Sagg Main LLC transferred the land at that address to Thomas and Jeffrey White, who at the same time transferred the 24 acres to the same corporate entity.

Last year, the Whites, whose family settled in Sagaponack in the 1600s, were forced by a judge to sell the homestead property to Mr. Petrello for $1.3 million — the approximate appraised value of the land when it was transferred into a family trust back in 2001, though its actual value had skyrocketed since then.

Mr. Petrello immediately transferred it to 1035 Sagg Main LLC, which is registered at the same address as the Houston oil-drilling company Nabors Industries, of which Mr. Petrello is chairman, president and CEO.

The recent deed transfers indicate that the Whites paid the same $1.3 million to get 1035 Sagg Main back, and that Mr. Petrello’s corporation paid them about $4.3 million for the farmland and oceanfront, though it’s not clear if any money actually exchanged hands in the deal.

The Whites and Mr. Petrello have been entwined in a series of lawsuits since 2001, when John C. White, who died in 2013, tried to back out of an original deal to sell 9.5 acres of his land to the Petrellos.

The Texas couple had been renters of one of the Whites’ six rustic oceanfront cottages — built in the 1920s as quarters for migrant farm workers — and had worked out a deal in 1998 to purchase that cottage and a chunk of the Whites’ land for about $2 million. As part of that original bargain, Mr. Petrello’s lawyers also were to handle the legal organizing of the Whites’ estate to help the family avoid crushing estate taxes when the senior Mr. White and his wife, Elizabeth, died.

Subdividing the parcel for the Petrellos from the rest of the Whites’ land took years, during which time the value of land in Sagaponack soared. By the time deal came ready to close in 2000, the Whites said the sale price was but a fraction of the appraised value of the land, barely covering the taxes they would have to pay, and tried to back out of the deal.

The Petrellos sued, and in 2009 a judge ordered the Whites to sell them the 9.5 acres agreed on in 1998 for the $2 million agreed upon price — a small fraction of what the land was worth by then.

And in the wake of the soured relationship, the Petrellos kept suing. In the estate planning that Mr. Petrello had done for the Whites, there were clauses that gave him the right of first refusal for any other land the family sold in the future. His attorneys consequently claimed that when the White family put much of its holdings into various trusts in the early 2000s, it constituted a “sale,” which violated his rights of first refusal, and they demanded that the family sell Mr. Petrello the parcels at the appraised values at the time the trusts were created.

Last year, a judge sided with the Petrellos and ordered the lot targeted first, the farmhouse at 1035 Sagg Main, to be transferred for the $1.3 million price tag. Other lawsuits still loomed, seeking to force similar sales of other family homes and the 24 oceanfront acres and cottages.

It is not clear whether the recent transfers between the two parties dispenses with the legal challenges once and for all, or whether Mr. Petrello could mount additional challenges to the sale of the development rights on the farmland acreage.

In the meantime, his representatives are moving forward with the long-standing plans to begin building on the land he already owns. An application to raze the tiny cottage at 108 Sandune Court — which does not have the same covenant protection as the other five — was first brought to Sagaponack Village in 2011, with a proposal to replace it with a 4,600-square-foot house.

That application led to a lawsuit by Mr. Petrello that ultimately forced the village and Southampton Town to scrap laws that prevented construction within 125 feet of oceanfront dunes. The plans for the new house have been revamped, replacing a proposal that was well below the size of house that village zoning would allow with one that is well above and has a pool house sitting nearly on the Coastal Erosion Hazard Zone limit.

“Our position is that the zoning from the time of the subdivision map should be applied,” said John Bennett, one of the Southampton attorneys working for Mr. Petrello on the application. “Also, given that we had to litigate the matter for so many years, a variance that would come into line with the building code at the time is reasonable.”

The proposed house is 9,049 square feet, with another 2,700 square feet of decking and garage space. Village zoning would allow a main house of just 6,900 square feet and a total buildout of about 8,000 square feet.

The house would occupy the smallest of the three lots the Petrellos already own, at 1.5 acres. A nearly 6-acre parcel, which also has ocean frontage, sits directly to the east, and a third 2-acre parcel is north of them.