The fate of the abandoned oyster factory at the end of Shipyard Lane in East Marion remains uncertain after an auction to sell the property was canceled earlier this month.
Following a judgment of foreclosure and sale dated June 20, a public auction of the 18-acre waterfront property was scheduled to take place at Southold Town Hall Aug. 16. According to a legal notice, the approximate lien amount was $2.9 million, plus interest and other fees. It wasn’t clear if that figure was the reserve price for the property.
Approximately 20 residents — including at least two potential bidders — gathered at Town Hall that morning, but no auction took place.
Documents obtained from the Second Appellate Court in Brooklyn show that the current property owner, listed as Oki-Do Ltd., argued for a temporary restraining order, which was granted Aug. 13 by Judge Angela Iannacci, stopping the auction.
The property remains tied up in a legal battle that appears to date back to 2007, according to foreclosure records.
Dr. Kazuko Tatsumura Hillyer, the property owner and director of Oki-Do Ltd., was loaned $1 million by the plaintiffs in 2007, according to those records. The plaintiffs listed are Alexander Sklavos as executor of the estate of Edward Sklavos, Prime Real Estate Ventures LLC., Lindsey Leigh LLC 401K Plan, Christina Swirni aka Christini Smirni, Mark Styczen and Eve Styczen.
The funds were secured through two $500,000 mortgages executed on Oct. 8 and Oct. 15, 2007, and eventually consolidated into a single note to minimize mortgage taxes, records show.
It’s unclear what the mortgages were for. Property records show Dr. Hillyer purchased the East Marion property in 1999 for $1.1 million.
According to the documents, the 2007 mortgages were signed on behalf of Dr. Hillyer by Edward Stein, acting as a power of attorney.
In the foreclosure proceedings, the defense argued that the power of attorney purportedly signed in October 2007 was a forgery, though the court held that Mr. Stein had the authority to act on behalf of Oki-Do under a power of attorney agreement signed earlier that year in July 2007.
The court found that Dr. Hillyer was aware of the mortgages by no later than February 2008 and that, by failing to take any action, Oki-Do “ratified Mr. Stein’s actions and became bound by it.”
Rosenberg Feldman Smith, LLP of Manhattan had represented Dr. Hillyer in the foreclosure proceeding between 2009 and 2018, but filed a suit against their former client in April 2019 over alleged unpaid legal fees.
In the suit, the firm alleges that as of June 29, 2018, Oki-Do owes a balance of at least $95,241.74 plus additional fees that have since accrued to $113,241.75.
According to the document filed in State Supreme Court, Oki-Do Ltd. switched counsel to Lieb at Law on March 7 of this year.
Andrew Lieb, managing partner of the Smithtown law firm, declined to comment on his client’s ongoing case.
Dr. Hillyer could not be reached for comment.
Anne Murray, president of the East Marion Community Association, said she attended the scheduled auction because residents in the area are concerned about the property.
The association was first established in 2007 in response to a proposal by Oki-Do Ltd. to construct a 28-building spa and wellness center there.
The proposed wellness center would have transformed the former oyster processing plant into a 114-room hotel with a 195-seat restaurant, a second restaurant with up to 99 additional seats, 27 spa suites, a pool, three gazebos, a gift shop and man-made lake, the Suffolk Times reported in 2014.
“We thought that the project was too big for that property,” Ms. Murray said.
Then, in 2016, it was rumored that Aqquua, a sustainable aquaculture company, would develop the site as a fish farm, but those plans never materialized.
Dr. Hillyer said in a phone interview in 2016 that she was considering a partnership, but declined to discuss the details.
Ms. Murray said the spa proposal that had been before the town was out of character for the area.
“It would be like putting Gurney’s at the end of Shipyard Lane. That’s a heavy lift for a small, residential, quiet street,” she said, adding that it would worsen existing traffic issues.
She said the East Marion Community Association isn’t anti-development.
“We’re concerned about what could be built there,” Ms. Murray said. “We don’t want something that’s out of scale.”
Photo caption: The fate of the Oki-Do property in East Marion remains unclear after an auction was recently called off. (Grant Parpan file photo)