Petrello v. Zoning Board of Appeals of the Village of Sagaponack, 2:22-cv-02632-HG

Plaintiffs Anthony and Cynthia Petrello contracted to buy a parcel previously approved by the Town of Southampton for subdivision and limited dwelling floor area in exchange for an agricultural reserve; closing was delayed for years due to litigation.
While closing was pending the Village of Sagaponack incorporated and enacted new zoning laws reducing permissible dwelling floor area and adding other restrictions.
Plaintiffs obtained lot-line modifications but were denied variances under the Village Law and the ZBA denied their 2019 appeal and a revised 2020 development plan; the ZBA issued a decision on April 8, 2022.
Plaintiffs filed suit in federal court under diversity jurisdiction seeking Article 78-style relief (declaratory and injunctive relief modifying the ZBA Decision), later adding the Village as a defendant.
The district court found diversity jurisdiction existed but evaluated whether to abstain under Burford, ultimately dismissing the case on Burford abstention grounds and directing state-court review instead.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal diversity jurisdiction exists	Diversity present (Plaintiffs Texas; Defendants New York) and controversy > $75,000	Defendants did not contest diversity but urged abstention	Court found diversity satisfied but proceeded to consider abstention
Whether Burford abstention bars federal review of Article 78 zoning challenge	Petrello argued federal forum needed (cites concern about local bias)	Defendants: state regulatory scheme and Article 78 provide adequate, specialized review; federal intrusion would disrupt state policy	Court held Burford abstention appropriate and dismissed the case
Whether allegations of local bias justify retaining federal jurisdiction	Alleged long-running litigation and ZBA member ties create impartiality concerns	State courts are independent and neutral; bias allegations insufficient to defeat abstention	Court rejected bias argument and favored state-court review
Whether the nature of relief (equitable vs. monetary) affects abstention	Petrello emphasized need for diversity forum for relief	Defendants noted plaintiffs seek only injunctive/declaratory relief (not damages) so Quackenbush principles favor dismissal	Because plaintiffs sought equitable relief only, the court dismissed (rather than stayed) under Burford

Hertz Corp. v. Friend, 559 U.S. 77 (federal courts must ensure subject-matter jurisdiction exists)
Arbaugh v. Y & H Corp., 546 U.S. 500 (jurisdictional defects may be raised at any stage)
Burford v. Sun Oil Co., 319 U.S. 315 (establishes abstention to avoid federal interference with complex state administrative schemes)
Quackenbush v. Allstate Ins. Co., 517 U.S. 706 (federal courts have discretion to dismiss equitable actions under abstention doctrines)
Liberty Mut. Ins. Co. v. Hurlbut, 585 F.3d 639 (Second Circuit articulation of Burford-related factors)
Zahra v. Town of Southold, 48 F.3d 674 (courts should avoid becoming overseers of local land-use decisions)
Carver v. Nassau Cnty. Interim Fin. Auth., 730 F.3d 150 (declined to adopt a per se rule that Article 78 proceedings divest federal jurisdiction)
Canaday v. Koch, 608 F. Supp. 1460 (abstention where state created a comprehensive administrative review system)