CAPE ELIZABETH — And the litigation continues.

Councilors last night voted 6-1 to reject a settlement in which the town would have vacated its claim to an 800-foot strip of the Surfside Avenue paper street, with Sara Lennon as the sole holdout.

Under the proposal, residents who sued the town in January and claimed ownership of the undeveloped stretch of Surfside Avenue along the coast between Pilot Point Road and Algonquin Road would have dropped the lawsuit and paid $500,000 to the town’s Land Acquisition Fund.

Paper streets are roads that were laid out in subdivisions, but never built or accepted by the town. Last November, rather than permanently accept or vacate rights to paper streets shown in a 1911 development plan of the Shore Acres subdivision, the council opted to maintain the rights, which were extended 20 years on Oct. 5, 2016.

The lawsuit was filed by plaintiffs Imad and Hulda Khalidi, David and Kara Leopold, Andrew Sommer and Susan Ross, Stewart and Julie Wooden, and Rock Dam Development LLC, all of whom own property on Pilot Point Road.

Town officials and the plaintiffs reached the $500,000 settlement in a July 19 mediated session.

Lennon said she did not feel comfortable “gambling with money that is not (hers),” but the taxpayers’, given the list of risks and unknowns, such as timeframe, expense and outcome that come with continuing in court. 

“If we turn down this settlement, we lose all control,” Lennon said. “We hired the three best lawyers in the state on municipal law and they all said … ‘This is the best settlement you can get’ … If we don’t win, we lose a lot.”

Still, the majority of the council opted to take that risk, based “on principle,” as some councilors said.

Councilor Valerie Randall said she was at first in favor of the proposal, but since “reversed course.”

“There are some things you can’t put a dollar amount on,” she said. “You can’t put a price on principle.”

Councilor Jamie Garvin said he hopes the town can come to some agreement with the plaintiffs, but felt this one did not support the “best interest of the town.”

“(There’s) no interest in litigating this through to conclusion,” he said, adding that continuing down that path will be “lengthy, contentious and costly.”

Councilor Caitlin Jordan also reversed course, saying she was at first in favor of the deal because it “gave certainty,” but was swayed by the thought of giving away what could one day be limited access to Cape Elizabeth’s coast. 

“It’s a risk, but that’s what the town has asked the council to take … We’re taking it,” Caitlin Jordan said. “… Hopefully we win and get access for everyone, but it’s a risk.”

Chairwoman Jessica Sullivan, who has long spoken in support of accepting the Surfside Avenue paper street, said she believes the town’s position is “strong” and that it will, in fact, “prevail” in court. 

In a statement given by Chris Philbrook, who has been handling communications for the plaintiffs throughout the litigation, the plaintiffs said they were “extremely disappointed by the council’s decision.”

“The settlement put to rest an issue that bitterly divided our community … It was also a good compromise that would have freed up the council to move past a set of issues that has paralyzed it for six years,” the statement read. “… We are saddened that it will be necessary to return to court … We are, however, confident in our legal case.”

The outcome of Wednesday night’s meeting was the wish of 1,400 residents who signed a petition asking the council to protect the public’s right to use the Shore Acres pathway. One petitioner at a public hearing last week said they would sue if the deal were accepted.

Ongoing litigation, however, will include considering a pending motion for summary judgment, which argues that the town’s only option to develop the paper street would be turning it into a road fit for vehicular traffic.

According to attorney James Monteleone, of Bernstein Shur, the plaintiffs filed the motion against the town in July before mediation and later asked the court to postpone consideration of the motion until after the council voted on the settlement.

In a Sept. 12 email, Monteleone, who’s one of the attorneys representing the plaintiffs, said prior to 1975, paper streets granted towns easements to build a road, rather than ownership rights, and without full ownership of the land, the town is limited in what it can do with the paper street.

Although Lennon opposed fellow councilors’ vote to reject the settlement, all seven councilors agreed on one thing: the community, specifically Shore Acres, needs to “heal,” regardless of differing opinions on the matter. 

“I truly believe there is some way we can find a resolution … but not with divisiveness,” Garvin said. “… (There has been an) unhealthy and unfair amount level of cynicism. It’s so very frustrating.”

Councilor Chris Straw, who made the initial motion to reject the settlement, held back tears as he thanked fellow councilors for their vote and urged all residents to just “be kind to each other.”

“The enemy is not your neighbor,” Straw said. “The enemy is the situation.”

Jocelyn Van Saun can be reached at 781-3661, ext. 183 or [email protected]. Follow her on Twitter @JocelynVanSaun.

The Town Council on Sept. 19, voted 6-1 to reject a settlement that would have meant vacating the town’s rights to an undeveloped stretch of Surfside Avenue in return for $500,000.