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Judge Victor Grossman dismissed the suit, which was filed in New York State Supreme Court in Dutchess County, and said the town was harassing the club as it tried to establish a backyard concert series.
Grossman said many of the claims in the lawsuit are premature and were not supported by fact.
"The claim that a reduction of the occupancy limits was demanded by the town in exchange for approval of continuation of the outdoor concerts is devoid of support," Grossman said in his ruling. "No meetings are alleged, no transcript is provided, no competent evidence is offered."
Grossman said Daryl's House was not able to prove it is being stonewalled in the approval process.
"Plaintiff has failed to provide to this court that it has even begun its permit process," Grossman wrote.
Kenneth Stenger, the attorney representing the Town of Pawling, said the town has been completely vindicated.
"The town never did anything wrong," Stenger said. "These elected leaders took a lot of heat on social media. They stood up for what was right. Instead of asking what is the town doing to Daryl Hall, people should be asking what was Daryl Hall doing to the town?"
Stenger said now that litigation is over, he is hoping the town and Darryl's House can work together.
"The town wants nothing more than for Daryl's House to remain a safe and successful venue," Stenger said.
William Sayegh, the attorney representing Daryl's House, said the town admitted its mistakes in dealing with the club.
"There's nothing left to litigate," Sayegh said. "We're working together to resolve the problem. They've been excellent to work with."
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