- A federal judge has dismissed a lawsuit filed against Honesdale council in connection with a defunct renovation project at Sullum's Anchor Building on Main Street.

U.S. District Judge A. Richard Caputo dismissed the $2.5 million suit last week that had been brought by Smith & Morris LLC (SMH) of Beach Lake, Michael C. Morris and Stephen G. Smith.

The lawsuit was filed in April in U.S. District Court in Scranton naming as defendants council members Scott J. Smith, James Brennan, Juanita Pisano, Bill Canfield, Robert Jennings and Harry DeVrieze, as well as former members Carolyn Lorent, Tiffany Kominski and F.J. Monaghan.

Brennan and Smith said Monday they were glad the case has come to a conclusion and the judge ruled in council's favor.

Brennan said he was happy the federal judge recognized council did no wrongdoing.

SMH could not be reached Monday afternoon.

The suit had claimed inaction by council resulted in the renovation project being delayed for more than a year and a half and was over-budget by hundreds of thousands of dollars.

The suit also accused council of engaging in a conspiracy designed to defame, harass, embarrass and "put the plaintiff's in a false light within the community."

But council's lawyer, Anthony R. Sherr of Blue Bell, filed paperwork disputing the claims, saying SMH had not shown that it was deprived of a protected property interest without notice or a hearing.

Regarding the conspiracy claims, Sherr wrote, "unless coupled with a tangible injury such as the loss of employment or extinction of a vested right recognized by state law, defamation by state officials is not actionable" and the plaintiffs have failed to identify the alleged defamation.

According to the lawsuit, SMH and the borough entered into negotiations in May 2011 to seek a grant from the state Department of Community & Economic Development (DCED) for funding and technical assistance for the borough's downtown revitalization and for grants and grants-to-loans for physical improvements to the community.

The anchor building's renovation project was approved by the DCED and a $255,076 grant was awarded to the borough.

SMH submitted for payment "in a timely" manner construction progress payment authorizations and qualified invoices, but council failed to follow through in a "reasonably diligent manner" to complete the obligations to the DCED under the grant agreement, according to the lawsuit.

SMH had claimed council's "unreasonable" procrastination totaled over 18 months of delays and associated carrying costs, additional costs to vendors that demanded up-front payment and inflated quotes to finish the work they started.