SARANAC LAKE — A state judge has refused to dismiss a lawsuit filed against the village Planning Board over its approval of the proposed Lake Flower Resort and Spa.

In a ruling issued Monday, Saratoga Springs-based state Supreme Court Judge Glen Bruening rejected a motion to dismiss the case that was filed by Saranac Lake Resort LLC, the developers of the proposed 93-room, four-story hotel on Lake Flower, and supported by the village. The decision means the lawsuit can continue.

“The merits of this case against the village Planning Board are now to be decided,” said Matt Norfolk of Lake Placid, an attorney for the developers. “I’m confident that the village Planning Board will prevail.”

New Hampshire-based Roedel Companies, which is restoring the potentially competing Hotel Saranac on Main Street, is behind the challenge the Planning Board’s July 7, 2016 approval of the Lake Flower Resort’s site plan. Its case surrounds 203 River St., a parcel that was included in a zoning district the village board created for the resort — the Lake Flower Planned Unit Development District — as a potential location for off-site parking.

Saranac Lake Resort representatives later said they no longer need it, and the parcel wasn’t included when the Planning Board approved the project. Roedel Companies quietly purchased the property in June of last year for $179,000 under the name Malone Real Estate LLC, which is the official plaintiff in the lawsuit against the Planning Board.

Malone Real Estate claims the removal of 203 River St. reduces the project size to less than 3 acres, in violation of a 2014 law that set the standards for PUDDs in the village. The company also claims Saranac Lake Resort LLC didn’t have the required legal control of the property during the site plan review process and that its application should have been referred back to the village board as a new application “given the numerous modifications to that proposal during the site plan review process.”

Among their arguments, Saranac Lake Resort and the village argued that the lawsuit should be thrown out because Malone Real Estate lacks the necessary legal standing to challenge the Planning Board’s determination.

Citing prior case law, Judge Bruening wrote that in order to have standing in land use matters, the petitioner must show that it would suffer “direct harm, injury that is in some way different from that of the public at large.”

Malone Real Estate argued that its status as owner of a parcel within the Lake Flower PUDD gives it standing. Even though 203 River St. is no longer included in the project, it argued that the parcel is still subject to the 2015 Lake Flower PUDD law, limiting its permitted use to accessory parking related to the project or a small storage shed.

Bruening agreed, saying Malone Real Estate “has sufficiently alleged a concrete injury to establish its standing.”

“By its allegations that (village’s) determination amounts to a zoning change, effectively preventing petitioner from utilizing and/or developing its property as provided for in the 2015 Lake Flower PUDD Law, petitioner has alleged a harm that is different from the harm alleged by the general public,” the judge wrote. “Thus, court finds that petitioner has standing to maintain this action.”

The resort developers and the village had also argued the the owners of the three motels that would be demolished to make way for the resort — the Adirondack Motel, the Lake Side Motel and the Lake Flower Inn — should have been named in the suit as “necessary parties.” In court papers, Norfolk said Daniel Manning, Mueller Capital Partners and Kimberly Walasky have all signed contracts to sell their motels to the developers, contingent on the Planning Board’s approval of the resort site plan.

“Thus all three landowners have a financial sta(k)e in the outcome (of the lawsuit),” Norfolk wrote. “If the court annulled the Planning Board’s approval of (the resort’s) site plan, the three property owners would risk the loss of a potential sale during a time when it is already difficult to find buyers interested in waterfront motel properties in Saranac Lake.”

The judge, however, said he was not persuaded that the motel owners are necessary parties to the case.

“While those owning or holding interests in real property are typically necessary parties in action affecting the property that would restrict a parcel’s use, here the allowable use of the Lake Flower Avenue parcels does not change and is not affected by the approval or denial of (Saranac Lake Resort’s) site plan application,” the judge wrote. “Rather, (the Planning Board’s) determination simply permits a party to move forward with the use that those parcels are already subject to.”

In addition to denying the dismissal the lawsuit, the judge ordered the village to file its answers to Malone Real Estate’s amended petition within 30 days.

Tom Ulasewicz, an attorney for Malone Real Estate, said his client was pleased with the judge’s ruling.

“It is a well laid out, comprehensive decision identifying all of the critical facts to my client’s arguments,” he wrote in an email. “Our comments to the Adirondack Park Agency that its approval of this project is premature, now takes on a whole new meaning.”

While this is a setback for the village and the developers of the resort, the project cleared a major hurdle last month when it won state Adirondack Park Agency approval. Resort developers have said previously they’re talking to contractors and architects but they haven’t set a timeline for the start of construction. Asked last week what the developers next steps are, Norfolk said he had “no significant updates” to provide.