News today from Task Force member organization Develop, Don’t Destroy Brooklyn: A State Appellate Court panel has rejected the Empire State Development Corporation’s (ESDC) motion to dismiss the eminent domain lawsuit filed by nine property owners and tenants with properties in the Atlantic Yards footprint earlier this year.

The lawsuit claims that Forest City Ratner’s Atlantic Yards project violates the New York State Constitution’s public use, due process and equal protection clauses, as well as low-income resident requirements. According to DDDB, the Court’s decision means that oral arguments will be heard in the case sometime in March or April, with a decision then expected between late spring and fall 2009.

This is a major setback for developer Bruce Ratner, who recently told the New York Times that he planned to break ground in December. The project cannot move forward without using eminent domain. In addition, according to the Times, Ratner has brokered a contract with Barclays Bank that would provide $20 million a year for naming rights to the arena. This contract requires FCR to close on the land and secure the financing by the end of November.