The group of residents opposing the demolition of the historic For ney House in Milltown has been threatened with a lawsuit by officials from Valley National Bank, the company trying to purchase the 142-year-old property in the borough's downtown.

Stewart Lieberman, the Princeton-based attorney for the John C. Evans Project, said he received an e-mail Friday from representatives of Valley National Bank that included the threat of a SLAPP -- strategic litigation against public participation -- which is meant to discourage citizen protests. Valley National Bank contends the group interfered with business opportunities, Lieberman said.

Such legal threats entail numerous requests for information, mak ing it expensive for citizen groups and individuals to mount a case against companies. Many states have "anti-SLAPP suit" statutes that protect citizens' rights to free speech and to petition the government, but New Jersey is not one of them.

"They've sent us an e-mail indi cating that in their opinion, this is an inappropriate pursuit," Lieber man said. "I think it's absurd. What they're trying to do is intimidate what they perceive to be a smaller people and we're going to react in a very strong way, because we're offended."

Fred Azrak, lawyer for Valley National Bank, did not return calls for comment.

Kathy Heilman, one of the activist group's trustees, said the group members are concerned about the possibility of a lawsuit but would not block their fight against the bank. Their opposition to the Forney House demolition has cost about $10,000.

"A lot of people joined thinking they were simply objecting to the demolition of a historic site but now this happened," Heilman said. "We're sensible people so we have to learn more about this, but we're not going to back down."

Another trustee, Michael Shakarjian, said the group heard overwhelming support from borough residents when they walked re cently in the Independence Day parade to protest the bank.

"We have a better feel for what the town's attitude is toward the issue," said Shakarjian, one of the group's roughly 35 members. "I think their (Valley National Bank's) claims are not well-founded; it's hostile. They want to see if they can use up our money, because they've got a lot more of it than we do."

Lieberman said the judicial system is stringent with SLAPP suits.

"Our courts are really strong on this," Lieberman said. "The judicial position is residents have every right to attend meetings and voice their opinions. There are numerous lawsuits in the state's superior courts that make it abundantly clear."

Members of the activist group filed a complaint in Superior Court in May against the borough's zon ing board, which in March granted a bank variance to build a drive- through branch. They contend that the creation of Valley National Bank on Main Street, across the street from another bank, would be damaging to the borough by caus ing excessive traffic and erasing an important part of Milltown's history.

The old medical clinic, and home to the first mayor of Milltown, is not registered as a historic landmark but meets the criteria for eligibility on both the state and national registers. Bank officials have said the structure is unsound and that after they bought the property and destroyed the building, they would preserve artifacts to document its existence, while residents opposing the project say protecting the entire structure is the only op tion.