Opinion
No. 30288/2010.
10-05-2015
The BOARD OF MANAGERS OF 647 & 649 PLACE CONDOMINIUM suing on behalf of the UNIT OWNERS OF 647 & 649 WASHINGTON AVENUE CONDOMINIUM, Plaintiff, v. 647 & 649 WASHINGTON AVE., LLC; Haijar Elayvan; Double M Development LLC ; Munzer Elayyan; Van J. Brody Architects, P.C., Defendants. 647 & 649 Washington Ave., LLC; Haijar Elayvan; Double M Development LLC ; Munzer Elayyan, Third–Party Plaintiffs, v. Erin Construction and Development Co., Inc., Third–Party Defendant.
Marcia E. Fokas, Esq., New York, NY, Attorney for Plaintiffs. Menicucci Villa & Assoc., PLLC, Staten Island, NY, Welby, Brady & Greenblatt, LLP, White Plains, NY, Attorney for Defendants.
Marcia E. Fokas, Esq., New York, NY, Attorney for Plaintiffs.
Menicucci Villa & Assoc., PLLC, Staten Island, NY, Welby, Brady & Greenblatt, LLP, White Plains, NY, Attorney for Defendants.
CAROLYN E. DEMAREST, J.
The following papers numbered 1 to 14 read herein:
| Papers | Numbered |
|---|---|
| Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits (Affirmations) Annexed | 1–48–10 |
| Opposing Affidavits (Affirmations) | 12 |
| Reply Affidavits (Affirmations) | 713 |
| Affidavit (Affirmation) | |
| Memoranda of Law | 5–6–11–14 |
In this action by plaintiff the Board of Managers of 647 & 649 Place Condominium, suing on behalf of the unit owners of 647 & 649 Washington Avenue Condominium (plaintiff) against defendants 647 & 649 Washington Ave, LLC, Haijar Elayyan (Haijar), Double M Development, LLC, and Munzer Elayyan (Munzer) (collectively, the sponsor defendants) and Van J. Brody Architects, P.C. (Van J. Brody Architects), the sponsor defendants move, under motion sequence number five, for an order: (1) dismissing plaintiff's complaint against Munzer and Haijar, individually, pursuant to CPLR 3211(a)(1) and (a)(7), based upon the documentary evidence and for failure to state a cause of action, and (2) dismissing certain of plaintiff's causes of action against Double M Development, LLC and 647 & 649 Washington Ave, LLC, pursuant to CPLR 3211(a)(1) and (a)(7), based upon the documentary evidence and for failure to state a cause of action. Plaintiff cross-moves, under motion sequence number six, for an order: (1) amending the caption of this action, pursuant to CPLR 3025(b), to set forth the full name of plaintiff, and (2) granting summary judgment, pursuant to CPLR 3212, against 647 & 649 Washington Ave, LLC, Double M Development, LLC, Haijar, and Munzer for breach of contract and negligence in the amount of $578,200. Plaintiff's cross motion further seeks, in the event that its instant cross motion for summary judgment is denied, an order allowing it to amend its complaint, pursuant to CPLR 3025(b), to include causes of action for common-law fraud that are not solely dependent on the Martin Act and a cause of action against Double M Development, LLC for common charge arrears in the amount of $33,350, and (2) a default judgment in its favor against Van J. Brody Architects, pursuant to CPLR 3215, in the amount of $578,200 under its seventh, eighth, and ninth causes of action.
BACKGROUND
647 & 649 Washington Ave, LLC was the sponsor of a condominium project, and Haijar was the principal and a member/officer of 647 & 649 Washington Ave, LLC. On January 13, 2005, 647 & 649 Washington Ave, LLC, as the sponsor, issued an offering plan providing for the sale of 16 condominium units at a seven-floor condominium building to be newly constructed at premises located at 647 & 649 Washington Avenue, in Brooklyn, New York. 647 & 649 Washington Ave, LLC and Haijar retained Van J. Brody Architects, as the architect for the condominium project, to prepare the plans and specifications for the design and construction of the condominium. At the request of 647 & 649 Washington Ave, LLC and Haijar, Van J. Brody Architects prepared a report dated August 23, 2004 and revised on October 27, 2004, which described the condition of the condominium as it would exist upon completion of construction (the architect's report). The architect's report was incorporated and made a part of the offering plan.
647 & 649 Washington Ave, LLC and Haijar executed a certification of the offering plan dated March 18, 2004. This certification stated that the offering plan and the documents which amend the offering plan, among other things, did not omit any material fact, did not contain any untrue statement of material fact, and did not contain any fraud. Van J. Brody Architects executed a certification of the architect's report dated November 2, 2004. These certifications were incorporated and made a part of the offering plan.
The 647 & 649 Washington Avenue Condominium (the condominium) was established by a declaration duly filed in the office of the Register of the City of New York, Kings County, on October 11, 2007. 647 & 649 Washington Ave, LLC continues to own 6 of the 16 units.
647 & 649 Washington Ave, LLC conveyed the condominium to Double M Development, LLC, who is the successor sponsor, by a deed dated December 12, 2007. The fifth amendment of the offering plan, dated November 18, 2008, set forth that 647 & 649 Washington Ave, LLC had conveyed title to eight units to Double M Development, LLC, as the successor sponsor. This fifth amendment to the offering plan stated that Munzer was the sole principal of Double M Development, LLC. Munzer is also a member/officer of Double M Development, LLC. Double M Development, LLC and Munzer executed a certification dated September 13, 2008 with respect to the offering plan, which was incorporated and made a part of the offering plan. This certification, like the certification signed by 647 & 649 Washington Ave, LLC and Haijar, stated, among other things, that the offering plan and the documents which amend the offering plan, among other things, did not omit any material fact, did not contain any untrue statement of material fact, and did not contain any fraud.
The condominium building was built in 2007 through 2008. There are 16 residential units in the building. All of the units were offered for sale by the sponsor defendants for a total initial offering of $6,225,000. The unit owners purchased their units from 647 & 649 Washington Ave, LLC or from Double M Development, LLC pursuant to purchase agreements, which incorporated the offering plan and made the offering plan a part of the purchase agreements. A form purchase agreement was contained in part II of the offering plan.
647 & 649 Washington Ave, LLC and Double M Development, LLC started selling and closing on units in the building after the temporary certificate of occupancy was issued. A final certificate of occupancy was issued by the New York City Department of Buildings on March 6, 2008, which certified that the premises "conform[ed] substantially to the approved plans and specifications and to the requirements of all applicable laws, rules and regulations for the uses and occupancies specified." The unit owners signed purchase agreements, which were set forth in the offering plan.
According to Cathleen D. Caron, the president of plaintiff, who is also one of the original purchasers of a unit at the building, she and other unit owners have experienced water leaks through the windows and the roof. Plaintiff alleges that the condominium contains numerous construction defects, including exterior insulation and finish system (EIFS) improperly installed, windows improperly installed, a defective water pump, ventilation in the basement and bathrooms not properly operating, water infiltration in the ground floor apartments, terraces with water leaks which have inadequate flashing and drainage, a roof which fails to meet industry standards as to flashing and parapets, improperly installed heating, ventilating, and air conditioning (HVAC) units, inadequate insulation throughout the building, roof doors that are improperly installed or inadequate causing water infiltration and damage, an improperly installed security camera, faulty cable wiring, and missing roof decks.
On December 13, 2010, plaintiff, which is an unincorporated association formed by the filing of the declaration of condominium, filed this action against the sponsor defendants and Van J. Brody Architects. Plaintiff's complaint alleges 15 causes of action, including a first cause of action against 647 & 649 Washington Ave, LLC and Haijar for fraud, a second cause of action against 647 & 649 Washington Ave, LLC and Haijar for breach of contract, a third cause of action against 647 & 649 Washington Ave, LLC and Haijar for breach of implied warranty, a fourth cause of action against 647 & 649 Washington Ave, LLC and Haijar for negligence, a fifth cause of action against Haijar and Van J. Brody Architects for negligence, a sixth cause of action against Van J. Brody Architects for breach of contract, a seventh cause of action against Van J. Brody Architects for negligent misrepresentations and omissions in the architect's report and certification, an eighth cause of action against Van J. Brody Architects for fraud, a ninth cause of action against Van J. Brody Architects for negligence in preparing and approving the plans and specifications, a tenth cause of action against 647 & 649 Washington Ave, LLC for fraudulent conveyance, an eleventh cause of action against Double M Development, LLC and Munzer for fraud, a twelfth cause of action against Double M Development, LLC and Munzer for breach of contract, a thirteenth cause of action against Double M Development, LLC and Munzer for breach of implied warranty, a fourteenth cause of action against Double M Development, LLC and Munzer for negligence, and a fifteenth cause of action for a preliminary injunction. The sponsor defendants interposed an answer on or about January 12, 2011, denying plaintiff's allegations and asserting various affirmative defenses and two cross claims against Van J. Brody Architects. Van J. Brody Architects has not served an answer and is in default.
Defendants served and filed a third-party complaint for contribution and indemnity, dated January 13, 2011, on Erin Construction and Development Co., Inc. (Erin), which they amended on January 30, 2014. Erin filed a third-party answer on March 10, 2014.
On February 11, 2014, plaintiff filed a note of issue with a certificate of readiness. By a stipulation dated December 2, 2014, the parties agreed that the time to file and serve a motion for summary judgment would be extended to a time when they notified the court that discovery was completed.
On December 16, 2014, the sponsor defendants filed their instant motion and, on January 16, 2015, plaintiff filed its cross motion. The sponsor defendants and Erin oppose plaintiff's cross motion. The sponsor defendants have not agreed to have their motion addressed to plaintiff's proposed amended complaint.
DISCUSSION
At the outset, it is noted that plaintiff has consented to the dismissal of its fifteenth cause of action for a preliminary injunction, its tenth cause of action for fraudulent conveyance, and its fifth cause of action for negligence insofar as it is asserted as against Van J. Brody Architects. Thus, dismissal of these causes of action is granted (see CPLR 3212[b] ).
Although the sponsor defendants, in their notice of motion, did not move for dismissal pursuant to CPLR 3211(a)(3), they argue, as an initial threshold matter, that the named plaintiff in this action lacks standing. They point to the fact that the fifth amendment to the offering plan, filed on November 18, 2008, stated that the successor sponsor had changed the name of the condominium to "Washington Towers Condominium, Inc," and that a certificate of incorporation of the condominium association was attached to this fifth amendment as an exhibit. The certificate of incorporation stated that it was filed on September 29, 2008, and that the entity name was "Washington Towers Condominium, Inc." The sponsor defendants contend that plaintiff, therefore, has no relationship to this action and lacks standing, warranting dismissal of this action.
Plaintiff, in response, asserts that it is an unincorporated association formed pursuant to the filing of a declaration of condominium pursuant to Real Property Law article 9–B, and not by the filing of a certificate of incorporation under the Business Corporation Law. It points out that the declaration of condominium, dated October 2, 2007, was the document that formed the condominium and named it. Paragraph 2 of the declaration of condominium stated that the condominium was to be known as 647 & 649 Washington Avenue Condominium. Pursuant to Real Property Law § 339–n (9), the declaration must contain the method by which it is to be amended. Paragraph 20 of the declaration of condominium provided that it could only be amended upon the vote of at least two-thirds in number and in common interest of all unit owners taken in accordance with the provisions of the bylaws. Plaintiff points out that the offering plan and all amendments are the sponsor's selling documents under the Martin Act (General Business Law article 23–A) and do not affect the condominium declaration and bylaws, and that the sponsor defendants have not asserted that the declaration was amended by the requisite two-thirds vote when the offering plan was amended.
In reply, the sponsor defendants do not address this argument and appear to no longer contest plaintiff's standing. In any event, the sponsor defendants did not raise the affirmative defense of lack of standing in their answer, and, such defense was, therefore, waived (see CPLR 3211[e] ; Onewest Bank, FSB v. Prince, 130 AD3d 700, 701 [2d Dept 2015] ).
Furthermore, plaintiff, as the board of managers of the condominium, had standing to commence this action on behalf of the individual condominium unit owners pursuant to the explicit statutory authority of Real Property Law § 339–dd, which empowers the board of managers of a condominium to maintain an action on behalf of the condominium owners with respect to "any cause of action relating to the common elements of more than one unit" (see Sutton Apts. Corp. v. Bradhurst 100 Dev. LLC, 107 AD3d 646, 648 [1st Dept 2013] ; Residential Bd. of Mgrs. of Zeckendorf Towers v. Union Sq.–14th St. Assoc., 190 A.D.2d 636, 637 [1st Dept 1993] ). Thus, the sponsor defendants' motion, insofar as it seeks to dismiss plaintiff's complaint on the ground of lack of standing, must be denied.
Plaintiff, in its cross motion, insofar as it seeks to amend its complaint, asserts that the caption has a typographical error and inadvertently called the condominium the 647 & 649 Place Condominium, rather than the 647 & 649 Washington Avenue Condominium. Plaintiff seeks leave to correct the caption to designate it as the Board of Managers of 647 & 649 Washington Avenue Condominium. The sponsor defendants do not specifically address or oppose this branch of plaintiff's cross motion to amend. Thus, since the sponsor defendants were well apprised of the identity of plaintiff during the four and a half years in which this action has been pending, there would be no prejudice in the granting of this amendment to correct the caption to properly designate plaintiff's name. Consequently, plaintiff's cross motion must be granted in this respect (see Stillman v. Kalikow, 31 AD3d 431, 432 [2d Dept 2006] ).
The sponsor defendants further seek to dismiss plaintiff's claims as against Haijar and Munzer. They argue that plaintiff has no contractual privity with Haijar or Munzer, and that plaintiff's breach of contract claims as against them, therefore, cannot be maintained. They contend that the allegations of plaintiff's complaint do not satisfy their burden of establishing that the corporate veil of 647 & 649 Washington Ave, LLC and Double M Development, LLC should be pierced so as to enable it to hold Haijar and Munzer individually liable for the acts of 647 & 649 Washington Ave, LLC and Double M Development, LLC. They assert that plaintiff's bare allegations that 647 & 649 Washington Ave, LLC and Double M Development, LLC were completely dominated by Haijar and Munzer, respectively, and that 647 & 649 Washington Ave, LLC and Double M Development, LLC were mere instrumentalities of Haijar and Munzer and existed solely to serve them, do not suffice to support the equitable relief of piercing the corporate veil.
Plaintiff, in opposition, asserts that despite these allegations in its complaint purporting to support a piercing of the corporate veil, it is not trying to pierce the corporate veil. Indeed, plaintiff removes these allegations in its proposed amended complaint. Instead, plaintiff contends that it seeks to hold Haijar and Munzer personally liable to it on the basis that they both signed certifications of the offering plan, which were incorporated into the purchase agreements, in their personal capacities.
The sponsor defendants, in reply, argue that Haijar and Munzer did not execute the certifications personally. This argument, however, is completely belied by the fact that Haijar and Munzer signed the certifications twice, once on behalf of the sponsor and successor sponsor, and then on behalf of themselves, individually. Specifically, Haijar signed the March 18, 2004 certification on a signature line under the name 647 & 649 Washington Ave, LLC, indicating that he was signing it on behalf of 647 & 649 Washington Ave, LLC, and then signed it a second time, under the title "sponsor's principal," indicating that he was signing it in his individual capacity as 647 & 649 Washington Ave, LLC's principal. Munzer signed the September 12, 2008 certification on the signature line under the name Double M Development, LLC, indicating that he was signing it on behalf of Double M Development, LLC, and then signed it a second time on a separate signature line, in his individual capacity.
"[I]t is well settled within the Second Department that a plaintiff may seek damages for a breach of contract against the individual principals of the sponsor, based upon certification of the offering plan and the incorporation of the terms of the offering plan in a specific provision of the purchase agreement" (Board of Mgrs. of the 231 Norman Ave. Condominium v. 231 Norman Ave. Prop. Dev., 36 Misc.3d 1232[A], 2012 N.Y. Slip Op 51573[U], *12 [Sup Ct, Kings County 2012]; see also Birnbaum v. Yonkers Contr. Co., 272 A.D.2d 355, 357 [2d Dept 2000] ; Zanani v. Savad, 228 A.D.2d 584, 585 [2d Dept 1996] ; Board of Mgrs. of Olive Park Condominium v. Maspeth Props. LLC, 2014 N.Y. Slip Op 33012[U], *5 [Sup Ct, Kings County 2014]; Board of Mgrs. of 550 Grand St. Condominium v. Schlegel LLC, 43 Misc.3d 1211[A], 2014 N.Y. Slip Op 50576[U], *11 [Sup Ct, Kings County 2014]; Board of Mgrs. of 14 Hope St. Condominium v. Hope St. Partners, LLC, 40 Misc.3d 1215[A], 2013 N.Y. Slip Op 51201[U], *3 [Sup Ct, Kings County 2013]; Board of Mgrs. of the Crest Condominium v. City View Gardens Phase II, LLC, 35 Misc.3d 1223[A], 2012 N.Y. Slip Op 50826[U], *4 [Sup Ct, Kings County 2012]; Sternstein v. Metropolitan Ave. Development LLC, 32 Misc.3d 1207[A], 2011 N.Y. Slip Op 51206[U], *5 [Sup Ct Kings County 2011]; Kikirov v. 335 Realty Assoc. LLC, 31 Misc.3d 1212[A], 2011 N.Y. Slip Op 50600[U], *7 [Sup Ct, Kings County 2011] ). Here, Haijar and Munzer individually executed the certifications and the terms of the offering plan were incorporated into the purchase agreements by specific provisions in the purchase agreements.
Specifically, paragraph 2 of the purchase agreement stated that the purchaser received and read the offering plan and the documents "made a part thereof." Paragraph 3 of the purchase agreement expressly provided that the purchaser agreed to purchase the condominium unit "in accordance with the terms of the [offering p]lan." Paragraph 8 of the purchase agreement further provided that "[t]he entire Agreement between the parties hereto is set forth herein and in the [offering p]lan." Thus, inasmuch as the certifications executed by Haijar and Munzer, which were contained in the offering plan, were incorporated by reference into the purchase agreements, the sponsor defendants' motion, insofar as it seeks to dismiss plaintiff's second and twelfth causes of action for breach of contract against Haijar and Munzer, respectively, must be denied.
The sponsor defendants also seek to dismiss plaintiff's third and thirteenth causes of action for breach of implied warranty. Plaintiff, in these causes of action, alleges that a warranty is implied in all purchase agreements between the sponsor defendants and the unit owners, pursuant to which the sponsor defendants impliedly warranted that the condominium would be constructed in a skilled and workmanlike manner free from all material defects. Plaintiff further alleges that the sponsor defendants breached this implied warranty.
In 20 Pine St. Homeowners Assn. v. 20 Pine St. LLC (109 AD3d 733, 733–734 [1st Dept 2013] ), the Appellate Division, First Department, recently observed that "[i]In Fumarelli v. Marsam Dev . (92 N.Y.2d 298 [1998] ), the Court of Appeals held that the codification of General Business Law article 36–B, pursuant to which a builder-vendor may exclude or modify all express warranties provided that the purchase agreement contains a limited warranty in accordance with the provisions of General Business Law § 777–b, has superseded the common-law implied housing merchant warranty previously recognized in Caceci v. Di Canio Constr. Corp. (72 N.Y.2d 52 [1988] )." Here, the implied warranties were expressly disclaimed in the offering plan, and the offering plan included a valid and specific limited warranty in accordance with the provisions of General Business Law § 777–b. Thus, plaintiff's third and thirteenth causes of action for breach of an implied warranty must be dismissed on this basis (see Board of Mgrs. of Soho N. 267 W. 124th St. Condominium v. NW 124 LLC, 116 AD3d 506, 507 [1st Dept 2014] ; 20 Pine St. Homeowners Assn., 109 AD3d at 733–734 ; Board of Mgrs. of Olive Park Condominium, 2014 N.Y. Slip Op 33012[U], *6; 110 Cent. Park S. Corp. v. 112 Cent. Park S., LLC, 41 Misc.3d 380, 387 [Sup Ct, N.Y. County 2013] ).
Plaintiff's fourth cause of action for negligence as against 647 & 649 Washington Ave, LLC and Haijar and its fourteenth causes of action for negligence as against Double M Development, LLC and Munzer allege that at the time that these defendants signed the certification in the fifth amendment to the offering plan, they knew or should have known that certain representations contained therein were materially false in that the offering plan omitted material facts and did not set forth completely and accurately the details of the condominium's construction. Plaintiff, in these causes of action, further alleges that the sponsor defendants also negligently failed to amend the offering plan and the certification after being notified of the defects in the condominium and thereby continued to misrepresent and omit material facts regarding the condominium's condition.
Plaintiff's fifth cause of action, insofar as it is asserted against 647 & 649 Washington Ave, LLC and Haijar, alleges that 647 & 649 Washington Ave, LLC and Haijar were under a duty to properly design, construct, and supervise construction of the condominium, and to comply with the New York City Building Code and all other relevant statutes, rules, and regulations, and that they caused the condominium to be designed and constructed negligently and defectively, improperly supervised the construction, and were in violation of the Building Code and all other relevant statutes, rules and regulations. It further alleges that 647 & 649 Washington Ave, LLC and Haijar took no steps to cure these defects.
It is well settled, however, that a simple "[b]reach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated" (Board of Mgrs. of Soho N. 267 W. 124th St. Condominium, 116 AD3d at 507 ; see also Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 N.Y.2d 382, 389 [1987] ). "This legal duty must spring from circumstances extraneous to, and not constituting elements of the contract, although it may be connected therewith and dependent upon the contract" (Board of Mgrs. of the 125 N. 10th Condominium v. 125 N. 10, LLC, 42 Misc.3d 1214[A], 2014 N.Y. Slip Op 50035[U], *11 [Sup Ct, Kings County 2014] [internal quotation marks omitted] ).
"Allegations of negligence based on defects in construction of a condominium sound in breach of contract rather than tort" (Board of Mgrs. of Soho N. 267 W. 124th St. Condominium, 116 AD3d at 507 ; see also Sutton Apts. Corp. v. Bradhurst 100 Dev. LLC, 107 AD3d 646, 648 [1st Dept 2013] ; Board of Mgrs. of the Chelsea 19 Condominium v. Chelsea 19 Assoc., 73 AD3d 581, 582 [1st Dept 2010] ). Here, the essence of plaintiff's negligence claims sounds in breach of contract, not tort, since plaintiff fails to allege that the sponsor defendants breached any duty other than to build the condominium building in the manner that they had promised (see Merritt v. Hooshang Constr., 216 A.D.2d 542, 543 [2d Dept 1995] ).
Furthermore, "[a] claim for negligent misrepresentation is not separate from a breach of contract claim where the plaintiff fails to allege a breach of any duty independent from contractual obligations" (Board of Mgrs. of Soho N. 267 W. 124th St. Condominium, 116 AD3d at 507 ; see also Greenman–Pedersen, Inc. v. Levine, 37 AD3d 250, 250 [1st Dept 2007] ). Here, plaintiff has failed to allege any legal duty that would give rise to an independent tort cause of action. Thus, plaintiff's negligence and negligent misrepresentation claims are duplicative of its breach of contract claims and fail to state viable causes of action. As such, dismissal of plaintiff's fourth, fifth, and fourteenth causes of action is mandated.
Plaintiff, in its cross motion, seeks summary judgment in its favor against the sponsor defendants on its second and twelfth causes of action for breach of contract and its fourth, fifth, and fourteenth causes of action for negligence, in the amount of $578,000. As discussed above, the court has dismissed plaintiff's fourth, fifth, and fourteenth causes of action for negligence. As to plaintiff's second and twelfth causes of action for breach of contract, plaintiff asserts that the sponsor defendants have failed to build a building in accordance with the offering plan or to comply with the plans and specifications filed with the New York City Department of Buildings, and that they did not construct the building with the quality of work that is comparable to local standards customary in the particular trade. It maintains that it is entitled to a leak free building.
Plaintiff has attached a copies of reports, dated March 25, 2011 and January 3, 2012, issued by its expert, AVT Enterprises Engineers & Consultants (AVT Engineering). AVT Engineering made a visual inspections of the building, and observed water entering apartments, and opined that several construction defects were causing the water infiltration. In its report dated January 3, 2012, AVT Engineering stated that it appeared that in many instances, the building was not built according to the building plans which plaintiff had provided to it. AVT Engineering stated that many of the problems with the water infiltration related to "the poor or improper installation of the exterior EFIS, as well as improper or inadequate flashing and caulking of windows, doors, and through wall HVAC PTAC units." It also stated that it appeared that the roof flashing system was not properly installed. Plaintiff has also annexed a report on the roof by Roof Services dated October 8, 2009, a proposal for partial facade restoration and waterproofing from Lawrence Exterior Restoration Corp. dated July 30, 2014, and an active leak schematic, work schedule and drawings prepared by Engineered Building Inspections, P.C. (EBI). Plaintiff states that it became necessary to obtain estimates for remedying the construction defects due to the issues in the building and that such estimated costs are $578,200. It submits an itemized list of the cost of the required repairs, including EIFS, windows, brick, roof, roof/build coping, HVAC, terrace doors, water pipe fastening, and caulk, which, along with the costs of permits, a sidewalk shed, and scaffolding/mobile, total the amount of $578,000.
Plaintiff asserts that the sponsor certifications included in the offering plan and signed by the sponsor defendants falsely stated that they did not know of any material fact or untrue statement of a material fact and that there was no fraud, deception, or concealment in the plan. Plaintiff states that the sponsor defendants further failed to amend the offering plan to disclose that roof decks would not be provided or that the building would not be constructed in accordance with the offering plan and amendments. Plaintiff contends that Haijar and Munzer actively participated in meetings and in the construction of the building and in making decisions with respect to the construction of the building. Plaintiff argues that the sponsor defendants have breached their contract, as embodied in the offering plan, with the unit owners because they did not comply with the terms of the offering plan, and that, as a result of that breach, they have been damaged in the amount of $578,000.
The sponsor defendants, in opposition, point out that plaintiff's experts' reports are unsworn, and, as such, are not admissible evidence sufficient to establish an entitlement to summary judgment. Furthermore, they have submitted the August 9, 2012 report of Harold Weinberg, a professional engineer. Mr. Weinberg set forth that he had visited the site on June 15, 2012 and made a field inspection and reviewed the prior reports that had been issued by AVT Engineering and Professional Building Inspectors. He stated that he did not find that the EIFS had widespread water seepage or water leaks. He further stated that he disagreed with the finding in these prior reports that the EIFS should be replaced, explaining that replacing such a widespread finish on the building "could do more damage than good." He set forth that, instead, the EIFS should be kept, with repairs made when any distress occurs. He listed a detailed comparison of the prior reports with his own field observations. He addressed, in depth, the original complaints of plaintiff, the three prior reports made on behalf of plaintiff, the efficacy of the solutions proposed by plaintiff's experts in those reports, already effectuated remedies, and the sponsor's proposed solutions. Mr. Weinberg, in his report, set forth that some of the alleged issues do not exist, and that the proposed solutions are either unnecessary or cost ineffective. Mr. Weinberg's report raises issues of fact as to plaintiff's breach of contract claims.
In view of the fact that plaintiff's allegations of breaches by the sponsor defendants and the damages resulting therefrom are not supported by sworn admissible evidence, and there are material issues of fact which exist as to the specific defects which exist at the building, summary judgment in favor of plaintiff on its second and twelfth causes of action must be denied (see Clark–Fitzpatrick, Inc. v. Long Is. R.R. Co., 198 A.D.2d 254, 255 [2d Dept 1993] ; Board of Mgrs. of Woodpoint Plaza Condominium v. Woodpoint Plaza LLC, 24 Misc.3d 1233[A], 2009 N.Y. Slip Op 51715[U], *5 [Sup Ct, Kings County 2009] ).
Plaintiff's first and eleventh causes of action for fraud allege that at the time that the certifications were signed, the sponsor defendants knew that the condominium would contain the alleged defects upon completion, and that they did not intend to correct or cause the defects to be corrected. Plaintiff, in these causes of action, further alleges that the sponsor defendants disseminated the offering plan to prospective unit owners, intending that the prospective unit owners would rely upon the truth and accuracy of the information set forth in the offering plan. Plaintiff alleges that the sponsor defendants failed to amend the offering plan and the certification contained therein to inform the prospective unit owners of the defects. It additionally alleges that at the time that these representations were made, the sponsor defendants knew them to be false and that they were made for the purpose of concealing from the condominium's prospective and actual unit owners expenditures which they would be required to make upon purchasing their units, and that these representations and omissions were made with the intent to deceive, defraud, and induce the prospective and actual unit owners to purchase their units. It asserts that the prospective and actual unit purchasers relied upon these representations and were thereby induced to purchase their units in the condominium, sustaining damages in the sum of $2,000,000.
The sponsor defendants seek dismissal of plaintiff's first and eleventh causes of action for fraud, contending that they are barred as a matter of law by the Martin Act, and are duplicative of plaintiff's breach of contract claims. It is well established that "[t]here is no private right of action where the fraud and misrepresentation relies entirely on alleged omissions in filings required by the Martin Act" (Berenger v. 261 W. LLC, 93 AD3d 175, 184 [1st Dept 2012] ; see also Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236, 247 [2009] ). "The Martin Act is a disclosure statute designed to protect the public from fraud in the sale of real estate securities and the Attorney General enforces its provisions and implementing regulations" (Berenger, 93 AD3d at 184 ; see also Kerusa Co. LLC, 12 NY3d at 245 ; CPC Intl. v. McKesson Corp., 70 N.Y.2d 268, 276–277 [1987] ). "[A] private litigant may not pursue a common-law cause of action where the claim is predicated solely on a violation of the Martin Act or its implementing regulations and would not exist but for the statute" (Assured Guar. [UK] Ltd. v. J.P. Morgan Inv. Mgt. Inc., 18 NY3d 341, 353 [2011] ; see also Board of Mgrs. of the 125 N. 10th Condominium, 2014 N.Y. Slip Op 50035[U], *15).
Here, plaintiff complains of omissions and misrepresentations made by the sponsor defendants in the offering plan. The certifications of the sponsor defendants stated that they were being provided to comply with the requirements set forth in 13 NYCRR Part 20. As these documents were filed in accordance with the Martin Act, claims of misrepresentations based upon such documents are preempted by the Martin Act (see Kerusa Co. LLC, 12 NY3d at 244–245 ). Thus, plaintiff's first and eleventh causes of action must be dismissed.
Plaintiff concedes that its first and eleventh causes of action, as presently alleged, are preempted by the Martin Act. However, it seeks, in its cross motion, leave to amend its complaint to add allegations to these causes of action that the representations were also contained in brochures and advertising distributed to the unit owners and that the sponsor defendants disseminated these marketing materials to prospective unit owners, knowing and intending that the prospective unit owners would rely upon the truth and accuracy of the information in the brochures and advertising.
It has been held that where causes of action against a sponsor defendant are based upon alleged fraud and material misrepresentations contained not only in the offering plan, but also in brochures, advertisements, and purchase agreements, as well as oral statements made by that defendant, they "are not precluded by the Martin Act, as they do not rel[y] entirely on alleged omissions from filings required by the Martin Act and the Attorney General's implementing regulations" ‘ (Board of Mgrs. of Marke Gardens Condominium v. 240/242 Franklin Ave., LLC, 71 AD3d 935, 936 [2d Dept 2010], quoting Kerusa Co. LLC, 12 NY3d at 247 ; see also Board of Mgrs. of 14 Hope St. Condominium, 2013 N.Y. Slip Op 51201[U], *4).
In support of its cross motion insofar as it seeks leave to amend its complaint, plaintiff has submitted the affidavit of Cathleen Caron, who, as noted above, is plaintiff's president. Ms. Caron asserts that the sponsor defendants advertised the building as having roof deck units and being a luxury building. She claims that the building was not a luxury building, but, instead, the building has suffered water leaks through the window and roof, which substantially impair the peace and enjoyment of the units. Plaintiff annexes a brochure to its cross motion as exhibit J, in an effort to show that the sponsor defendants made representations outside of the offering plan. The only representations which plaintiff purports to rely upon in this brochure were that the condominium consisted of "luxury condominium homes" with "luxury amenities," and that there were roof deck units. However, this brochure contains only the name of Van J. Brody Architects, and does not show that it was disseminated by the sponsor defendants. Moreover, the offering plan included a form of the purchase agreement, which was required to expressly represent that the purchaser has "not relied upon any representations, statements or warranties, written or oral, to any matter or estimate, that are not set forth herein and in the [offering p]lan," and this was included in the purchase agreements given to the unit owners. A motion to amend a pleading must be denied where the proposed amendment is shown to be patently devoid of merit (see Darby Group Companies, Inc. v. Wulforst Acquisition, LLC, 130 AD3d 866 [2d Dept 2015] ; Scofield v. DeGroodt, 54 AD3d 1017, 1018 [2d Dept 2008] ).
In addition, plaintiff's common-law fraud claim against the sponsor defendants is duplicative of its breach of contract claim. "A fraud claim may not be maintained when the only fraud charged relates to the breach of contract" (34–35th Corp. v. 1–10 Ind. Assoc., LLC, 2 AD3d 711, 712 [2d Dept 2003] ; Alamo Contract Bldrs. v. CTF Hotel Co., 242 A.D.2d 643, 644 [2d Dept 1997] ). Here, both plaintiff's breach of contract claim and proposed amended fraud claim merely allege, in essence, that the sponsor defendants promised to build for it and the unit owners a well constructed condominium with defect-free apartments and common areas. Plaintiff's proposed common-law fraud allegations do not arise from any representations that are collateral or extraneous to the offering plan or purchase agreements and is redundant of its breach of contract claim (see 34–35th Corp., 2 AD3d at 712 ; Alamo Contract Bldrs., 242 A.D.2d at 643–644 [2d Dept 1997] ). Furthermore, the alleged misrepresentations/omissions did not result in any loss independent of the damages allegedly incurred for breach of contract. Thus, plaintiff's attempt to circumvent the Martin Act's preemption of its fraud claim by its proposed amendment must be rejected.
Moreover, plaintiff does not assert that it was previously unaware of any facts which underlie its proposed amendment to its fraud claim and such proposed amendment is prejudicial to the sponsor defendants at this late juncture (following the filing of plaintiff's note of issue) since they have not conducted discovery on the issue of brochures and advertisements during the four and a half years in which this action has been pending (see generally Morris v. Queens Long Is. Med. Group, P.C., 49 AD3d 827, 828–829 [2d Dept 2008] ; Linares v. Spencer–Cameron Leasing Corp., 121 A.D.2d 606. 607 [2d Dept 1986] ).
Plaintiff, in its cross motion, further seeks to amend its complaint to include a claim against Double M Development, LLC for alleged common charges assessments levied on all unit owners. Plaintiff asserts that the amount of Double M Development, LLC's arrears in paying these assessments of common charges through January 31, 2015 equals $33,350. This claim is not set forth in plaintiff's proposed amended complaint which is annexed to its reply affirmation. It is also unrelated to the claims raised in this action or the underlying facts upon which they are based. Furthermore, plaintiff has not alleged any specific facts in support of this proposed claim, but merely submits an "arrears report," unsupported by any affidavit or competent proof. No discovery has been conducted on this proposed claim during the four and one-half years in which this action has been pending. Thus, since this proposed amendment would be prejudicial to Double M Development, LLC, leave to assert it must be denied (see Morris, 49 AD3d at 828–829 ).
Plaintiff seeks an order granting it a default judgment against Van J. Brody Architects under its seventh, eighth, and ninth causes of action pursuant to CPLR 3215. It asserts that an additional copy of the summons and complaint was served by mailing a copy to Van J. Brody Architects on December 30, 2010 pursuant to CPLR 3215(g)(4)(i). It is undisputed that Van J. Brody Architects has not answered plaintiff's complaint or otherwise appeared in this action.
As discussed above, Van J. Brody Architects is the architect who prepared the architect's report for inclusion in part II of the offering plan and also signed a certification. In the certification, Van J. Brody Architects stated that the architect's report did not omit any material facts, and did not contain any untrue statements or conceal any facts. Van J. Brody Architects also stated, in its certification, that it prepared the building plans and specifications.
According to the offering plan, the sponsor defendants had entered into agreements with Van J. Brody Architects to perform architectural services in connection with the building's construction, including preparing plans and specifications. Plaintiff's claims against Van J. Brody Architects are predicated on its contention that Van J. Brody Architects's report provided that the condominium would be constructed with roof decks and that EIFS would be installed, and that no roof decks were provided and EIFS was improperly installed. Plaintiff states that the offering plan was amended five times, but Van J. Brody Architects failed to amend its architect's report. Plaintiff contends that the unit owners were the intended third-party beneficiaries of Van J. Brody Architects' obligation under its contract with the sponsor defendants, and that the unit owners are entitled to compensation from Van J. Brody Architects for not complying with its own architect's report. As noted above, plaintiff's fifth, seventh and ninth causes of action against Van J. Brody Architects are for negligence, its eighth cause of action against Van J. Brody Architects is for fraud, and its sixth cause of action against Van J. Brody Architects is for breach of contract.
It is undisputed that neither plaintiff nor the unit owners were in privity with Van J. Brody Architects, and there is no indication that the contract between Van J. Brody Architects and the sponsor defendants reflected an intent that the unit owners be its beneficiaries. While plaintiff does not seek a default judgment against Van J. Brody Architects based upon its sixth cause of action against it for breach of contract claim, this cause of action could not, in any event, be maintained as against it (see Sutton Apts., 107 AD3d at 649 ; Kerusa Co. LLC v. W10 Z/515 Real Estate L.P., 50 AD3d 503, 504 [1st Dept 2008] ; Board of Mgrs. of 550 Grand St. Condominium, 2014 N.Y. Slip Op 50576[U], *10; Board of Mgrs. of NV 101 N 5th St. Condominium v. Morton, 39 Misc.3d 1212[A], 2013 N.Y. Slip Op 50575[U], *10 [Sup Ct, Kings County 2013] ).
Plaintiff's seventh and ninth causes of action for negligence (and its fifth cause of action for negligence under which it does not seek a default judgment), which allege that Van J. Brody Architects negligently failed to see that the building was constructed in accordance with the architect's report and negligently designed and/or oversaw construction of the units and the building of the condominium in a manner resulting in the alleged numerous construction defects, merely sound in breach of contract which cannot be maintained due to the absence of privity, and it does not allege any independent cause of action for negligence (see Clark–Fitzpatrick, Inc., 70 N.Y.2d at 389 ; Hamlet on Olde Oyster Bay Home Owners Assn., Inc. v. Holiday Org., Inc., 65 AD3d 1284, 1288 [2d Dept 2009], appeal dismissed 15 NY3d 742 [2010] ; Board of Mgrs. of 550 Grand St. Condominium, 2014 N.Y. Slip Op 50576[U], *10). Thus, these tort claims against Van J. Brody Architects must fail for lack of contractual privity, or the functional equivalency of privity (see Sutton Apts. Corp., 107 AD3d at 648 ).
As to plaintiff's eighth cause of action for fraud against Van J. Brody Architects, the certification in the offering plan executed by Van J. Brody Architects was pursuant to the Attorney General's implementing regulations and, as such, it may not provide the basis of a private cause of action against it (see Hamlet on Olde Oyster Bay Home Owners Assn., Inc., 64 AD3d at 1287–1288). Plaintiff's claim for fraud against Van J. Brody Architects cannot be maintained since it is based on the failure to disclose facts in the offering plan or amendments, which are required only because of the Martin Act (see Board of Mgrs. of the 231 Norman Ave. Condominium, 2012 N.Y. Slip Op 51573 [U], *7).
"A plaintiff's right to recover upon a defendant's default in answering is governed by CPLR 3215... which requires that the plaintiff state a viable cause of action" ‘ (Walley v. Leatherstocking Healthcare, LLC, 79 AD3d 1236, 1238 [3d Dept 2010], quoting Fappiano v. City of New York, 5 AD3d 627, 628 [2d Dept 2004], lv denied 4 NY3d 702 [2004] ; see also Venturella–Ferretti v. Ferretti, 74 AD3d 792, 793 [2d Dept 2010] ). "In evaluating whether plaintiff has fulfilled this obligation, [Van J. Brody Architects], as the defaulting party, is deemed to have admitted all factual allegations contained in the complaint and all reasonable inferences that flow from them" ‘ (Walley, 79 AD3d at 1238, quoting Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 71 [2003] ). However, "the legal conclusions to be drawn from such proof are reserved for the court's determination" (Green v. Dolphy Constr. Co., 187 A.D.2d 635, 636 [2d Dept 1992] ; see also CPLR 3215[b], [e] ), and the court "must still reach the legal conclusion that those factual allegations establish a prima facie case" (Walley, 79 AD3d at 1238 ; see also Matter of Dyno v. Rose, 260 A.D.2d 694, 698 [1999], appeal dismissed 93 N.Y.2d 998 [1999], lv denied 94 N.Y.2d 753 [1999] ). "Where a valid cause of action is not stated, the party moving for judgment is not entitled to the requested relief, even on default" ‘ (LIUS Group Intl. Endwell, LLC v. HFS Intl., Inc., 92 AD3d 918, 920 [2d Dept 2012], quoting Green, 187 A.D.2d at 636 ; see also Church of S. India Malayalam Congregation of Greater N.Y. v. Bryant Installations, Inc., 85 AD3d 706, 707 [2d Dept 2012] ; Cree v. Cree, 124 A.D.2d 538, 541 ). Rather, "[u]nder such circumstances, the court may sua sponte dismiss a plaintiff's complaint upon [its] motion for a default judgment" (Walley, 79 AD3d at 1238 ; see also Martocci v. Bowaskie Ice House, LLC, 31 AD3d 1021, 1022 [3d Dept 2006], lv dismissed 7 NY3d 916 [2006], cert denied 552 U.S. 918 [2007] ). Thus, since the court finds that none of plaintiff's causes of action against Van J. Brody Architects state a viable cause of action, the court, sua sponte, dismisses these claims.
CONCLUSION
Accordingly, the sponsor defendants' motion to dismiss plaintiff's complaint is granted with respect to its first, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, thirteenth, fourteenth, and fifteenth causes of action, and is denied with respect to plaintiff's second and twelfth causes of action. Plaintiff's cross motion is granted insofar as it seeks to amend the caption of this action to reflect its name to be Board of Managers of 647 & 649 Washington Avenue Condominium, and it is otherwise denied in its entirety. The court, upon plaintiff's cross motion for a default judgment against Van J. Brody Architects, sua sponte, dismisses plaintiff's claims as against it.
This constitutes the decision and order of the court.
Parties to appear for conference on November 19, 2015 at 10 AM.