Bd. of Managers of the 231 Norman Ave. Condo., M. Ferrari, LLC v. 231 Norman Ave. Prop. Dev., LLC, 4197/11.

• Decision Date: 20 July 2012
• Docket Number: No. 4197/11.,4197/11.
• Parties: The BOARD OF MANAGERS OF the 231 NORMAN AVENUE CONDOMINIUM, M. Ferrari, LLC, Zbigniew Solarz, Katarzyna Solarz, Artac.com, LLC, Steven Holl, Tommy Agriodimas, Joan Levinson, Dorothy Venezia, Vincent Venezia, Raffaele Venezia, a/k/a Ralph Venzia, Anthony E. Conte, The Pickle Jar, LLC, and Stephen Conte, Plaintiffs, v. 231 NORMAN AVENUE PROPERTY DEVELOPMENT, LLC, David Yerushalmi, Amir Yerushalmi, Oren Yerushalmi a/k/a Oren Yerushalmy, MBK Architect, Michael Kriegh, Raviv Turner, and Ben Friedman, Defendants.
• Court: New York Supreme Court

36 Misc.3d 1232
959 N.Y.S.2d 87
2012 N.Y. Slip Op. 51573

The BOARD OF MANAGERS OF the 231 NORMAN AVENUE CONDOMINIUM, M. Ferrari, LLC, Zbigniew Solarz, Katarzyna Solarz, Artac.com, LLC, Steven Holl, Tommy Agriodimas, Joan Levinson, Dorothy Venezia, Vincent Venezia, Raffaele Venezia, a/k/a Ralph Venzia, Anthony E. Conte, The Pickle Jar, LLC, and Stephen Conte, Plaintiffs,
v.
231 NORMAN AVENUE PROPERTY DEVELOPMENT, LLC, David Yerushalmi, Amir Yerushalmi, Oren Yerushalmi a/k/a Oren Yerushalmy, MBK Architect, Michael Kriegh, Raviv Turner, and Ben Friedman, Defendants.

No. 4197/11.

Supreme Court, Kings County, New York.

July 20, 2012.

Adam Leitman Bailey, Scott J. Pashman, Adam Leitman Bailey, PC, New York, for Plaintiffs.

N. Ari Weisbrot, Phillips Nizer, LLP, New York, for Defendants, 231 Norman & Amir Yerushalmi.

Christopher Cobb, Wolf Haldenstein Adler Freeman & Herz LLP, New York, for Defendants, Turner & Friedman.

Albert Wesley McKee, Gogick, Byrne & O'Neill, New York, for Defendants, MBK & Kriegh.

CAROLYN E. DEMAREST, J.

This is an action by plaintiffs the Board of Managers of the 231 Norman Avenue Condominium (the Board), M. Ferrari, LLC, Zbigniew Solarz, Katarzyna Solarz, Artarc.com, LLC, Steven Holl, Tommy Agriodimas, Joan Levinson, Dorothy Venezia, Vincent Venezia, Raffaele Venezia, a/k/a Ralph Venezia, Anthony E. Conte, the Pickle Jar, LLC, and Stephen Conte (collectively, plaintiffs), a group of purchasers of certain commercial condominium units at the 231 Norman Avenue Condominium (the Condominium), also known as the Greenpoint Lofts, which is located at 231 Norman Avenue, in Brooklyn, New York, against defendants 231 Norman Avenue Property Development, LLC (the Sponsor), David Yerushalmi, Amir Yerushalmi (Yerushalmi), Oren Yerushalmi a/k/a Oren Yerushalmy, MBK Architect, Michael Kriegh (Kriegh), Raviv Turner, and Ben Friedman (collectively, defendants), to recover for alleged construction and design defects in the Condominium. MBK Architect and Kriegh (collectively, the Architect defendants) move for an order, pursuant to CPLR 3211(a)(1), (5), and (7), dismissing plaintiffs' verified complaint as directed as against them and all cross claims as against them. The Sponsor and Yerushalmi (collectively, the Sponsor defendants) move for an order, pursuant to CPLR 3211(a)(1), (2), and (7), and 3016(b), dismissing plaintiffs' amended complaint as directed against them in its entirety, with prejudice.

BACKGROUND

The buildings at the Condominium were renovated, constructed, and converted into a commercial condominium, pursuant to a project by the Sponsor. The Condominium consists of a pre-existing commercial building with an additional reconstructed annex. As developed, the Condominium has a total of 68 commercial units, which were offered for sale pursuant to a condominium Offering Plan (the Offering Plan) submitted by the Sponsor and accepted for filing by the Attorney General's office on or about April 26, 2006.

The Offering Plan contains representations by the Sponsor that it would construct the building in accordance with the descriptions and specifications as set forth in that plan. Each purchaser of a unit executed a form Purchase Agreement (Purchase Agreement), with the Sponsor, as seller, which expressly provided that “[t]he Offering Plan ... including all documents set forth in Part II thereof and any amendments thereto, is incorporated herein by reference with the same effect as if set forth at length.” Thus, all of the Sponsor's obligations under the Offering Plan were thereby incorporated into each individual plaintiff's Purchase Agreement. The Certification by the Sponsor and Yerushalmi was part of the Offering Plan that was incorporated by reference into each unit owner's Purchase Agreement.

In addition, under section 33(A) of each unit purchaser's Purchase Agreement, the Sponsor expressly covenanted that “[t]he construction of the building and the Unit, including the materials, equipment and fixtures to be installed therein, shall be substantially in accordance with the Plan and the architectural plans and specifications' (defined in the Plan), subject to the right reserved by Sponsor to modify and amend the Plan and the plans and specifications' in order to substitute materials, equipment or fixtures of equal or better quality and design.” The Sponsor further covenanted, in subdivision (B) of this section, that “[t]he construction of the Building and the Unit and the correction of any defects in construction to the extent required under the Plan are the sole responsibility of the Sponsor.”

MBK Architect is the architect retained by the Sponsor in connection with the design of the Condominium buildings and the preparation of the Offering Plan, and Kriegh is the principal of MBK Architect. The Architect defendants were retained pursuant to a written agreement (the Agreement) with the Owner, identified as 231 Norman Avenue Property Development Corp. The Agreement, dated February 2, 2004, set forth the Architect defendants' responsibilities and the scope of the work. The Agreement provided that the project was to renovate and convert pre-existing warehouse space to a 68–unit commercial condominium facility. The Agreement specified, at page 3, that “[n]othing contained in this agreement shall necessarily create a contractual relationship with or a cause of action in favor of a third party against either the Owner or the Architect.”

On or about August 25, 2005, as part of the services provided by MBK, the Architects defendants issued an Architect's Report regarding both the then-current conditions of the pre-existing structures, as well as the planned modifications as part of the development and conversion to the commercial Condominium (the Architect's Report). In order to allow the filing of the Offering Plan, the Sponsor was required to include, in its Offering Plan, a Certification of the Sponsor's Architect pursuant to Part 20.4 of the Regulations issued pursuant to General Business Law article 23–A (the Certification). Kriegh executed, as required by statute, the Certification regarding the Architect's Report. In the Certification, Kriegh stated that he had “read the entire Architect's Report and investigated the facts therein and the facts underlying it with due diligence in order to form a basis for this certification.” Kriegh further stated that “[t]his certification [wa]s made for the benefit of all persons to whom this offer is made .” In addition, Kriegh certified that the Architect's Report:

“(i) set forth in narrative form the description and/or physical condition of the entire property as it will exist upon completion of construction, provided that construction is in accordance with the plans and specifications that [he] examined [emphasis added];

“(ii) in our professional opinion afford potential investors, potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the description and/or physical condition of the property as it will exist upon completion of construction, provided that construction is in accordance with the plans and specifications that [he] examined ” [emphasis added].

Kriegh also certified that the Architect's Report did “not omit any material fact”; “contain any untrue statement of a material fact”; “contain any fraud, deception, concealment, or suppression”; “contain any promise or representation as to the future, which is beyond reasonable expectation or unwarranted by existing circumstances”; or “contain any representation or statement which [wa]s false where [he]: (a) knew the truth; (b) with reasonable effort could have known the truth; (c) made no reasonable effort to ascertain the truth; [or] (d) did not have knowledge concerning the representation or statement made.” The Certification also explicitly provided that “[t]his statement [wa]s not intended as a guarantee [or] warranty of the physical condition of the property.”

On January 10, 2008, the certificate of occupancy was issued by the New York City Department of Buildings. Kriegh attests that MBK Architect had completed the scope of the work in December 2007, prior to the issuance of the certificate of occupancy. The Architect defendants issued their final bill for services on January 15, 2008.

The April 26, 2006 Offering Plan was amended eight times over the years, from the First Amendment dated October 25, 2006, through the Eighth Amendment dated September 3, 2010. The First Amendment and the Second Amendment described physical changes in the Condominium and contained an Addendum to the Architect's Report detailing those changes prepared by the Architects. The following six Amendments did not identify any physical changes to the Condominium, and specifically noted that: “[t]here are no other changes to the Offering Plan.”

This action was commenced by the filing of a summons with notice on February 22, 2011, and a verified complaint was filed on September 1, 2011. Plaintiffs are the Board ¹ of the Condominium and a group of individual unit owners who purchased condominium units in the Condominium. Defendants include the Sponsor, principals of the Sponsor, and the former Sponsor-appointed members of the Condominium's Board. Yerushalmi is one of the principals of the Sponsor who served as a member of the Board of the Condominium pursuant to the terms of the Offering Plan. Also named as defendants are MBK Architect, who, as noted above, was the architect retained by the Sponsor in connection with the design of the Condominium buildings and the preparation of the Offering Plan, and Kriegh, who, as previously noted, is MBK Architect's principal who signed the Certification contained in the Offering Plan.

Plaintiffs allege that the design and construction of the Condominium were grossly deficient, with numerous problems and deviations from what was promised to unit owners. Plaintiffs claim that there are substantial defects that cause the Condominium and...