Bd. of Managers of the 125 N. 10th Condo. v. 125 N. 10, LLC
| Decision Date | 11 January 2016 |
| Docket Number | No. 14982/2012.,14982/2012. |
| Citation | 31 N.Y.S.3d 920 (Table) |
| Parties | BOARD OF MANAGERS OF THE 125 NORTH 10TH CONDOMINIUM, Plaintiff, v. 125 NORTH 10, LLC, d/b/a 125 North 10 LLC, 125N 10 d/b/a 125 North 10 LLC, 125 N 10 d/b/a 125 North 10 MM, LLC, Savanna Services L.L.C d/b/a Savanna Partners d/b/a Savanna Fund, Christopher Schlank, Nicholas Bienstock a/k/a Nicholas C. Bienstock a/k/a Nicholas Churnham Bienstock, Peter Petron, John Fraser a/k/a John R. Fraser, Investcorp International Holdings Inc. d/b/a Investcorp, Ryder Construction, Inc., Carl Jaccarino, Robert M. Reich, LLC, Robert M. Rich, Anthony Cucich Architects d/b/a A. Cucih Architects, Anthony Cucich a/k/a Anthony A. Cucich, Scarano Architect, PLLC d/b/a Scarano & Associates, Sharon Engineering P.C. d/b/a Sharon Engineering, P.C., Ronan Sharon, Penmark Realty Corporation d/b/a Penmark Realty Corp. d/b/a Penmark, Core Group Marketing LLC d/b/a Core Group Marketing, LLC, S. Schwartz Engineering, PLLC d/b/a S. Schwartz Associates LLC d/b/a Schwartz S d/b/a S. Schwartz Associates Consulting Engineers, Simon Schwartz, Frank Seta & Associates, LLC, Saeid S. Seta a/k/a Frank Seta, “John Doe No.1 through John Doe # 10, inclusive, the last ten names being fictitious and unknown to plaintiff, the persons or parties intended being the persons or corporations or entities who provided construction services and/or design and fabrication services at the premises described herein, Defendants. 125 North 10, LLC d/b/a 125 North 10 LLC, 125 N 10 d/b/a 125 North 10 LLC, 125 N 10 d/b/a 125 North 10 MM, LLC, Savanna Services L.L.C. d/b/a Savanna Partners d/b/a Savanna Fund, Christopher Schlank, Nicholas Bienstock, a.k.a. Nicholas Cburham Bienstock, Peter Petron, John Fraser a/k/a John R. Fraser, Investcorp International Holdings Inc. d/b/a Investcorp, Third Party Plaintiffs, v. Anthony Cucich Architects d/b/a A Cucich Architects, Scarano Architect, PLLC d/b/a Sacarano & Associates Architects, Sharon Engineering, P.C. d/b/a Sharon Engineering, P.C., Ronan Sharon, S. Schwartz Engineering PLLC d/b/a S Schwartz Associates LLC d/b/a Schwartz S d/b/a S. Schwartz Associates Consulting Engineers, Frank Seta & Associates, LLC and Ryder Construction, Inc., Third Party Defendants. Ryder Construction, Inc., Second Third–Party Plaintiff, v. KNS Building Restorations, Inc., Hi–Lume Corporation, Castle Construction Group, Inc., Doortec Architectural Metal & Glass, Maspeth Steel Fabricators, Inc. Mulroy Masonry, Inc., M & D Fire Door, ADS Windows, Inc., Glen Island Construction, Corp., Stucco Specialists, Inc., Williamsburg Parquet Flooring Co., H2L Millwork Construction Corp., Roz–A–Lite Electrical Contracting, Inc., Dynamic Sheet Metal Ltd., Brook Plumbing & Heating Corp., Imperial Painting & Fireproofing, Inc., d/b/a The Gold Group, Shabco Construction Services, Inc., Capitol Fire Sprinkler CPO., Inc. and Rotavele Elevator, Inc., Second Third–Party Defendants. |
| Court | New York Supreme Court |
Jennifer J. Bock, Esq., Great Neck, for Plaintiffs.
Andrea Roschelle, Esq., New York, for Defendants.
The following e-filed papers read herein:
| Papers | Numbered |
| Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed | 221–242 |
| Opposing Affidavits (Affirmations) | 325–338 |
| Reply Affidavits (Affirmations) | 480–482 |
| Affidavit (Affirmation) Memorandum of Law | 339 |
In this action by plaintiff Board of Managers of the 125 North 10th Condominium (plaintiff), defendants 125 North 10, LLC (the Sponsor), and 125 North 10 MM, LLC (North10 MM), Savanna Services L.L.C d/b/a Savanna Partners d/b/a Savanna Fund (Savanna), Christopher Schlank (Schlank), Nicholas Bienstock (Bienstock), Peter Petron (Petron), John Fraser a/k/a John R. Fraser (Fraser), Investcorp International Holdings Inc. d/b/a Investcorp (Investcorp), and Core Group Marketing, LLC (Core) (collectively, the Non–Sponsor Defendants) move, under motion sequence number 17, for an order: (1) granting partial summary judgment in favor of the Sponsor dismissing plaintiff's second, third, fourth, fifth, and sixth causes of action as against it, and (2) granting summary judgment in favor of the Non–Sponsor Defendants dismissing plaintiff's complaint in its entirety as against: (a) Schlank, Bienstock, Petron, and Fraser (collectively, the Sponsor Principals), (b) North10 MM, Savanna and Investcorp (the Sponsor Affiliates), and (c) the Sponsor's selling agent, Core. The Sponsor moves, in the alternative, for a more definite statement pursuant to CPLR 3024(a).
The Sponsor is a duly-formed Delaware limited liability company that was created on May 15, 2006. As set forth in the Sponsor's Operating Agreement dated June 27, 2006, the Sponsor is comprised of three members, namely, North10 MM, which is its managing member, and Optinvest IV, LLC (Optinvest) and Savanna Williamsburg LLC (Williamsburg), which are both non-managing members. Fraser, Petron, Schlank, and Bienstock are not members or employees of the Sponsor. Fraser was formerly the chairperson and president of both North10 MM and Optinvest, and Petron was a member of the Sponsor's executive committee. Schlank and Bienstock are members of the Williamsburg member.
Pursuant to a contract of sale dated June 27, 2006, the Sponsor, as the purchaser, and 125 North Tenth Street LLC, as the seller, agreed to the purchase and sale of real property located at 125 North Tenth Street, in Williamsburg, Brooklyn (the property). The Sponsor's Operating Agreement provided that the Sponsor was formed to acquire the property and to own, hold, develop, operate, sell, finance, and convert it to condominium ownership. Thereafter, the Sponsor promulgated a condominium offering plan for the establishment of condominium ownership of property, including the land and building, pursuant to the Condominium Act (the Offering Plan), which was accepted for filing with the Department of Law of the State of New York on April 16, 2007 and was thereafter amended 18 times. The Sponsor developed the property to include 86 residential units, 8 storage lockers, 24 cabanas, and 51 parking units. The building consists of two six-story structures containing condominium units with a common cellar containing a parking garage. The Offering Plan contains representations by the Sponsor that it would construct the building and the units in accordance with plans, specifications, and applicable law.
As set forth in the Offering Plan, Schlank, Bienstock, Petron, and Fraser were the principals of the Sponsor. On November 14, 2006, before the Offering Plan was accepted for filing on April 16, 2007, Schlank, Bienstock, Petron, and Fraser, in their individual capacities, as the Principals of Sponsor, executed a Certification of Sponsor and Principals (the Certification), which was thereafter appended to the Offering Plan. The Certification was also executed by the Sponsor by North10 MM, as its managing member, and by Fraser, on behalf of North10 MM, as North10 MM's president. The Certification, which is mandated to be included in the Offering Plan pursuant to General Business Law § 362–e (6), represented that the Sponsor Principals had read the entire Offering Plan, investigated the facts in the Offering Plan and the underlying facts, exercised due diligence to form a basis for this Certification, and jointly and severally certified that the Offering Plan does, and that documents submitted thereafter by them which amended or supplemented the Offering Plan would:
“(i) set forth the detailed terms of the transaction and be complete, current and accurate; (ii) afford potential ... purchasers ... an adequate basis upon which to found their judgment; (iii) not omit any material fact; (iv) not contain any untrue statement of a material fact, (v) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale; (vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; (vii) not contain any representation or statement which is false, where [they]: (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.”
Core was the Sponsor's selling agent, pursuant to a July 1, 2006 Sales and Marketing Agreement (the Sponsor–Core Sales and Marketing Agreement), under which the Sponsor engaged Core as its exclusive agent to market and sell the condominium units. In connection with the condominium offering, each purchaser of a unit executed a form purchase agreement (the Purchase Agreement) with the Sponsor, as the seller, which listed Core as the selling agent.
Section 1 of the Purchase Agreement provided that the purchaser acknowledged receiving and reading a copy of the Offering Plan for the condominium and all amendments thereto, and that “[t]he [Offering] Plan is incorporated herein by reference and made a part hereof with the same force and effect as if set forth at length.” Section 17.2 of the Purchase Agreement provided that “[t]he construction of the [b]uilding and the [u]nit and the correction of any defects in the construction thereof to the extent required under the [Offering] Plan are the sole responsibility of [the] Sponsor.” The Purchase Agreements were signed by the individual condominium unit purchasers and by the Sponsor, by its managing member, North10 MM. Although the form Purchase Agreement contained in the Offering Plan set forth the printed name of Fraser, as president of North10 MM and the authorized signatory for North10 MM, the actual Purchase Agreements were signed by Schlank, on behalf of North10 MM, with his title listed therein as North10 MM's member.
On July 24, 2013, plaintiff, on behalf of itself as the board of managers of the condominium and the unit owners, commenced this action against numerous defendants, including the...
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