Rai v. WB Imico Lexington Fee, LLC, 09 Civ. 9586 (PGG)

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtPAUL G. GARDEPHE, U.S.D.J.
PartiesAVIRAL RAI and SANGEETA RAI, Plaintiffs and Counter-Defendants, v. WB IMICO LEXINGTON FEE, LLC and GARY BARNETT, Defendants and Counter-Claimants.
Docket Number09 Civ. 9586 (PGG)
Decision Date31 March 2017

AVIRAL RAI and SANGEETA RAI, Plaintiffs and Counter-Defendants,
v.
WB IMICO LEXINGTON FEE, LLC and GARY BARNETT, Defendants and Counter-Claimants.

09 Civ. 9586 (PGG)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

March 31, 2017


MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, U.S.D.J.:

Plaintiffs Aviral Rai and Sangeeta Rai (the "Rais" or the "Rai Plaintiffs") are purchasers of a condominium unit in "The Lucida," a condominium development in Manhattan sponsored and developed by Defendant WB Imico Lexington Fee, LLC ("WB Imico") and its principal, Gary Barnett. Having fully prevailed against the Rais in this litigation, WB Imico has moved for an award of attorneys' fees and costs pursuant to a fee-shifting provision in the Rais' purchase agreement.1 (Dkt. No. 113)2 WB Imico seeks $444,059.79 in attorneys' fees and costs incurred over six years of litigation against the Rais and four other condominium purchasers.

For the reasons stated below, WB Imico's motion for an award of attorneys' fees and costs will be granted.

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BACKGROUND

I. FACTS3

The Lucida is a condominium development located at 151 East 85th Street, New York, New York. (Am. Cmplt. (Dkt. No. 7) ¶ 1) On November 12, 2007, the Rai Plaintiffs executed a purchase agreement for a condominium unit in The Lucida (the "Purchase Agreement") and paid WB Imico a deposit of $643,119.90 - constituting 15% of the purchase price of the unit - pursuant to that agreement. (Id. ¶¶ 20-21)

On November 10, 2009, within two years of executing the Purchase Agreement, the Rai Plaintiffs sent a notice to WB Imico seeking to rescind the Purchase Agreement due to WB Imico's alleged violations of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701-1720 ("ILSA"). (See id. ¶¶ 46, 50-79) In addition to the rescission of the Purchase Agreement, the Rai Plaintiffs sought the return of their deposit. (Id. ¶¶ 48-49, 55, 67, 77)

II. PROCEDURAL HISTORY

The procedural history of this matter and related cases is long and complex.

On November 18, 2009, the Rai Plaintiffs commenced this action, alleging that WB Imico failed to provide them with a printed property report in advance of signing the Purchase Agreement, in violation of Section 1703(a)(1)(B) of the ILSA. (Cmplt. (Dkt. No. 1) ¶¶ 30-34) On the basis of this violation, the Rai Plaintiffs sought to rescind the Purchase Agreement and recover their $643,119.90 deposit. (Id. ¶¶ 48-49, 55, 67, 77) That same day, four other actions were filed in this District against WB Imico by other purchasers of

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condominiums at The Lucida (the "Other Plaintiffs").4 In all four actions, plaintiffs alleged that their purchase agreements violated (1) Section 1703(d)(1) of the ILSA, because the purchase agreements did not include a tax lot number for the purchased unit, and (2) Section 1703(d)(3) of the ILSA, because the purchase agreements did not clearly communicate certain purchaser rights in the event of the purchaser's default. (See 09 Civ. 9609 (Dkt. No. 1); 09 Civ. 9610 (Dkt. No. 1); 09 Civ. 9611 (Dkt. No. 1); 09 Civ. 9612 (Dkt. No. 1)) Like the Rai Plaintiffs, the Other Plaintiffs sought to rescind their purchase agreements and recover their deposits based on the alleged violations of the ILSA. (See id.)

On January 28, 2010, the Rais filed an Amended Complaint that repeated their ILSA, Section 1703(a)(1)(B) claim concerning the property report (Am. Cmplt. (Dkt. No. 7) ¶¶ 50-57), but added claims for violations of ILSA, Sections 1703(d)(1) (tax lot number) and 1703(d)(3) (rights in event of default). (Id. ¶¶ 58-79 ("Counts II and III")). The Rais' new claims mirrored those asserted by the Other Plaintiffs in their respective complaints. (Compare id., with 09 Civ. 9609 (Dkt. No. 1) ¶¶ 43-64; 09 Civ. 9610 (Dkt. No. 1) ¶¶ 43-64; 09 Civ. 9611 (Dkt. No. 1) ¶¶ 43-64; 09 Civ. 9612 (Dkt. No. 1) ¶¶ 43-64)) Because the Rai Plaintiffs' Amended Complaint now repeated both claims presented in the Other Plaintiffs' complaints - thereby raising common issues of law and fact - this Court's subsequent orders and opinions addressed all five cases together throughout the litigation.

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On May 7, 2010, the Rai Plaintiffs moved for partial summary judgment on Counts II and III of their Amended Complaint, which addressed the ILSA claims founded on the failure to provide a tax lot number and to disclose rights in the event of default. (Dkt. Nos. 12, 13) The Other Plaintiffs jointly moved for summary judgment on these same claims, asserted in their own complaints. (See 09 Civ. 9609 (Dkt. Nos. 13, 19); 09 Civ. 9610 (Dkt. Nos. 12, 18); 09 Civ. 9611 (Dkt. Nos. 11, 17); 09 Civ. 9612 (Dkt. Nos. 14, 20)) The Rai Plaintiffs and Other Plaintiffs "submitted virtually identical briefs in support of their separate motions for summary judgment." (See Apr. 30, 2010 Rai Pltfs. Partial Sum. J. Reply Br. (Dkt. No. 25) at 5) The briefs raised the same legal arguments - that the condominiums were subject to the ILSA, that the purchase agreements violated Sections 1703(d)(1) and 1703(d)(3) of the ILSA, and that WB Imico's defense relating to the ILSA's "100-Lot Exemption" did not apply - and did so using largely identical language and citing the same case law. (See Rai Dkt. No. 13; see also 09 Civ. 9609 (Dkt. No. 19); 09 Civ. 9610 (Dkt. No. 18); 09 Civ. 9611 (Dkt. No. 17); 09 Civ. 9612 (Dkt. No. 20)) WB Imico cross-moved for summary judgment against all plaintiffs, as to all claims. Although WB Imico filed two sets of briefs - one set addressed to the Rai Plaintiffs and another set addressed to the Other Plaintiffs - the briefs were substantially the same, except that in Rai WB Imico also addressed Count I of the Rai Plaintiffs' Amended Complaint (failure to provide property report). (Compare Dkt. Nos. 19, 23, with 09 Civ. 9612 (Dkt. Nos. 25, 29))

On December 29, 2010, this Court denied the parties' cross-motions for summary judgment without prejudice. (Dkt. No. 33) The Court determined that the applicability of the ILSA's "100-Lot Exemption" was a key issue because - if the exemption applied - the ILSA did not cover plaintiffs' units. (Id. at 3-4) Because there were factual disputes about the number of units sold at The Lucida, summary judgment was not appropriate, and this Court directed the

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parties to conduct additional discovery. (Id. at 5-8) Moreover, on March 2, 2011, the Second Circuit issued Bodansky v. Fifth on the Park LLC, 635 F.3d 75 (2d Cir. 2011), which addressed the applicability of the "100-Lot Exemption."

On May 23, 2011, the parties filed renewed cross-motions for summary judgment. As before, the Other Plaintiffs filed a joint brief, and the Rai Plaintiffs separately moved for partial summary judgment on their Amended Complaint's Count II (tax lot number) and Count III (rights in the event of default) - the same claims set forth in the Other Plaintiffs' complaints. (Dkt. Nos. 38, 43; see also 09 Civ. 9612 (Dkt. No. 57, 63)) In their Notice of Motion, the Rai Plaintiffs stated that they were "rely[ing] upon the Memorandum of Law filed by [the Other] Plaintiffs in 09-cv-9609, 09-cv-9610, 09-cv-9611, and 09-cv-9612." (Notice of Motion (Dkt. No. 38) at 1-2) WB Imico again cross-moved for summary judgment on all of plaintiffs' claims, including Count I of the Rai Plaintiffs' Amended Complaint (failure to provide property report). (Dkt. No. 49) WB Imico filed two substantially similar sets of moving briefs, which differed only to the extent that one set addressed the Rai Plaintiffs' separate claim under Count I (compare Dkt. No. 49, with 09 Civ. 9612 (Dkt. No. 48)). WB Imico filed a single reply brief - on the dockets of the Other Plaintiffs, not the Rai Plaintiffs - addressing together all of plaintiffs' joint arguments concerning the tax lot number and disclosure of default rights issues. (See 09 Civ. 9612 (Dkt. No. 54))

On March 19, 2012 - in a single order - this Court granted the motions of the Rai Plaintiffs and the Other Plaintiffs for summary judgment, and denied WB Imico's cross-motions for summary judgment. The Court concluded that the

ILSA applies to condominium units, that the [ILSA's] "100-Lot Exemption" is not applicable [here], and that WB Imico's failure to include tax lot numbers in the purchase agreements constitutes a violation of [the] ILSA that permits Plaintiffs to rescind the purchase agreements and recover their deposits.

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(Mar. 19, 2012 Order (Dkt. No. 52) at 3) The Court directed the parties to submit briefing concerning the plaintiffs' joint application for an award of attorneys' fees, costs, and pre-judgment interest under the ILSA. (Id. at 24 n.9; see also May 15, 2012 Pltfs. Joint Motion for Attorneys' Fees (Dkt. Nos. 55, 56))

On July 27, 2012, while the plaintiffs' joint motion for an award of attorneys' fees, costs, and interest was still pending, WB Imico filed a notice of appeal concerning the Court's March 19, 2012 Order. (See Dkt. No. 61; 09 Civ. 9612 (Dkt. No. 72))

On December 12, 2012, the Second Circuit issued Bacolitsas v. 86th & 3rd Owner, LLC, 702 F.3d 673 (2d Cir. 2013), in which purchasers of a condominium sought to revoke their purchase agreement under Section 1703(d)(1) of the ILSA, because it did not contain a "unit description clause." Bacolitsas, 702 F.3d at 681. The district court had granted the purchasers' motion for summary judgment, employing reasoning similar to that used in this Court's March 19, 2012 Order. See id. at 679. The Second Circuit rejected that analysis, however. Given the Second Circuit's ruling in Bacolitsas, this Court set a briefing schedule for WB Imico's anticipated motion to vacate the March 19, 2012 Order. (Dkt. No. 69; see also 09 Civ. 9612 (Dkt. No. 74)) In support of its motion to vacate, WB Imico filed one set of briefs applicable to both the Rai Plaintiffs and the Other Plaintiffs. (Compare Dkt. Nos. 63, 65, 66, with 09 Civ. 9612 (Dkt. Nos. 75, 77, 78)) The Rai Plaintiffs and Other Plaintiffs filed a joint brief opposing WB Imico's motion to...

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