| Hamlet on Olde Oyster Bay Home Owners Assn., Inc. v Holiday Org.,Inc. |
| 2009 NY Slip Op 01443 [59 AD3d 673] |
| February 24, 2009 |
| Appellate Division, Second Department |
| Hamlet on Olde Oyster Bay Home Owners Association, Inc., et al.,Appellants, v Holiday Organization, Inc., et al., Respondents, et al.,Defendants. |
—[*1] Rosenberg Calica & Birney, LLP, Garden City, N.Y. (Robert M. Calica and Judah Serfaty ofcounsel), for respondents Holiday Organization, Inc., Hamlet on Olde Oyster Bay DevelopmentCorp., Hamlet on Olde Oyster Bay, LLC, Hamlet on Olde Oyster Bay Development Co., LLC,O.B. Ventures Corp., Gerald Monter, Elliot Monter, Marilyn Monter, Richard Spirio, JosephMancino, John Bransfield, Jr., Jeffrey Wall, R. Patrick Quinn, Michael Puorro, Ron Bloomfield,Holiday Management Associates, Inc., Hamlet on Olde Oyster Bay Food and Beverage Corp.,Holcom Incorporated, Schiffer Management Group, and Joseph Gill Schiffer. Krieg Associates, P.C., Dix Hills, N.Y. (Marc S. Krieg of counsel), for respondents SidneyB. Bowne & Sons, LLP, and Dane C. Kenny. Farber Brocks & Zane LLP, Mineola, N.Y. (Braden H. Farber and Christopher P. Cartier ofcounsel), for respondents Charles A. DiGiovanna Architect and Charles A.DiGiovanna.
In an action, inter alia, to recover damages for common-law fraudulent inducement,negligent misrepresentation, and breach of contract, the plaintiffs appeal, as limited by theirnotice of appeal and brief, (1) from so much of an order of the Supreme Court, Nassau County(Austin, J.), entered July 13, 2006, as granted those branches of the motion of the defendantsHoliday Organization, Inc., Hamlet on Olde Oyster Bay Development Corp., Hamlet on OldeOyster Bay, LLC, Hamlet on Olde Oyster Bay Development Co., LLC, O.B. Ventures Corp.,Gerald Monter, Elliot Monter, Marilyn Monter, Richard Spirio, Joseph Mancino, JohnBransfield, Jr., Jeffrey Wall, R. Patrick Quinn, Michael Puorro, Ron Bloomfield, HolidayManagement Associates, Inc., Hamlet on Olde Oyster Bay [*2]Food and Beverage Corp., Holcom Incorporated, SchifferManagement Group, and Joseph Gill Schiffer which were pursuant to CPLR 3211 (a) (1), (3), (5)and (7), to dismiss the causes of action alleging fraudulent inducement, negligentmisrepresentation, and negligence insofar as asserted against all of those defendants except forthe defendants O.B. Ventures Corp., Holcom Incorporated, and Hamlet on Olde Oyster BayFood and Beverage Corp., to dismiss the causes of action alleging breach of fiduciary dutyinsofar as asserted against all of those defendants except for the defendants O.B. Ventures Corp.,Holcom Incorporated, and Hamlet on Olde Oyster Bay Food and Beverage Corp. insofar as theyseek to recover damages for a period beyond three years prior to the commencement of theaction, and to dismiss the causes of action alleging breach of contract insofar as asserted againstall of those defendants except for the defendants O.B. Ventures Corp., Holcom Incorporated, andHamlet on Olde Oyster Bay Food and Beverage Corp. to the extent of directing the plaintiffs toserve an amended complaint to plead the causes of action alleging breach of warranty separatelyfrom those alleging breach of contract, and (2) from so much of an order of the same courtentered January 8, 2008, as, in effect, upon reargument, adhered to the prior determination,granted that branch of the motion of the defendants Holiday Organization, Inc., Hamlet on OldeOyster Bay Development Corp., Hamlet on Olde Oyster Bay, LLC, Hamlet on Olde Oyster BayDevelopment Co., LLC, O.B. Ventures Corp., Gerald Monter, Elliot Monter, Marilyn Monter,Richard Spirio, Joseph Mancino, John Bransfield, Jr., Jeffrey Wall, R. Patrick Quinn, MichaelPuorro, Ron Bloomfield, Holiday Management Associates, Inc., Hamlet on Olde Oyster BayFood and Beverage Corp., Schiffer Management Group, and Joseph Gill Schiffer which was toclarify the prior determination, granted those branches of the cross motion of the defendantsCharles A. DiGiovanna Architect and Charles A. DiGiovanna which were pursuant to CPLR3211 (a) (1), (3), (5) and (7) to dismiss the causes of action in the amended complaint allegingbreach of contract, fraudulent inducement, negligent misrepresentation, andnegligence/malpractice insofar as asserted against them, and granted those branches of the crossmotion of the defendants Sidney B. Bowne & Sons, LLP, and Dane C. Kenny which werepursuant to CPLR 3211 (a) (1), (5) and (7) for the same relief.
Ordered that the appeal from the order entered July 13, 2006 is dismissed, as that order wassuperseded by the order entered January 8, 2008, in effect, made upon reargument; and it isfurther,
Ordered that the order entered January 8, 2008 is modified, on the law, (1) by deleting theprovision thereof which, in effect, upon reargument, adhered to so much of the originaldetermination in the order entered July 13, 2006 as granted those branches of the motion of thedefendants Holiday Organization, Inc., Hamlet on Olde Oyster Bay Development Corp., Hamleton Olde Oyster Bay, LLC, Hamlet on Olde Oyster Bay Development Co., LLC, O.B. VenturesCorp., Gerald Monter, Elliot Monter, Marilyn Monter, Richard Spirio, Joseph Mancino, JohnBransfield, Jr., Jeffrey Wall, R. Patrick Quinn, Michael Puorro, Ron Bloomfield, HolidayManagement Associates, Inc., Hamlet on Olde Oyster Bay Food and Beverage Corp., HolcomIncorporated, Schiffer Management Group, and Joseph Gill Schiffer pursuant to CPLR 3211 (a)(1), (3), (5) and (7) which were to dismiss the causes of action alleging fraudulent inducementand negligent misrepresentation insofar as asserted against all of those defendants except for thedefendants O.B. Ventures Corp., Holcom Incorporated, and Hamlet on Olde Oyster Bay Foodand Beverage Corp., and to dismiss the causes of action alleging breach of fiduciary duty insofaras asserted against all of those defendants except for the defendants O.B. Ventures Corp.,Holcom Incorporated, and Hamlet on Olde Oyster Bay Food and Beverage Corp. insofar as theyseek to recover damages for a period beyond three years prior to the commencement of theaction, and substituting therefor a provision, upon reargument, vacating those portions of theorder entered July 13, 2006 and denying [*3]those branches ofthe motion, (2) by deleting the provision thereof granting that branch of the motion of thedefendants Holiday Organization, Inc., Hamlet on Olde Oyster Bay Development Corp., Hamleton Olde Oyster Bay, LLC, Hamlet on Olde Oyster Bay Development Co., LLC, O.B. Ventures,Corp., Gerald Monter, Elliot Monter, Marilyn Monter, Richard Spirio, Joseph Mancino, JohnBransfield, Jr., Jeffrey Wall, R. Patrick Quinn, Michael Puorro, Ron Bloomfield, HolidayManagement Associates, Inc., Hamlet on Olde Oyster Bay Food and Beverage Corp., HolcomIncorporated, Schiffer Management Group, and Joseph Gill Schiffer which was to clarify theprior determination, and substituting therefor a provision denying that branch of the motion, (3)by deleting the provision thereof granting those branches of the cross motion of the defendantsCharles A. DiGiovanna Architect and Charles A. DiGiovanna which were pursuant to CPLR3211 (a) (1), (3), (5) and (7) to dismiss the causes of action in the amended complaint allegingbreach of contract, fraudulent inducement, negligent misrepresentation, andnegligence/malpractice insofar as asserted against them, and substituting therefor a provisiondenying those branches of the cross motion, and (4) by deleting the provision thereof grantingthose branches of the cross motion of the defendants Sidney B. Bowne & Sons, LLP, and DaneC. Kenny which were pursuant to CPLR 3211 (a) (1), (3), (5) and (7) for the same relief, andsubstituting therefor a provision denying those branches of the cross motion; as so modified, theorder is affirmed insofar as appealed from; and it is further,
Ordered that one bill of costs is awarded to the plaintiffs, payable by the respondentsappearing separately and filing separate briefs.
The plaintiffs in this action are Hamlet on Olde Oyster Bay Home Owners Association(hereinafter the Association), Hamlet on Olde Oyster Bay Villa Condominium, Hamlet on OldeOyster Bay Carriage Home Condominium, and individual owners of units within the Hamlet onOlde Oyster Bay Development (hereinafter the owners). Shortly after moving into theirnewly-constructed residences, the owners allegedly experienced problems, inter alia, with theirheating, air conditioning, and plumbing systems. Similar problems allegedly occurred in thedevelopment's common-area buildings. The Association drastically increased assessments afterthe first year to repair the alleged defects in the common areas because the income realized wassignificantly less, and the expenses were considerably more, than the budget projections in theoffering plan.
Thereafter, the plaintiffs commenced this action against, among others, the followingdefendants: Hamlet on Olde Oyster Bay, LLC, the sponsor; Hamlet on Olde Oyster BayDevelopment Co., LLC, a member of the sponsor; Gerald Monter, Elliot Monter, MarilynMonter, Richard Spirio, Joseph Mancino, John Bransfield, Jr., Jeffrey Wall, R. Patrick Quinn,and Michael Puorro, the principals of the members; Holiday Organization, Inc., and Hamlet onOlde Oyster Bay Development Corp., the sponsor's parent organizations (hereinafter collectivelythe Holiday defendants); Schiffer Management Group and Joseph Gill Schiffer (hereinaftertogether the real estate broker); Sidney B. Bowne & Sons, LLP, and Dane C. Kenny (hereinaftertogether the engineering firm); and Charles A. DiGiovanna Architect and Charles A.DiGiovanna (hereinafter together the architectural firm).
The Supreme Court erred in granting that branch of the Holiday defendants' motion whichwas to dismiss the causes of action alleging fraudulent inducement insofar as asserted againstthem. While there is no express or implied private right of action under the Martin Act(see General Business Law § 352 et seq.), private causes of actionsounding in common-law fraud may rest upon the same facts that would support an allegedMartin Act violation as long as they are sufficient to satisfy traditional rules of pleading andproof (see Caboara v Babylon Cove Dev., LLC, 54 AD3d [*4]79, 80 [2008]). Here, the plaintiffs pleaded all the elements of fraudwith particularity (see CPC Intl. v McKesson Corp., 70 NY2d 268, 284-286 [1987]). It isimportant to emphasize that this appeal arises from an order granting a pre-discovery motion todismiss, not an order awarding summary judgment (see Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker,LLP, 38 AD3d 34, 37 [2006]). "There is no legitimate reason to question at the pleadingstage the ability of the plaintiff[s] to prove all of the essential elements of common-law fraud"(Kramer v W10Z/515 Real Estate Ltd.Partnership, 44 AD3d 457, 459 [2007]).
The Supreme Court also erred in granting that branch of the Holiday defendants' motionwhich was to dismiss the causes of action alleging negligent representation insofar as assertedagainst them as "nothing in the clear import of the language of the Martin Act requires aconclusion that the Legislature intended to abrogate any common-law remedy arising fromconduct prohibited under the act" (Caboara v Babylon Cove Dev., LLC, 54 AD3d at 83).
Further, the Supreme Court should not have granted that branch of the Holiday defendants'motion which was to dismiss the causes of action alleging breach of fiduciary duty insofar asasserted against them insofar as plaintiffs seek to recover damages for a period beyond threeyears prior to the commencement of this action. As the gravamen of the complaint soundswholly in fraud, the causes of action alleging breach of fiduciary duty are subject to a six-yearlimitations period (see Klein vGutman, 12 AD3d 417 [2004]).
The Supreme Court correctly found that the plaintiffs could seek damages for breach ofcontract based upon specific provisions of the purchase agreements, as well as for breach of thelimited warranty (see Tiffany atWestbury Condominium v Marelli Dev. Corp., 40 AD3d 1073 [2007]). The SupremeCourt also properly granted those branches of the Holiday defendants' motion which were todismiss the causes of action alleging negligence insofar as asserted against the sponsor basedupon construction defects, as these claims were duplicative of the causes of action allegingbreach of contract (see Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 389[1987]; Old Republic Natl. Tit. Ins. Co.v Cardinal Abstract Corp., 14 AD3d 678 [2005]).
However, the Supreme Court erred in granting those branches of the motions of the realestate broker, the engineering firm, and the architectural firm which were to dismiss the causesof action alleging breach of contract, fraudulent inducement, negligent misrepresentation, andnegligence/malpractice insofar as asserted against them. These defendants failed to submitdocumentary proof that the plaintiffs were not third-party beneficiaries of their contracts with thesponsor (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; see also Kerusa Co. LLC v W10Z/515 RealEstate Ltd. Partnership, 50 AD3d 503 [2008]; Board of Mgrs. of AlfredCondominium v Carol Mgt., 214 AD2d 380 [1995]).
The Supreme Court erred in granting that branch of the Holiday defendants' motion whichwas to dismiss the complaint insofar as asserted against Holiday Organization, Inc., Hamlet onOlde Oyster Bay Development Corp., Hamlet on Olde Oyster Bay Development Co., LLC,Joseph Mancino, John Bransfield, Jr., Jeffrey Wall, R. Patrick Quinn, and Michael Puorro(see Birnbaum v Yonkers Contr. Co., 272 AD2d 355 [2000]).
We decline the request of the Holiday defendants and the real estate broker to impose asanction pursuant to 22 NYCRR 130-1.1 (c) (1) against the plaintiffs, as this appeal is notfrivolous as defined therein (seeChardavoyne v Cohen, 56 AD3d 508 [2008]; Kutner v Catterson, 56 AD3d 437 [2008]). Spolzino, J.P., Florio,Carni and Leventhal, JJ., concur. [See 12 Misc 3d 1182(A), 2006 NY Slip Op51378(U).]
[Recalled and vacated by 65 AD3d 1284.]