| Sutton Apts. Corp. v Bradhurst 100 Dev. LLC |
| 2013 NY Slip Op 04910 [107 AD3d 646] |
| June 27, 2013 |
| Appellate Division, First Department |
| Sutton Apartments Corporation et al.,Appellants, v Bradhurst 100 Development LLC et al.,Respondents. |
—[*1] Silverman Shin & Byrne PLLC, New York (Michael Byrne of counsel), forBradhurst 100 Development LLC and Pennrose Properties LLC, respondents, and(Donald F. Schneider of counsel), for Richard Barnhart and Mark Dambly, respondents. Babchik & Young, LLP, White Plains (Siobhan A. Healy of counsel), for Duvernay+ Brooks, LLC and Joni Brooks, respondents. Gogick, Byrne & O'Neill, LLP, New York (Elaine C. Gangel of counsel), forMagnusson Architecture & Planning, PC, respondent. McElroy, Deutsch, Mulvaney & Carpenter, LLP, New York (John P. Cookson ofcounsel), for West Manor Construction Corp., respondent.
Order, Supreme Court, New York County (Joan M. Kenney, J.), entered June 7,2012, which, to the extent appealed from, granted defendants' motions to strike theamended complaint dated April 24, 2012, unanimously affirmed, without costs. Order,same court and Justice, entered January 25, 2013, which granted defendants' motions todismiss the amended complaint dated July 11, 2012, unanimously modified, on the law,to reinstate the breach of contract action asserted against defendant Bradhurst 100Development LLC seeking to recover damages for alleged defects to the common areas,to reinstate the breach of contract cause of action asserted against defendant West ManorConstruction Corp., and otherwise affirmed, without costs. Appeal from order, samecourt and Justice, entered June 27, 2012, which granted in part defendants' motions todismiss the original complaint, unanimously dismissed, without costs, as academic.
Plaintiff Sutton Apartments Corporation commenced this action on behalf of theproprietary leaseholders/shareholders of a "condop" to recover damages allegedlysustained as a result of purported defects in the design and construction of the building. Itasserts claims for [*2]breach of contract, negligence,fraud, negligent misrepresentation, professional malpractice, fraudulent conveyance, andviolation of General Business Law §§ 349 and 350. Defendant Bradhurst100 Development, LLC was the sponsor; defendants Pennrose Properties, LLC(Pennrose) and Duvernay + Brooks, LLC (Duvernay) were the sponsor's members;defendant Joni Brooks was a member of Duvernay; and defendants Richard Barnhart andMark Dambly were presidents of Pennrose (collectively the sponsor defendants).Plaintiff also sued Magnusson Architecture and Planning, PC (the architect), and generalcontractor West Manor Construction Corp. (the contractor).
The court properly granted defendants' motions to strike the amended complaintdated April 24, 2012. That complaint was served after defendants' motions to dismiss theoriginal complaint had been submitted for consideration. The amended complaint wasnot served as of right, as it was served outside the time period for amendments withoutleave under CPLR 3025 (a).
The court, however, erred in dismissing the amended complaint dated July 11, 2012,filed after disposition of the motions to dismiss. Contrary to the court's conclusion, theamended complaint did not merely reassert the dismissed claims, but also raised newclaims for consideration. We also note that the June 7, 2012 order striking the prioramended complaint granted leave to re-serve an amended complaint 10 days after serviceof entry of the decision on the motions to dismiss.
The court also erred in dismissing the claim for breach of contract as asserted againstthe contractor. While the court reasoned that the contracts submitted did not refer toprospective leaseholders as beneficiaries of an agreement between the contractor and thesponsor, it is undisputed that the contractor-sponsor agreement had not been submittedwith the motions. Accordingly, the court could not have ascertained the terms of thatagreement. Accordingly, we reinstate the claim to permit the matter to proceed todiscovery.
To the extent the court partially dismissed the breach of contract claim against thesponsor on the ground that Sutton Apartments Corporation lacked standing to bringclaims to recover damages for defects to common elements of the building (see Kerusa Co. LLC v W10Z/515Real Estate Ltd. Partnership, 50 AD3d 503, 504 [1st Dept 2008]), the secondamended complaint naming the Board of Managers of the Sutton Condominium as aplaintiff sufficiently addressed this deficiency (Residential Bd. of Mgrs. ofZeckendorf Towers v Union Sq.-14th St. Assoc., 190 AD2d 636 [1st Dept 1993]).Accordingly, the breach of contract claim against the sponsor regarding the commonelements is reinstated.
The dismissal of the remaining claims are affirmed. While the Martin Act does notpreclude the fraud claims, which allege affirmative misrepresentations as opposed toomissions of information required by the Act (see Bhandari v Ismael Leyva Architects, P.C., 84 AD3d607, 607 [1st Dept 2011]), plaintiffs failed to plead those claims with sufficientparticularity to permit an inference of fraud (see Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486[2008]; Ford v Sivilli, 2AD3d 773, 775 [2d Dept 2003]; Wildman & Bernhardt Constr. v BPMAssoc., 273 AD2d 38, 38-39 [1st Dept 2000]). The court properly dismissedplaintiffs' claims alleging constructive fraudulent conveyance and fraudulent conveyancecausing unreasonably small capital, as plaintiffs did not allege facts showing a fiduciaryor confidential relationship between them and the sponsor defendants (see Levin v Kitsis, 82 AD3d1051, 1054 [2d Dept 2011]).
The court also properly dismissed the claims alleging violation of General Business[*3]Law §§ 349 and 350, as this action islimited to the parties in the subject building and does not involve "the public at large" (Merin v Precinct Devs. LLC,74 AD3d 688, 689 [1st Dept 2010]; Thompson v Parkchester Apts. Co., 271AD2d 311, 311-312 [1st Dept 2000]). Plaintiffs failed to allege facts sufficient to supportpiercing the corporate veil to reach Pennrose and Duvernay or the individual defendants,Brooks, Barnhart, and Dambly (see Morpheus Capital Advisors LLC v UBS AG, 105 AD3d145, 153 [1st Dept 2013]; Retropolis, Inc. v 14th St. Dev. LLC, 17 AD3d 209,210-211 [1st Dept 2005]). Further, plaintiffs' aiding and abetting fraud claim fails, astheir conclusory allegations are insufficient to show "actual knowledge" (Oster v Kirschner, 77 AD3d51, 55 [1st Dept 2010]). The court properly dismissed the negligence claims againstthe sponsor defendants and the contractor, as they are duplicative of the breach ofcontract claims against those defendants (see Clark-Fitzpatrick, Inc. v Long Is. R.R.Co., 70 NY2d 382, 390 [1987]).
The tort claims against the architect fail for lack of contractual privity, or thefunctional equivalency of privity (see Ossining Union Free School Dist. v AndersonLaRocca Anderson, 73 NY2d 417, 421, 424 [1989]; Bri-Den Constr. Co., Inc. v Kapell& Kostow Architects, P.C., 56 AD3d 355 [1st Dept 2008], lv denied 12NY3d 703 [2009]). Because the agreement between the architect and the sponsor doesnot reflect an intent that proprietary leaseholder be beneficiaries of the agreement, thecourt properly dismissed the breach of contract claim against the architect (see PortChester Elec. Constr. Corp. v Atlas, 40 NY2d 652, 655 [1976]).
We have reviewed plaintiffs' remaining contentions, including its argumentregarding punitive damages, and find them unavailing. Concur—Tom, J.P.,Mazzarelli, Moskowitz and Gische, JJ.