A recent decision from the Supreme Court of the State of New York, County of Kings upheld claims alleged by the Board of Managers of a Brooklyn condominium against its Sponsor and architect for construction defects. In this action, the Board of Managers, represented by Adam Leitman Bailey, P.C., sought to recover damages for various construction defects, including lack of fire stopping and significant water infiltration into the building and units. The Sponsor and the Architect both moved to dismiss pursuant to CPLR §3211. The decision upheld the Plaintiff’s claims for breach of contract, breach of warranty, professional malpractice, fraud and/or negligent misrepresentation and violations of General Business Law, §349.
The decision is notable in several respects. First, with regard to the Architect’s motion, the Architect argued that because it had stopped work on the building more than three years before the filing of the summons with notice, Plaintiff was barred by the statute of limitations from asserting claims against the Architect. The Court found this argument without merit, noting that the Architect had presented no evidence to contradict Plaintiff’s claims that they performed work on the building until at least August 20, 2009 (less than three years before the case was filed).
The Court also held that the Architect presented no evidence to controvert Plaintiff’s claims that Plaintiff was a third party beneficiary of the contract between the Architect and the Sponsor, and therefore the contract claims were permitted to stand. The Court also allowed Plaintiff’s fraud and negligent misrepresentation claims to move forward on the basis Plaintiff adequately pled the requirements for fraud and negligent misrepresentation.
Perhaps most significantly, the Court also dismissed the Architect’s argument that Plaintiff’s claims for breach of contract, as well as fraud and/or negligent misrepresentation were barred by the Martin Act. The Court agreed with Plaintiff that affirmative misrepresentations are not covered by the Martin Act, and held that only actions based entirely on alleged omissions from filings required by the Martin Act are preempted.
With regard to the Sponsor’s motion, the Court rejected the Sponsor’s contention that the case was subject to mandatory arbitration pursuant to the purchase agreements entered into by the individual unit owners and the Sponsor. The Court agreed with Plaintiff’s position that the Board was not a signatory to any agreement for arbitration with the Sponsor and therefore could not be compelled to arbitrate its claims.
The Court also allowed Plaintiff’s fraud and negligent misrepresentation claims to move forward on the same basis as for the Architect, holding that Plaintiff adequately pled the requirements for fraud and negligent misrepresentation.
Further, Plaintiff’s claims for violations of GBL §349 were also upheld. The Court held that Plaintiff alleged affirmative misrepresentations, not omissions, and as such, those claims were not barred by the Martin Act.
Courtney J. Lerias, Colin E. Kaufman, and John M. Desiderio represented Adam Leitman Bailey P.C. on the motion.