Board of Mgrs. of the Philip House Condominium v. 141 E. 88th St., LLC

2024 NY Slip Op 32176(U)

• Court: New York Supreme Court, New York County
• Decided: June 27, 2024
• Status: Unpublished

Opinion

Board of Mgrs. of the Philip House Condominium v 141 E. 88th St., LLC 2024 NY Slip Op 32176(U) June 27, 2024 Supreme Court, New York County Docket Number: Index No. 153289/2019 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 153289/2019 NYSCEF DOC. NO. 516 RECEIVED NYSCEF: 06/27/2024

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LYLE E. FRANK PART 11M Justice ----------------------------------------------------------------- ----------------X INDEX NO. 153289/2019 THE BOARD OF MANAGERS OF THE PHILIP HOUSE MOTION DATE 12/08/2023 CONDOMINIUM, ON BEHALF OF ITS INDIVIDUAL UNIT OWNERS, MOTION SEQ. NO. 007 Plaintiff,

- V -

141 EAST 88TH STREET, LLC,THE CHESHIRE GROUP, DECISION + ORDER ON L.L.C., SUSAN HEWITT, JENNIFER STEIG, JOHN DOES, MOTION JOHN DOE CORPORATIONS,

Defendant. ------------------------------------------------------------------- --------------X

141 EAST 88TH STREET, LLC, THE CHESHIRE GROUP, Third-Party L.L.C., SUSAN HEWITT, JENNIFER STEIG Index No. 595567/2020

Plaintiff,

-against-

TEKTON BUILDERS, LLC, EDWARDS & ZUCK, P.C., ARCT ARCHITECTURE, P.C., STERLING PROJECT DEVELOPMENT GROUP, LLC, METAL AND GLASS SOLUTIONS

Defendant. --------------------------------------------------- -----------------------------X

141 EAST 88TH STREET, LLC, THE CHESHIRE GROUP, Second Third-Party L.L.C. Index No. 595220/2022

RETCON MECHANICAL CORP., CENTRIA, GALAXY METAL PRODUCTS, SUPER STUD BUILDING PRODUCTS, INC., TRI-STATE FIREPROOFING INC., DOMANI INSPECTION SERVICES, INC., GALICIA CONTRACTING & RESTORATION CORP., LUKE LICALZI P.E., P.C., FIRST SERVICE RESIDENTIAL, RICHTER & RATNER CONTRACTING CORP., FORT-CICA ROOFING SHEETMETAL WATERPROOFING, COD MECHANICAL CORP., SUPERIOR CONCRETE & MASONRY CORP., ROBERT SILMAN

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ASSOCIATES

Defendant. -------------------------------------------------------------------------------- X

The following e-filed documents, listed by NYSCEF document number (Motion 007) 373, 374, 375, 376, 377,378,400,433,437,438,439,440,441,442,443,444,445,446,447,466,471,472,477,479,480, 486,487 were read on this motion to/for DISMISS

This action arises out of alleged breach of contract and violations of the Debt and

Creditor Law pursuant to an offering plan and contract between the parties.

Defendants, 141 East 88th Street LLC and The Cheshire Group LLC now move to

dismiss plaintiffs second and third causes of action pursuant to CPLR § 321 l(a)(l), (7).

Plaintiff opposes the motion and cross-moves to amend the complaint. For the reasons set forth

below, the motion to dismiss is denied and the cross-motion to amend the complaint is granted.

Background

The Sponsor, defendant 141 East 88th Street, LLC, was the original owner of the real

property at 141 East 88th Street, New York, New York (the "Building"). Pursuant to an offering

plan, the Sponsor would convert the Building to condominium ownership and offer and sell the

condominium units to purchasers under purchase agreements. The Sponsor created the

Condominium under a declaration recorded on July 19, 2013, and thereafter began closing on

sales of units.

The original Complaint alleged that the Sponsor, defendant The Cheshire Group, an

alleged alter ego of the Sponsor and the individual principals breached their obligations under the

Offering Plan and Purchase Agreements by defectively constructing its improvements and

renovations to the Building. Additionally, the complaint contained allegations that defendants

violated the Debtor and Creditor Law, by providing equity distributions without fair

consideration and leaving it with an unreasonably small capital. The proposed amended

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complaint expands on those allegations and inserts factual allegations that have occurred during

the pendency of the instant litigation.

Motion to Dismiss

When considering a motion to dismiss based upon CPLR § 3211(a)(7), the court must

accept the alleged facts as true, accord the plaintiff the benefit of every possible favorable

inference, and determine whether the facts alleged fit into any cognizable legal theory. Leon v.

Martinez, 84 NY2d 83 [1994]. On a motion to dismiss the court "merely examines the adequacy

of the pleadings", the court "accept as true each and every allegation made by plaintiff and limit

our inquiry to the legal sufficiency of plaintiff's claim." Davis v Boeheim, 24 NY3d 262, 268

[2014].

"To establish fraud, a plaintiff must show a misrepresentation or a material omission of

fact which was false and known to be false by [the] defendant, made for the purpose of inducing

the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or

material omission, and injury."' Ambac Assur. Corp. v Countrywide Home Loans, Inc., 151 AD3d

83 at 85 [1st Dept 2017]. Further, CPLR § 3016(b) provides that when a cause of action is based

upon fraud "the circumstances constituting the wrong shall be stated in detail."

Under CPLR Rule 321 l(a)(l) documentary evidence provides a basis for dismissing a

cause of action "where the documentary evidence utterly refutes plaintiff's factual allegations,

conclusively establishing a defense as a matter of law." Goshen v Mutual Life Ins. Co. ofNY, 98

NY2d 314, 326 [2002].

Movants contend that plaintiff's second cause of action, fraudulent conveyance pursuant

to (the now repealed) Debtor Creditor Law (DCL) §§273, 278, and third cause of action,

constructive fraudulent conveyance causing unreasonably small capital pursuant to DCL §§274

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and 278, fail to state a cause of action. Further movants contend that the proposed amended

complaint does not address the deficiencies, as such allowing the amendment would be futile.

The Court does not agree. Specifically, movants contention that claims made pursuant to

the cited DCL sections required heightened pleadings pursuant to CPLR § 3016 (b) has been

rejected by the First Department, (Hudson Spring Partners, L.P. v P+M Design Consultants,

Inc., 210 AD3d 553, 554 [1st Dept 2022]). The First Department specifically held that only

claims made pursuant to DCL § 276 are subject to the pleadings standards of CPLR § 3016 (b),

and the other sections are not subject to those standards. Id.

As to the documentary evidence submitted by the movants, the Court is not persuaded

that it "utterly refutes" plaintiffs allegations as a matter of law. Accordingly, movants motion to

dismiss the second and third cause of action is denied.

Cross-Motion to Amend

CPLR § 3025(b) authorizes a party to seek leave of the Court to amend or supplement a

pleading. As stated therein, leave "shall be freely given upon such terms as may be just." A

motion to amend a complaint is to be granted if (a) the amended claims have merit and (b) the

opposing party is not unfairly surprised or prejudiced by the filing of the amended claims.

Here, the Court finds that plaintiff has established, and defendants have not rebutted that

they would suffer no prejudice or unfair surprise. As indicated above, allowing such amendment

would not be futile as the Court finds that the allegations are sufficiently pled. Accordingly, it is

hereby

ORDERED that defendants' motion to dismiss the second and third causes of action is

denied; and it is further

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ORDERED that the plaintiffs cross-motion for leave to amend the complaint is granted;

and it is further

ORDERED that the amended complaint, in the form annexed to the motion papers, shall

be deemed served upon service of a copy of this order with notice of entry upon all parties who

have appeared in the action; and it is further

ORDERED that defendants shall serve an answer to the amended verified complaint or

otherwise respond thereto within 20 days from the date of service of this Order with Notice of

Entry.

6/27/2024 DATE LYLE E. FRANK, J.S.C.

~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION

GRANTED □ DENIED GRANTED IN PART □ OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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