The 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.
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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
Plaintiff,
-against-
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
153289/2019 Motion No. 007 Page 1 of 5
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NYSCEF DOC. NO. 516 RECEIVED NYSCEF: 06/27/2024
ASSOCIATES
Defendant.
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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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