A federal district court judge denied an attempt by the sponsors of the 20 Pine Street condominium to throw out two cases under the Interstate Land Sales Full Disclosure Act.
The plaintiffs, NU-Chan LLC and Pei-Ching Chu, filed their lawsuits in early 2009 against 20 Pine Street to rescind their contracts for a $670,000 unit and a $925,000 unit, respectively, saying the owners failed to file the required documents with the department of Housing and Urban Development.
U.S. District Court Judge Paul Crotty ruled against motions from both sides for summary judgment, but lawyers for the plaintiffs say that the ILSA cases have been combined and will likely proceed to full trial. He stated that the law does in fact apply to condo properties in New York and that buyers can bring a claim for damages against a developer within three years of signing a purchase agreement.
“This decision will have a significant impact on the many pending ILSA litigations in New York City,” said Lawrence Weiner, who represents the plaintiffs. “This is the first ILSA case where the developer directly challenges ILSA’s application to New York City condominiums. Several other developers have recently started making this argument.”
The plaintiffs failed to file a complaint within the two-year limitation to get automatic rescission of the contracts, but they are still allowed to file claims for damages.
The court also ruled that there is no exemption under ILSA for 20 Pine, despite the fact that the condo previously operated as a commercial office building. Lawyers for 20 Pine argued that the building qualified for the “improved lot” exemption, but the judge ruled that that would only apply if the building had already been converted to residential use and was ready for occupancy before the units sold. The improved lot exemption allows buildings to be exempt from ILSA if they are previously ready for residential use before sales begin.
The judge finally ruled that Nu-Chan does have standing in the case, despite the fact that the entity was assigned the apartment from the original purchaser, a man named Michael Nucatola. The Nu-Chan firm is a limited liability company in which Nucatola and his business partner, Jeffrey Chan, were sole members.
Lawyers for 20 Pine said they were evaluating the ruling, but looked forward to moving ahead with the case.
“We were pleased that the plaintiffs were denied summary judgment,” said Aaron Abraham attorney for 20 Pine. “We are analyzing what the effect will be.”
Weiner said the case is likely to go to a full-fledged trial before a final decision is rendered.