Chelsea condo developers may be liable for board’s claims

Developer LLC's individual principals can be held accountable in Modern 23 lawsuit, judge rules

New York /
Apr.April 22, 2016 02:00 PM

UPDATED, 6:00 p.m., April 25: The condominium board for the Modern 23 residential building in Chelsea received a boost in its legal battle against the property’s developers. A judge ruled last week that the board may hold the developer LLC’s individual principals liable for breach of contract and breach of warranty claims.

The decision could set a precedent regarding how “[condo] boards with claims against their sponsors may have recourse against the individual principals,” attorney Leni Cummins of Cozen O’Connor, which is representing the Modern 23 board, told the Commercial Observer.

“This is important because very often the sponsor entities are devoid of assets so this allows recourse for the boards and unit owners,” Cummins said. The New York State Supreme Court judge did dismiss plaintiff claims alleging fraud, however.

Despite noting that the decision could set precedent, the Modern 23 board’s lawsuit cites similar instances of “case law” in asserting “claims for breach of contract against the individual defendants” — including a lawsuit filed in 2013 by the condo board of the Palomar building at 266 West 115th Street in Harlem, which found that “a principal of a sponsor may be held separately liable” when “knowingly and intentionally advanc[ing] the alleged misrepresentations of the [condo] offering plan.”

The board of the 14-unit building at 350 West 23rd Street filed suit against the property’s developers – including individual principals Martin Hollander, Arthur Israel and Itzhaki Acquisitions founder Erez Itzhaki – in May 2015, claiming a “willful and fraudulent failure to construct the Modern 23” including construction defects and poor workmanship.

The lawsuit claimed the eight-story property had “a laundry list of defects… that have required, currently require and continue to require remediation or replacement,” and that the developers had allegedly failed to fix the issues despite unit owners’ requests.

The Modern 23’s developers acquired the property for $7.2 million in March 2005 and completed the glassy condo building in 2009. The average sale price of an apartment at the Chelsea property is $2.1 million, according to the lawsuit. [CO]Rey Mashayekhi


Related Articles

arrow_forward_ios
560 Seventh Avenue and Sharif El-Gamal (Margaritaville Resorts; Getty)
Synagogue sues Sharif El-Gamal over missing space
Synagogue sues Sharif El-Gamal over missing space
Corcoran Global Living's Michael Mahon (Corcoran, Getty)
Turmoil at Corcoran Global Living: CEO accused of fraud
Turmoil at Corcoran Global Living: CEO accused of fraud
From left: Peter Hungerford, Shai Segev, and Michelle Haruvi (Getty, LinkedIn, Zillow)
She wanted a piece of the Haruvi empire. She got an eviction notice instead
She wanted a piece of the Haruvi empire. She got an eviction notice instead
JDS Development’s Michael Stern and renderings of Two Bridges (JDS, Getty)
JDS hits snag after ruling on Two Bridges project
JDS hits snag after ruling on Two Bridges project
Lightstone Group's Mitchell C. Hochberg and 130 William Street (Getty, 130 William Street, Lighstone)
Buyer sues Lightstone over $19M FiDi condo deal gone bad
Buyer sues Lightstone over $19M FiDi condo deal gone bad
350 East 52nd Street (Google Maps)
Landlord seeks $10M from mom over rent overcharge claims
Landlord seeks $10M from mom over rent overcharge claims
198 Scholes Street, 11 Gunther Place, 506 Dekalb Avenue and 65 Kent Avenue (Google Maps)
Avi Philipson to All Year: Get me out of here
Avi Philipson to All Year: Get me out of here
A photo illustration of Danny Meyer and the Maialino at the Gramercy Park Hotel (Getty, Google Maps, Maialino)
Judge to Solil: Hands off Danny Meyer’s Maialino
Judge to Solil: Hands off Danny Meyer’s Maialino
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...