Condo owners at 51 Jay sue Slate Property Group, Adam America

The blame game over construction defects at a luxury Dumbo condo now includes allegations of fraud.

The board of managers at 51 Jay Street is suing Adam America Real Estate and Slate Property Group, the project’s sponsors and developers, alleging breach of contract, fiduciary duty and fraud.

The condo board claims the 74-unit luxury warehouse-to-condo conversion “fell far short of the developers’ promises” due to a multitude of construction defects, according to its complaint filed in Kings County Supreme Court on Jan. 3. The lawsuit claims Adam America and Slate knew of the problems but sold the condos to unsuspecting buyers anyway.

The board is demanding up to $6.5 million in damages. All units were sold and, as of 2018, the project’s sellout was $192 million, the lawsuit says.

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Construction defects listed in the suit include “strong sewer smells” from toilets and sewage piping, water leaks caused by faulty installation of HVAC systems, bathroom fixtures that led to mold and damage and windows that weren’t fully sealed against the elements.

The board also outlined the “amateurish” installation of carpeting and wallpaper, a common lounge that was never completed and unstable bathtubs, among other issues. The condo owners even commissioned their own forensic examination of the building to fully document all of the defects, including violations of the New York City Building Code.

Construction issues at 51 Jay Street aren’t news to Adam America or Slate.

The developers have also sued, seeking $8 million in damages from their contractors — a joint venture between Danya Cebus Construction and Hudson Meridian Construction Group — for alleged project delays, overbilling and defective work. The suit, filed a year ago, is ongoing.

The developers claim to have spent hundreds of thousands of dollars to fix problems in various units and said through a lawyer that it is the contractors’ responsibility to make things right. “To the extent the board’s complaint has any merit, we expect that Danya Cebus and Hudson Meridian will honor their obligation to complete any unfinished work,” wrote David Scharf of Morrison Cohen LLP in a statement. He also said the developers have “always stood by the quality of our buildings and will continue to do so.”

The board said in its complaint that the developers made a “halfhearted” attempt at some repairs, and in some cases made things worse. For instance, in testing the sealant of leaky showers, they allegedly left water standing for hours, in some cases creating leaks into units below.

Unit owners were trapped in the “cross-fire,” the board claimed, as developers and contractors pointed fingers.

The board also contends that both developers’ principals, Slate’s David Schwartz and Martin Nussbaum and Adam America’s Dvir Cohen Hoshen, misused the condo’s funds while on the condo board in 2017 and 2018 by “pocketing profits” and making equity distributions.

The board’s attorney, Steven Sladkus, said it “believed it had no other choice but to file this lawsuit” but he noted that it was “sincerely hopeful that an amicable resolution can and will be reached in the near future.”

Slate’s Nussbaum acquired the former warehouse for $45 million in 2013. Eran Chen’s firm, ODA Architecture, designed the converted building.

Asking prices for the condos ranged from $750,000 for a studio to $5.2 million for an average ask of $1,546 per foot. Units were half sold within five months of sales launching in 2015.

Write to Erin Hudson at ekh@therealdeal.com