FILED: NEW YORK COUNTY CLERK 06/20/ :13 PM INDEX NO /2016 NYSCEF DOC. NO. 104 RECEIVED NYSCEF: 07/10/2018

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X BOARD OF MANAGERS OF THE 650 SIXTH AVENUE Index No.: /2016 CONDOMINIUM, -against- Date of Filing With Plaintiff, Clerk of the Court: 6/20/18 SUPPLEMENTAL K-W 650 ASSOCIATES LLC, KUMKANG 650 MANAGER CORP., TAE-WOO KIM, KEUMKANG HOUSING CO., LTD., guggogg WESTPORT 650 COMPANY, LLC, KUMKANG HOUSING NY LLC, KLAUS KRETSCHMANN, WESTPORT 650 LLC ' Plaintiff designates New KEUN-HWAN BAE, KUMKANG HOUSING CO., LTD., York County as the place LIVEIN INC., WESTOPRT GROUP, INC., GOLDSTEIN of trial. ASSOCIATES CONSULTING ENGINEERS, PLLC, GACE CONSULTING ENGINEERS, D.P.C., IBEX CONSTRUCTION The basis for such venue is COMPANY, LLC, IBEX CONSTRUCTION SERVICES, INC., the residence of plaintiff. IBEX CONSTRUCTION U.S., LLC, IBEX CONSTRUCTION, LLC, IBEX CONTRACTING INC., IBEX DEVELOPMENT 4 CONSTRUCTION CO., LLC, IBEX DEVELOPMENT 4 CONSTRUCTION CORP., and ISLAND ACOUSTICS, LLC, X Defendants. TO THE ABOVE NAMED DEFENDANTS: YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a copy of your answer, or, if the complaint is not served with this summons, to serve a notice of appearance, on the plaintiff's attorneys within twenty (20) days after the service of this summons, exclusive of the day of service (or within thirty (30) days after the service is complete if the summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded herein. Dated: New York, New York June 20, 2018 SCHWARTZ SLADKUS REICH GREENBERG ATLAS LLP Attorneys for Plaintiff By: Rachael G. Ratner 270 Madison Avenue, 9th Floor New York, New York (212) of 28

2 ADDRESSES OF DEFENDANTS: K-W 650 ASSOCIATES LLC KUMKANG 650 MANAGER CORP. Chung & Ha LLP clo Chung & Ha LLP 215 Main Street, Main Street, Fort Lee, New Jersey Fort Lee, New Jersey TAE-WOO KIM KEUMKANG HOUSING CO., LTD. 425 Fifth Avenue, Suite 27B Keumkang Building New York, New York Daechi-Dong Kangnam-Ku, Seoul Republic of Korea WESTPORT 650 COMPANY, LLC KUMKANG HOUSING NY LLC The Westport Group Inc. clo Chung & Ha LLP 44 Charcoal Hill Road 215 Main Street, Westport, Connecticut Fort Lee, New Jersey ~ KLAUS KRETSCHMANN WESTPORT 650 LLC c/o Westport Group Inc. c/o The Westport Group Inc. 44 Charcoal Hill Road 44 Charcoal Hill Road Westport, Connecticut Westport, Connecticut KEUN-HWAN BAE KUMKANG HOUSING CO., LTD. 425 Fifth Avenue, Suite 27B clo Chung & Ha LLP New York, New York Main Street, Fort Lee, New Jersey LIVE1N, INC. WESTPORT GROUP, INC., 246 Fifth Avenue, Suite 407 c/o Herrick Feinstein LLP New York, New York Park Avenue New York, New York GOLDSTEIN ASSOCIATES GACE CONSULTING ENGINEERS, D.P.C. 6th CONSULTING ENGINEERS, PLLC 105 Madison Avenue, 6 FlOOr 27th 6th 31 West 27 Street, 6 Floor New York, New York New York, New York IBEX CONSTRUCTION COMPANY, IBEX CONSTRUCTION SERVICES, INC. LLC c/o CT Corporation System 7th One Whitehall Street, 7 Floor 111 Eighth Avenue New York, New York New York, New York of 28

3 IBEX CONSTRUCTION U.S., LLC IBEX CONSTRUCTION, LLC 1372 Broadway, 15th Floor c/o Arnold E. Reiter, Esq. New York, New York Montebello Road Suffern, New York IBEX CONTRACTING INC. IBEX DEVELOPMENT & CONSTRUCTION 24th Road CO., LLC 7th Astoria, New York One Whitehall Street, FlOOr New York, New York IBEX DEVELOPMENT & ISLAND ACOUSTICS, LLC CONSTRUCTION CORP. 518 Johnson Avenue c/o Stokkers & Co., Inc. Bohemia, New York Bay Road Huntington, New York / of 28

4 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK BOARD OF MANAGERS OF THE 650 SIXTH AVENUE Index No /2016 CONDOMINIUM, Plaintiff, -against- FIRST K-W 650 ASSOCIATES LLC, KUMKANG 650 MANAGER COMPLAINT CORP., TAE-WOO KIM, KEUMKANG HOUSING CO., LTD., WESTPORT 650 COMPANY, LLC, KUMKANG HOUSING NY LLC, KLAUS KRETSCHMANN, WESTPORT 650 LLC, KEUN-HWAN BAE, KUMKANG HOUSING CO., LTD., LIVEIN INC., WESTOPRT GROUP, INC., GOLDSTEIN ASSOCIATES CONSULTING ENGINEERS, PLLC, GACE CONSULTING ENGINEERS, D.P.C., IBEX CONSTRUCTION COMPANY, LLC, IBEX CONSTRUCTION SERVICES, INC., IBEX CONSTRUCTION U.S., LLC, IBEX CONSTRUCTION, LLC, IBEX CONTRACTING INC., IBEX DEVELOPMENT & CONSTRUCTION CO., LLC, IBEX DEVELOPMENT & CONSTRUCTION CORP, and ISLAND ACOUSTICS, LLC, AMENDED Defendants. Plaintiff Board of Managers (the "Board" or "Plaintiff") of the 650 Sixth Avenue Condominium, by its attorneys Schwartz Sladkus Reich Greenberg Atlas LLP, as and for their Complaint, alleges as follows: NATURE OF THE ACTION 1. This is a case of a sponsor/developer of a residential condominium "Condominium" building in New York, New York - - the 650 Sixth Avenue Condominium (the "Condominium") - - which failed to ensure that the Condominium building, located at 650 Sixth Avenue, New "Building" York, New York (the "Building"), was renovated in accordance with the representations made in the offering plan pursuant to which it offered units of the Condominium for sale (the 4 of 28

5 "Offering Plan" Plan"). 2. In particular, the ceilings in the majority of the Building's units "Units" (collectively, the "Units") were insufficiently anchored to the structural ceiling slab.1 This defect first came to light on December 24, 2015, when a portion of the sheetrock in one Unit collapsed, Incident" completely without warning (the "Collapse Incident"). This catastrophic incident is the direct result of construction practices by the defendants that were amateurish at best, and downright dangerous and grossly negligent at worst. Until the date of the Collapse Incident, neither plaintiff nor any of the Unit Owners had any reason to know of this latent construction defect. 3. Once discovered, the Board took immediate action by surveying the remainder of the Building and fortifying the ceiling connection in 51 Units that were identified in the survey as being at risk for collapse (the "Ceiling Project").2 ). The Ceiling Project has come at a Owners" tremendous expense to the Condominium's unit owners (collectively, the "Unit Owners"), not only in terms of financial loss, but also in terms of personal inconvenience as each affected Unit Owner has had to completely vacate their Unit in order for the work to take place. 4. Plaintiff therefore brings this action to hold the sponsor/developer and its principals, representatives, affiliates, design professionals, and contractors accountable for the substantial costs incurred by the Unit Owners to fortify the ceilings, and to bring the Building's construction into conformance with the Offering Plan, as well the plans and specifications filed with the New York City Department of Buildings. 1 "slab" The is comprised of a terracotta block arched ceiling. 2 This project is currently underway and as of the date of this complaint, restorative work has been completed in 26 of the 51Units which require remediation. 2 5 of 28

6 PARTIES 5. The Board consists of the duly elected members of the Condominium's board of managers, and is charged, pursuant to Article 2, Section 4 of the Condominium's bylaws, with administering the affairs of the Condominium. 6. The Condominium is an unincorporated association of Unit Owners, and was formed pursuant to a Declaration of Condominium filed and recorded, pursuant to Article 9- B of the Real Property Law, in the New York County Office of the City Register of the City of New York on May 24, Pursuant to Real Property Law 339-dd, the Board is empowered to bring this action on behalf of the Condominium and its Unit Owners. "Sponsor" 8. Defendant K-W 650 Associates LLC (the "Sponsor") is the sponsor/developer of the Condominium, and is a limited liability company organized and existing under and by virtue of the laws of the State of Delaware. 9. Upon information and belief, the Sponsor's principal place of business is located at 246 Fifth Avenue, Suite 407, New York, New York Manager" 10. Defendant Kumkang 650 Manager Corp. ("K-W Manager") is the managing member of the Sponsor, and is a corporation organized and existing under and by virtue of the laws of the State of New York. 11. Upon information and belief, K-W Manager's principal place of business is located at 425 Fifth Avenue, Suite 27B, New York, New York Defendant Tae-Woo Kim is a principal of the Sponsor, and as such, directly participated in the transactions below by, without limitation, causing the Sponsor to act 3 Amendments to the Declaration of Condominium were subsequently filed and recorded with the New York County Office of the City Register of the City of New York on February 11, of 28

7 as alleged herein. 13. Upon information and belief, Mr. Kim is a resident of the State of New York with a business address at 425 Fifth Avenue, Suite 27B, New York, New York As a principal of the Sponsor, Mr. Kim signed the Certification of Sponsor and Principals in the first amendment to the Offering Plan (the "Amended Sponsor Certification" Certification"), both in his individual capacity and on behalf of the Sponsor. 15. Defendant Keumkang Housing Co., Ltd. ("Keumkang") is a representative and affiliate of the Sponsor and upon information and belief, is also an investor in the Condominium and/or the Sponsor. Keumkang is a corporation organized and existing under and by virtue of the laws of the Republic of Korea, with a business address located at Daechi-Dong, Kangnam-Ku, Seoul, Republic of Korea. (" Westport" 16. Defendant Westport 650 Company, LLC ("Westport") is a representative and affiliate of the Sponsor and upon information and belief, is also an investor in the Condominium and/or the Sponsor. Westport is a limited liability company organized and existing under and by virtue of the laws of the State of Delaware with a business address located at 44 Charcoal Hill Road, Westport, Connecticut Defendant Kumkang Housing NY LLC ("Kumkang LLC") is representative and affiliate of the Sponsor, as well as a subsidiary of Keumkang. Upon information and belief, Kumkang LLC is also an investor in the Condominium and/or the Sponsor. Kumkang LLC is a limited liability company organized and existing under and by virtue of the laws of the State of Delaware with a business address located at 425 Fifth Avenue, Suite 27B, New York, New York Defendant Klaus Kretschmann is the president of Westport, and a 4 7 of 28

8 managing member of Sponsor, and as such, directly participated in the transactions below by, without limitation, causing the Sponsor to act as alleged herein. 19. Upon information and belief, Mr. Kretschmann is a resident of the State of Connecticut, with a business address located at 44 Charcoal Hill Road, Westport, Connecticut As a managing member of the Sponsor, Mr. Kretschmann signed the Certification of Sponsor and Principals in the Offering Plan, both in his individual capacity and Certification" on behalf of the Sponsor (the "Original Sponsor Certification"). The Amended and Original Sponsor Certifications shall hereafter be collectively referred to as the "Sponsor Certification." (" 21. Defendant Westport 650 LLC ("Westport LLC") is a representative and affiliate of the Sponsor and upon information and belief, is also an investor in the Condominium and/or the Sponsor. Westport LLC is a limited liability company organized and existing under and by virtue of the laws of the State of Delaware with a business address located at 44 Charcoal Hill Road Westport, Connecticut Defendant Keun-Hwan Bae is a representative and affiliate of the Sponsor and as such, directly participated in the transactions below by, without limitation, causing the Sponsor to act as alleged herein. Upon information and belief, Mr. Bae is a resident of the State of New York with a business address at 425 Fifth Avenue, Suite 27B, New York, New York Defendant Kumkang Housing Co., Ltd. ("Kumkang Ltd.") is a representative and affiliate of the Sponsor and upon information and belief, is also an investor in the Condominium and/or the Sponsor. Kumkang Ltd. is a corporation organized and existing under and by virtue of the laws of the State of New York with an business address located at of 28

9 Fifth Avenue, Suite 27B, New York, New York Defendant Livein Inc., ("Livein") is the principal real estate development subsidiary of Keumkang, and a representative and affiliate of the Sponsor. Upon information and belief, Livein is also an investor in the Condominium and/or the Sponsor. Livein is a corporation organized and existing under and by virtue of the laws of the State of New York, with a business address located at 246 Fifth Avenue, Suite 407, New York, New York (" 25. Defendant Westport Group, Inc. ("Westport Group" Group"), is a representative and affiliate of the Sponsor and upon information and belief, is also an investor in the Condominium and/or the Sponsor. Westport Group is a corporation organized and existing under and by virtue of the laws of the State of Connecticut with a business address located at 2 Park Avenue, New York, New York K-W Manager, Mr. Kim, Keumkang, Westport, Kumkang LLC, Mr. Kretschmann, Westport LLC, Mr. Bae, Kumkang Ltd., Livein, and Westport Group shall hereafter be collectively referred to as the "Sponsor Investors." The Sponsor Investors, together with the Sponsor, shall hereafter be referred to as the "Sponsor Defendants." 27. Defendant Goldstein Associates Consulting Engineers, PLLC (" Goldstein" ("Goldstein"), is a professional service limited liability company organized and existing under and by virtue of the laws of the State of New York. Goldstein's principal place of business is located at 31 West 27th Street, New York, New York Defendant GACE Consulting Engineers, D.P.C. ("GACE"), is a design professional corporation organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, GACE's principal place of business is located at 105 Madison Avenue, 6th Floor, New York, New York of 28

10 29. Upon information and belief, GACE is the successor to Goldstein. GACE and Goldstein shall be collectively referred to herein as the "Engineer Defendants." Upon information and belief, the Engineer Defendants were at all relevant times the engineers of record in connection with the design and construction of the Building. (" 30. Defendant IBEX Construction Company, LLC ("IBEX Construction Co."), is a limited liability company organized and existing under and by virtue of the laws of the State of Delaware. Upon information and belief, IBEX Construction Co.'s principal place of business is located at One Whitehall Street, 7th Floor, New York, New York (" 31. Defendant IBEX Construction Services Inc. ("IBEX Construction Services" Services"), is a corporation organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, IBEX Construction Services' Services principal place of business is located at 111 Eighth Avenue, New York, New York (" 32. Defendant IBEX Construction U.S., LLC ("IBEX US"), is a limited liability company organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, IBEX US' US principal place of business is located at 1372 Broadway, New York, New York (" 33. Defendant IBEX Construction, LLC ("IBEX LLC"), is a limited liability company organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, IBEX LLC's principal place of business is located at 75 Montebello Road, Suffern, New York (" 34. Defendant IBEX Contracting Inc. ("IBEX Contracting" Contracting"), is a corporation organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, IBEX Contracting's principal place of business is located at th 7 10 of 28

11 Road, Astoria, New York (" 35. Defendant IBEX Development & Construction Co., LLC ("IBEX Development LLC"), is a limited liability company organized and existing under and by virtue of the laws of the State of Delaware. Upon information and belief, IBEX Development LLC's principal place of business is located at One Whitehall Street, 7th Floor, New York, New York (" 36. Defendant IBEX Development & Construction Corp. ("IBEX Development Corp."), is a corporation organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, IBEX Development Corp.'s principal place of business is located at 158 Bay Road, Huntington, New York Defendants IBEX Construction Co., IBEX Construction Services, IBEX US, IBEX LLC, IBEX Contracting, IBEX Development LLC, and IBEX Development Corp. shall hereafter be collectively referred to as the "Contractor Defendants." Upon information and belief, the Contractor Defendants provided services as a general contractor and construction manager in connection with the construction of the Building. (" 38. Defendant Island Acoustics, LLC ("Island Acoustics" Acoustics") is a corporation organized and existing under and by virtue of the laws of the State of New York. Upon information and belief, Island Acoustics' Acoustics principal place of business is located at 518 Johnson Avenue, Bohemia, New York Upon information and belief, Island Acoustics was a subcontractor employed by the Contractor Defendants to install the sheetrock ceilings within the Units of 28

12 BACKGROUND 40. Originally constructed in 1892, the Condominium is a historic, pre-war landmarked building located in Chelsea. The 7-story Building contains 67 residential apartment units, and one commercial unit. 41. All of the residential apartment units were offered for sale by the Sponsor Defendants. The total value of their initial offering was more than $105 million and individual apartments were sold for prices ranging from $905,000 million to over $5 million. 42. The Sponsor Defendants commissioned various marketing materials and made those materials, as well as the Offering Plan, available to the public-at-large in an effort to attract potential purchasers to the Condominium. 43. Through the Offering Plan and other such marketing materials, the Sponsor Defendants represented to prospective purchasers that the Building would be of a premier luxury caliber and would be constructed with the highest quality of materials and workmanship and in accordance with its plans and specifications, as well as all applicable government codes, rules, regulations, and prevailing construction industry standards. 44. The Sponsor Defendants, however, never amended the Offering Plan to reflect the risk of ceiling collapse, or to indicate that certain aspects of the Building's construction deviated from the plans and specifications prepared by the Sponsor Defendants and their design professionals, including the Engineering Defendants. 45. The Offering Plan thus ceased to serve as an accurate source of information for prospective purchasers who bought units in the Building. The Defendants nonetheless continued to disseminate the Offering Plan in an effort to ensure that every residential unit of the Condominium was sold of 28

13 CONSTRUCTION OF THE CEILINGS WITHIN UNITS MATERIALLY DEVIATED FROM THE BUILDING'S PLANS AND SPECIFICATIONS 46. The Offering Plan, on page 28, states that the Building will be constructed in accordance with the plans and specifications filed with the New York City Department of Specifications" Buildings (the "Plans and Specifications"). This assurance is repeated on page 89, as well as on page 101 of the Offering Plan, which provides that "the quality of construction shall be comparable to local standards customary in the particular trade and in accordance with the Plans and Specifications for the Building." 47. The Building's ceiling slabs are comprised of terracotta blocks that are covered with an approximately 1-1/4-inch-thick layer of plaster. The plaster is finished with a 5/8-inch-thick layer of sheetrock. 48. An installation detail included with the Plans and Specifications prepared by the Engineer Defendants clearly states that the sheetrock should be securely anchored through the plaster to the terracotta blocks by use of a 7/8-inch metal furring channel. 49. This detail was not followed by the Sponsor and Contractor Defendants, and was not enforced by the Engineer Defendants. 50. Specifically, the Collapse Incident (as well as the ensuing Building-wide survey) revealed that no furring channels were used at all, and that the sheetrock was secured to the plaster merely by nails applied in a haphazard manner, as well as a joint compound used as a glue. 51. This was a fatal corner for the defendants to cut. The nails used were not long enough to penetrate all the way through the plaster layer to the terracotta blocks, and therefore did not securely anchor the sheetrock. Because the nails could not support the weight of the sheetrock, they began to detach over time and eventually gave way to collapse, as was seen of 28

14 by the Collapse Incident. 52. Although only one Unit was impacted by the Collapse Incident, the same defect was confirmed to exist in 50 other Units, all of which are also at risk of having their ceilings collapse. 53. The purpose of the Ceiling Project is to ensure the ceilings within all affected Units are securely anchored to the terracotta blocks to prevent any additional Collapse Incidents, as such incidents clearly threaten the safety and well-being of the Condominium's Unit Owners. FIRST CAUSE OF ACTION AGAINST THE SPONSOR (Breach of Contract) 54. Plaintiff repeats and re-alleges all prior paragraphs. 55. Each Unit Owner of the Condominium who purchased a unit from the Sponsor entered into a form written agreement with the Sponsor, as seller, for such purchase (the "Purchase Agreement" Agreement"). 56. The Purchase Agreement expressly provided that the Offering Plan, and all amendments thereto, are incorporated in the Purchase Agreement and, further, that in the event of any inconsistency between the provisions of the Purchase Agreement and the Offering Plan, the provisions of the Offering Plan control. 57. Paragraph 20 of the Purchase Agreement obligates the Sponsor to complete construction of the units and the Building in accordance with the Offering Plan, including the Plans and Specifications. 58. As previously stated, the Offering Plan itself unequivocally states that the Building will be constructed in accordance with the Plans and Specifications. 59. The Sponsor thus obligated itself in the Offering Plan to ensure that the of 28

15 Building was constructed in accordance with its Plans and Specifications. The Sponsor failed to do so in that no furring channels were used to properly secure the sheetrock layer of the Unit ceilings to the terracotta blocks of the ceiling slab, as called for in the Plans and Specifications. Inadequately sized nails were used instead. This substandard method of securement failed in at least one Unit causing the Collapse Incident. The Board has consequently been forced to undertake the Ceiling Project at a significant expense to the Condominium's Unit Owners. 60. Plaintiff and the Unit Owners have fully performed all of their obligations under the Purchase Agreements and the Offering Plan. 61. By reason of the aforementioned breaches of contract by the Sponsor, Plaintiff has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum the Sponsor is liable to Plaintiff. SECOND CAUSE OF ACTION AGAINST THE SPONSOR DEFENDANTS (Fraud in the Inducement) 62. Plaintiff repeats and re-alleges all prior paragraphs. 63. Upon information and belief, as the Building's renovation was underway and by virtue of their management and oversight of the Building's conversion to Condominium Units, the Sponsor Defendants were aware of the absence of furring channels securing the sheetrock ceilings within Units. 64. Thus, after the Building's renovation commenced and as each Unit in the Building was completed, and after renovation of the Building was complete, the Offering Plan came to contain a material misrepresentation of an existing fact because it falsely represented that the sheetrock ceilings within the Units were properly secured to the Building's ceiling slab with furring channels, when in fact they were not. 65. The Sponsor Defendants made this misrepresentation of fact regarding the of 28

16 Building and its Units, in the Offering Plan and/or in circulating the Offering Plan and/or in promoting sales of units of the Condominium after the Building's renovation commenced, and as each Unit was completed. 66. Specifically, the Sponsor Certification contained representations by the defendants (and by Messrs. Kim and Kretschmann, in particular) certifying that (a) the Offering Plan set forth the detailed terms of the offering of Units of the Condominium; (b) the Offering Plan was complete, current, and accurate; (c) the Offering Plan afforded potential investors, purchasers, and participants an adequate basis upon which to found their judgment; (d) the Offering Plan did not omit any material fact; (e) the Offering Plan did not contain any untrue statement of a material fact; (f) the Offering Plan did not contain any fraud, deception, concealment, suppression, or false pretense; (g) the Offering Plan did not contain any promise or representation as to the future which was beyond reasonable expectation or unwarranted by existing circumstances; and (h) the Offering Plan did not contain any representation or statement which was false, where the defendants knew the truth, could with reasonable effort have known the truth, made no reasonable effort to ascertain the truth, or did not have knowledge concerning the representations or statements made. 67. Further, the Offering Plan contained representations that the Building and its Units, and all improvements therein would be renovated in accordance with prevailing construction industry standards as well as with the Plans and Specifications. 68. These representations were false because while the Plans and Specifications called for attaching the Units' sheetrock ceilings to the slab with a furring channel, neither furring channels nor any other substantially similar anchoring mechanism with equivalent strength were used in the Unit's ceiling assembly. Inadequately sized nails incapable of 28

17 of withstanding the weight of sheetrock were used instead, thereby causing the Collapse Incident and rendering ceilings throughout the impacted Units prone to collapse. 69. At the time they concealed this defective condition, the Sponsor Defendants knew that it thereby rendered other representations in the Offering Plan misleading or false. 70. The Sponsor Defendants further knew and intended, at the time of the issuance of the Offering Plan and/or of circulating the Offering Plan and/or of promoting sales of units of the Condominium based on the Offering Plan's representations, and at all times thereafter, that the Offering Plan would be disseminated to prospective Unit Owners and that such prospective Unit Owners would rely upon its truth and accuracy. 71. The affirmative misrepresentations made by the Sponsor Defendants in the Offering Plan and/or in circulating the Offering Plan and/or in promoting sales of units of the Condominium based on the Offering Plan's representations were made for the specific purpose of inducing prospective Unit Owners to purchase units of the Condominium. 72. The prospective Unit Owners reasonably relied upon the aforesaid affirmative misrepresentations made by the Sponsor Defendants and were thereby induced to purchase their Condominium units from the Sponsor. 73. The Sponsor Investors, Mr. Kim, and Mr. Kretschmann exercised complete dominion and control over the Sponsor in making the aforesaid affirmative misrepresentations and directly participated in the fraud in the inducement alleged herein. 74. By reason of such fraud in the inducement by the Sponsor Defendants, Plaintiff has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum the Sponsor Defendants are liable of 28

18 to Plaintiff. 75. In addition, Plaintiff is entitled to an award of punitive damages against the Sponsor Defendants, in an amount to be determined at trial but in no event less than $1,000, THIRD CAUSE OF ACTION AGAINST THE ENGINEER DEFENDANTS (Breach of Contract) 76. Plaintiff repeats and re-alleges all prior paragraphs. 77. Upon information and belief, the Engineer Defendants entered into one or Contract" more contracts with the Sponsor (collectively, the "Sponsor-Engineer Contract"), pursuant to which the Engineer Defendants agreed, inter alia, to perform professional engineering services in connection with the Building's conversion to a condominium, and the preparation of the Offering Plan, including but not limited to supervising and/or inspecting the Building construction work, and ensuring that the Building construction work was performed in accordance with the Plans and Specifications. 78. Plaintiff is a successor-in-interest to the Sponsor under the Sponsor- Engineer Contract, and as such, acquired all of the Sponsor's contractual rights under the Sponsor-Engineer Contract, including the right to enforce the contract terms and hold the Engineer Defendants accountable for their breaches thereof. 79. Plaintiff is also the intended beneficiary of the Engineer Defendants' obligations and the performance thereof under the Sponsor-Engineer Contract. 80. The Engineer Defendants breached their obligations under the Sponsor- Engineer Contract in that, among other things, they failed to properly supervise and/or inspect construction work at the Building and failed to properly ensure that the construction work at the Building was performed in accordance with the Plans and Specifications, particularly with regard of 28

19 to the absence of furring channels or any other mechanism to securely anchor sheetrock to the ceiling slab within the Condominium Units. 81. By reason of such breaches of contract, Plaintiff has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum the Engineer Defendants are liable to Plaintiff. FOURTH CAUSE OF ACTION AGAINST THE ENGINEER DEFENDANTS (Professional Malpractice) 82. Plaintiff repeats and re-alleges all prior paragraphs. 83. Upon information and belief, the Engineer Defendants were retained to perform engineering services in connection with the Building's construction, including, without limitation, preparing the Plans and Specifications for, and inspecting and supervising, the Building's construction. 84. Upon information and belief, the Engineer Defendants accepted and undertook to perform said services, and to perform said services in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the engineering profession, so that the Building's renovation and conversion to condominium units would be accomplished in a good and workmanlike manner and free of material defects. 85. Upon information and belief, the Engineer Defendants did not perform said engineering services in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the engineering profession, but rather performed said services carelessly and negligently and contrary to accepted practices and standards of the engineering profession, as a consequence of which carelessness and negligence the Collapse Incident occurred, and the sheetrock within numerous Condominium Units remains at risk of collapse pending completion of the Ceiling Project of 28

20 86. Thus, the Engineer Defendants committed professional malpractice in their performance of engineering services in connection with the Building's construction. 87. By reason of such professional malpractice by the Engineer Defendants, Plaintiff has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum the Engineer Defendants are liable to Plaintiff. FIFTH CAUSE OF ACTION AGAINST THE CONTRACTOR DEFENDANTS (Breach of Contract) 88. Plaintiff repeats and re-alleges all prior paragraphs. 89. Upon information and belief, the Contractor Defendants entered into one Contract" or more contracts with the Sponsor (the "Sponsor-IBEX Contract") pursuant to which the Contractor Defendants agreed, inter alia, to perform general construction services in connection with the Building's construction, including but not limited to performing construction work at the Building, supervising and/or inspecting the construction work, and ensuring that the construction work was performed in accordance with the Plans and Specifications. 90. Plaintiff is the successor-in-interest to the Sponsor under the Sponsor- IBEX Contract, and as such, has acquired all of the Sponsor's contractual rights under the Sponsor-IBEX Contract, including the right to enforce the contract terms and hold the Contractor Defendants accountable for their breaches thereof. 91. Plaintiff was also the intended beneficiary of the Contractor Defendants' obligations and the performance thereof under the Sponsor-IBEX Contract. 92. The Contractor Defendants breached their obligations under the Sponsor- IBEX Contract in that, among other things, they failed and/or improperly performed construction work at the Building, failed and/or improperly supervised and/or inspected the construction of 28

21 work, and failed to ensure that the Building's construction work was performed in accordance with the Plans and Specifications, particularly with regard to the absence of furring channels or any other mechanism to securely anchor sheetrock to the ceiling slab within the Condominium Units. 93. By reason of such breaches of contract by the Contractor Defendants, Plaintiff has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum the Contractor Defendants are liable to Plaintiff. SIXTH CAUSE OF ACTION AGAINST THE CONTRACTOR DEFENDANTS (Negligence) 94. Plaintiff repeats and re-alleges all prior paragraphs. 95. Upon information and belief, the Contractor Defendants were retained by the Sponsor to perform general construction services in connection with the Building's construction. 96. Upon information and belief, the Contractor Defendants accepted and undertook to perform said services, and to perform said services in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the construction industry, so that the Building's renovation and conversion to condominium units would be accomplished in a good and workmanlike manner and free of material defects. 97. The Contractor Defendants did not perform said construction services in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the construction industry, so that the Building's renovation and conversion would be accomplished in a good and workmanlike manner and free of material defects, but rather performed said services carelessly and negligently and contrary to accepted practices and of 28

22 standards of the construction industry, as a consequence of which carelessness and negligence the Collapse Incident occurred, and the sheetrock within numerous Condominium Units remains at risk of collapse pending completion of the Ceiling Project. 98. By reason of such negligence by the Contractor Defendants, Plaintiff has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum the Contractor Defendants are liable to Plaintiff. SEVENTH CAUSE OF ACTION AGAINST THE SPONSOR DEFENDANTS (Constructive Fraudulent Conveyances While Insolvent) 99. Plaintiff repeats and re-alleges all prior paragraphs Based on the Sponsor's liability to Plaintiff, as set forth above, Plaintiff is a creditor of the Sponsor Upon information and belief, the Sponsor is a single purpose entity formed and existing solely in order to serve as the sponsor/developer of the Condominium Upon information and belief, the Sponsor has no business other than to have sponsored/developed and sold units of the Condominium Upon information and belief, the Sponsor does not have and has never had any material assets other than the units of the Condominium it was selling pursuant to the Offering Plan, and the proceeds of the sales of such units The Sponsor sold its first Unit of the Condominium on or about April 24, The Sponsor has since sold all of the Units At the time the Sponsor began closing on its sales of Units, upon information and belief, the Sponsor was indebted to an institutional lender and was obligated under its loan agreement with the lender to pay the sales proceeds to the lender until the loan was satisfied of 28

23 106. Upon information and belief, at some point between April 24, 2008 and the present time, the exact date being unknown to Plaintiff and being in the exclusive knowledge Date" of the Sponsor Defendants (the "Loan Repayment Date"), the Sponsor had closed on the sales of a sufficient number of Units so as to repay the lender in full, and the Sponsor did so Upon information and belief, after the Loan Repayment Date, the Sponsor completed additional closings on sales of Units of the Condominium As the Sponsor completed additional closings, it retained little if any of the sales proceeds, instead distributing those proceeds pro rata to the Sponsor Investors in accordance with their equity interests in the Sponsor and/or the Condominium (the "Equity Distributions" Distributions") The Equity Distributions were transfers of the property of the Sponsor The Equity Distributions were made without fair consideration Upon information and belief, among the parties who received the Equity Distributions were the Sponsor Investors The exact dates of the Equity Distributions are within the exclusive knowledge of the Sponsor, the Sponsor Investors and other members and/or affiliates of the Sponsor who received them Upon information and belief, the Sponsor was insolvent at the time that some or all of the Equity Distributions were made, or in making the Equity Distributions was rendered insolvent Accordingly, pursuant to 273 and 278 of the New York Debtor and Creditor Law ("DCL"), Plaintiff is entitled to set aside the Equity Distributions, and the Sponsor Investors are each liable to Plaintiff for the amounts of the Equity Distributions they (and their of 28

24 members and/or affiliates) received. EIGHTH CAUSE OF ACTION AGAINST THE SPONSOR DEFENDANTS (Constructive Fraudulent Conveyances Causing Unreasonably Small Capital) 115. Plaintiff repeats and re-alleges all prior paragraphs Upon information and belief, some or all of the Equity Distributions were made while the Sponsor was engaged in, or was about to be engaged in, a business or transaction for which the property remaining in its hands after such distribution would leave it with an unreasonably small amount of capital Accordingly, pursuant to DCL 274 and 278, Plaintiff is entitled to set aside such Equity Distributions, and the Sponsor Investors are each liable to Plaintiff for the amounts of the Equity Distributions they (and their members and/or affiliates) received. NINTH CAUSE OF ACTION AGAINST THE SPONSOR DEFENDANTS (Intentional Fraudulent Conveyances) 118. Plaintiff repeats and re-alleges all prior paragraphs Upon information and belief, some or all of the Equity Distributions were made by the Sponsor with actual intent to hinder, delay and defraud creditors of the Sponsor, including Plaintiff Accordingly, pursuant to DCL 276 and 278, Plaintiff is entitled to set aside such Equity Distributions, and the Sponsor Investors are each liable to Plaintiff for the amounts of the Equity Distributions they (and their members and/or affiliates) received In addition, Plaintiff is entitled to an award of punitive damages against the Sponsor Defendants in an amount to be determined at trial, but in no event less than $1,000, of 28

25 TENTH CAUSE OF ACTION AGAINST ISLAND ACOUSTICS (Breach of Contract) 122. Plaintiff repeats and realleges all prior paragraphs Upon information and belief, Island Acoustics entered into one or more contracts with the Sponsor and/or the Contractor Defendants and/or a third-party unknown to Contract" Plaintiff (the "Island Acoustics Contract"), pursuant to which Island Acoustics agreed, inter alia, to construct and/or install and/or supply sheetrock and/or gypsum board ceilings within the Units in connection with the Building's construction, and to perform all such services in accordance with the Building's Plans and Specifications Plaintiff (including all unit owners of the Condominium) is the successorin-interest to the Sponsor and/or the Contractor Defendants and/or a third party unknown to Plaintiff under the Island Acoustics Contract, and as such, has acquired all of the contractual rights of Sponsor and/or the Contractor Defendants and/or a third party unknown to Plaintiff under the Island Acoustics Contract, including the right to enforce the contract terms and hold Island Acoustics accountable for its breaches thereof Plaintiff (including the unit owners of the Condominium) was also the intended beneficiary of Island Acoustic's obligations and the performance thereof under the Island Acoustics Contract Island Acoustics breached its obligations under the Island Acoustics Contract in that, among other things, it improperly installed and/or failed to secure the sheetrock and/or gypsum board ceilings within the Units, not in accordance with the Plans and Specifications, resulting in the ceiling defect as set forth above, and the necessity to perform the Ceiling Project of 28

26 127. By reason of such breach of contract by Island Acoustics, Plaintiff (including the unit owners of the Condominium) has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum Island Acoustics is liable to Plaintiff. ELEVENTH CAUSE OF ACTION, AGAINST ISLAND ACOUSTICS (Negligence) 128. Plaintiff repeats and realleges all prior paragraphs Upon information and belief, Island Acoustics was retained to construct and/or install and/or supply sheetrock and/or gypsum board ceilings within the Units in connection with the Building's construction Upon information and belief, Island Acoustics accepted and undertook to perform said services, and to perform said services in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the construction industry, so that the installation of the ceilings within the Units would be accomplished in a good and workmanlike manner and free of material defects Upon information and belief, Island Acoustics did not supply and/or construct and/or install the ceilings within the Units in a good and workmanlike manner, and pursuant to and in accordance with accepted practices and standards of the construction industry, so that the Units' Units ceilings would be free of material defects, but rather performed said services carelessly and negligently and contrary to accepted practices and standards of the construction industry, as a consequence of which carelessness and negligence the defective ceiling conditions hereinabove described are present in the Building of 28

27 132. By reason of such negligence by Island Acoustics, Plaintiff (including the unit owners of the Condominium) has been injured in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon, for which sum Island Acoustics is liable to Plaintiff. WHEREFORE, Plaintiff respectfully requests judgment as follows: A. On the First Cause of Action for Breach of Contract, awarding money damages against the Sponsor in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; B. On the Second Cause of Action for Fraud in the Inducement, awarding money damages against the Sponsor Defendants in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; and together with punitive damages in an amount to be determined at trial but in no event less than $1,000,000.00; C. On the Third Cause of Action for Breach of Contract, awarding money damages against the Engineer Defendants, in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; D. On the Fourth Cause of Action for Professional Malpractice, awarding money damages against the Engineer Defendants in a sum to be determined at trial but in no event less than 2,500,000.00, together with interest thereon; E. On the Fifth Cause of Action for Breach of Contract, awarding money damages against the Contractor Defendants in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; F. On the Sixth Cause of Action for Negligence, awarding money damages against the Contractor Defendants in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; G. On the Seventh Cause of Action for Constructive Fraudulent Conveyances While Insolvent, awarding money damages against the Sponsor Defendants in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; and together with the amount of the Equity Distributions which Plaintiff is entitled to set aside; H. On the Eighth Cause of Action for Fraudulent Conveyances Causing Unreasonably Small Capital, awarding money damages against the Sponsor Defendants in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; and together with the amount of the Equity Distributions which Plaintiff is entitled to set aside; of 28

28 I. On the Ninth Cause of Action for Intentional Fraudulent Conveyances, awarding money damages against the Sponsor Defendants in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; together with the amount of the Equity Distributions which Plaintiff is entitled to set aside; and together with punitive damages in an amount to be determined at trial, but in no event less than $1,000,000.00; and J. On the Tenth Cause of Action for Breach of Contract, awarding money damages against Island Acoustics in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon; K. On the Eleventh Cause of Action for Negligence, awarding money damages against Island Acoustics in a sum to be determined at trial but in no event less than $2,500,000.00, together with interest thereon. L. Granting to Plaintiff such other and further relief against each of the defendants as may to the Court appear just, proper and equitable, including the costs and disbursements of this action. Dated: New York, New York June 20, 2018 SCHWARTZ SLADKUS REICH GREENBERG ATLAS LLP Attorneys for Plaintiff By: Rachael G. Ratner 270 Madison Avenue, 9th Floor New York, New York (212) / of 28