FILED: NEW YORK COUNTY CLERK 02/26/ :42 PM INDEX NO /2015 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 02/26/2016

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1 FILED: NEW YORK COUNTY CLERK 02/26/ :42 PM INDEX NO /2015 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 02/26/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X THE BOARD OF MANAGERS OF THE MODERN 23 CONDOMINIUM, -against- Plaintiff, Index No /2015 Hon. Barry R. Ostrager Motion Seq. No WEST 23, LLC, MARTIN HOLLANDER, ARTHUR ISRAEL and EREZ ITZHAKI, Defendants X REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANTS' MOTION TO DISMISS LORI ANKER NOTT Of Counsel ROSENBERG & ESTIS, P.C. Attorneys for Defendants 733 Third Avenue New York, New York (212) RE18031 I \0001 \ v2

2 TABLE OF CONTENTS Page PRELIMINARY STATEMENT... l ARGUMENT...? I. The First Cause of Action For Fraud Must be Dismissed in its Entirety The Martin Act Precludes Plaintiff s Fii-st Cause of Action For Fraud...? 2. Plaintiffs Fraud Claim is Barred as Duplicative...~ 3. Plaintiff s Fraud Cause of Action is not Pled wit11 the Requisite Pai-ticulai-ity...12 II. The Second Cause of Action For Breach of Contract Must be Dismissed The Limited Warranty Precludes a Cause of Action for Breach of Contract...15 III. Plaintiff s Third Cause of Action for Breach of Wat-ranty Must be Dismissed... l b 1. Plaintiff is Precluded From Seeking Damages The Alleged Defects Are Precluded By the One Year Limitation...17 IV. Plaintiff Fails to State a Cause of Action Individually Against Principals of Sponsor a. The Sponsor Certification Is Insufficient to Iin~~ose Personal Liability...20 b. Plaintiff s Piercing Allegations Are Insufficient As a Matter of Law...21 CONCLUSION...29 R E\80311 \0001 \6181 S S v2 -i-

3 TABLE OF AUTHORITIES Pa e s Cases 266 West 115th Street Condominium v. 266 West 115th Street, LLC 2014 WL (Sup. Ct. N.Y. Co. Dec. 2, 2014)... 10, 15, 19, 21, Tower Apartment LLC v. Mark Hotel LLC, 853 F. Supp. 2d 386 (S.D.N.Y. 2012)... 7, 26 Andejo Corp. v. South Street Seaport Limited Partnership, 40 A.D. 3d 407, 836 N.Y.S.2d 571 (1st Dept 2007) Babv Phat Holding Company, LLC v. Kellwood Company, 123 A.D.3d 405, 997 N.Y.S.2d 67 (1st Dept 2014) Rarneli & C.ie SA v_ i~utch R~~k Fund SPC_ 95 A.D.3d 736, 946 N.Y.S.2d 53 (1st Dept 2012) Berenger v. 261 West LLC, 93 A.D.3d 175, 940 N.Y.S.2d 4 (1st Dept 2012)... 3, 4, 20 Bhandari v. Ismael LeWa Architects, P.C., 84 A.D.3d 607, 923 N.Y.S.2d 484 (1st Dept 2011)... 3, 4 Birnbaum v. Yonkers Contr. Co., 272 A.D.2d 355 (2nd Dept 2000) Blaikie v. Borden Co., 29 A.D.2d 932, 289 N.Y.S.2d 260 (1st Dept 1968) Board of Managers of 184 Thompson Street Condominium v. 184 Thompson Street Owner LLC, 2012 WL (Sup. Ct. NY Co., Apr. 2, 2012, Bransten, J.), aff'd, 106 A.D.3d 542, 965 N.Y.S.2d 114 (1st Dept 2013)... 8, 19, 21 Board of Managers of Chelsea 19 Condominium v. Chelsea 19 Associates, et al., 73 A.D.3d 581, 905 N.Y.S.2d 8 (1st Dept 2010)... 3, 8 Board of Managers of Crest Condominium v. City View Gardens Phase II, LLC, 951 N.Y.S.2d 85 (Sup. Ct., N.Y. Co. 2012) Board of Managers of Marke Gardens Condominium v. 240/242 Franklin Avenue, LLC, 71 A.D.3d 935, 898 N.Y.S.2d 564 (2d Dep't 2010)... 6, 21 Board of Managers of Park Slope Views Condominium v. Park Slope Views, LLC, 972 N.Y.S.2d 142 (N.Y. Sup. Kings Cty. 2013) RE\80311 \0001 \618155v2 -ii-

4 Board of Managers of Soho North 267 West 124th Street Condominium v. N W 124 LLC, 2012 WL (Sup. Ct., N.Y. Co. Dec. 6, 2012)... 15, 21 Board of Managers of the 231 Norman Avenue Condolni~liu~n v. ~J I NO1`111a11 AVeIlUC PI'OpeI~v Development, LLC, 959 N.Y.S.2d 87, 36 Misc.3d 1232(A) (Sup. Ct., Kings Co.) , 5, 11 Boat-d of Managers of the Lore Condominium v. Gaetano, 2012 WL (Sup. Ct. N.Y. Co. 2014)... 5, 9, 21, 23 Caboal-a v. Babylon Cove Development, LLC, 920 N.Y.S.2d 191, 82 A.D.3d 1141 (2d Dep't 2011) CPC International Inc. v. McKesson Corporation, 70 N.Y.2d 268, 519 N.Y.S.2d 804 (1987)... D'Mel &Associates v. Athco, Inc., 105 A.D.3d 451, 963 N.Y.S.2d 65 (1st Dept 2013)...?4 East Hampton Union Free School Dist. v. Sandpebble Blders, Inc., 16 N.Y.3d 775, 919 N.Y.S.2d 496 (2011)... 14,?3 First Bank of the Americas v. Motor Car Funding, 257 A.D.2d 287, 690 N.Y.S.2d 17 (1st Dept 1999) Forum Insurance Company v. Texarkona Transportation Co., 229 A.D.2d 341, 645 N.Y.S.2d 786 (1st Dept 1996) Fumarelli v. Maxsam Development, Inc., 238 A.D.2d 470, 657 N.Y.S.2d 61 (2d Dep't 1997), affld, 92 N.Y.2d 298, 680 N.Y.S.2d 440 (1998)... 1 Hudson v. Greenwich I Associates, 226 A.D.2d 119, 640 N.Y.S.2d 46 (1st Dept 1996), lv denied, 89 N.Y.2d 860, 653 N.Y.S.2d 282 (1996)... 10, 1 Kerusa Co. LLC v. W l OZ/515 Real Estate Limited Partnership, 12 N.Y.3d 236, 879 N.Y.S.2d 17 (2009)... 2,?0 Kerusa Co. LLC v. W l OZ/515 Real Estate, L.P., 10 Misc.3d 929, 810 N.Y.S.2d 861 (Sup. Ct., N.Y. Co. Dec. 6, 2005)... (~, 1 Manus v. VMS Assoc., 53 A.D.3d 451 (1st Dept 2008) Matias v. Mondo Properties LLC, 43 AD 3d 367, 841 N.Y.S.2d 279 (1st Dept. 2007) RE \0001 \ v

5 MBIA Ins. Corp. v. COUI1tI'yW1C~C H0111C LOdI1S, Inc., 87 A.D.3d 287 (1st Dept 201 1) Moi-~-is v. N.Y. State Dept. of Taxation and Fin., 82 N.Y.2d 135, 603 N.Y.S.2d 807 (1993) Moustakis v. Christie's Inc., 68 A.D.3d 637, 89? N.Y.S.2d 83 (1st Dept 2009)... New York University v. Contine11ta1 Ins. Co., 87 N.Y.2d 308 (1995)... 1 U Orix Credit Alliance, Inc. v. R.E. Hable Co., 256 A.D.2d 1 14, 682 N.Y.S.2d 160 (1st Dept 1998) Pasquier v Wal~-en Street Realty LLC, 2015 WL (Sup. Ct. NY Co., Apr'. 20, 2015, Rakower, J.)... 2O,?2 Pine Street Homeowners Association v. 20 Pine Street, LLC, 109 A.D.3d 733, 971 N.Y.S.2d 289 (1st Dept 2013)... ~, 1? 15, ] 6, Pludeman v. Northern Leasing Systems, Inc., 10 N.Y.3d 486, 860 N.Y.S.2d 422 (?008) Port Chester Elec. Const. Co. v. Atlas, 40 N.Y.2d 652, 357 N.E.2d 983 (1976)... 26, 2~ Sheridan Broadcasting; Corporation v. Small, 19 A.D.3d 331, 798 N.Y.S.2d 45 (1st Dept 2005)...?8 Snow v. Seff, 98 A.D.3d 1019, 950 N.Y.S.2d 591 (2nd Dept 2012) Sound Communications Inc. v. Rack &Roll, Inc., 88 A.D.3d 523, 930 N.Y.S.2d 577 (1st Dept?011) Sutton Apartments Corporation v. Bradhurst 100 Development LLC, 107 A.D.3d 646, 968 N.Y.S.2d 483 (1st Dept 2013)... 4, 14, 24 The Board of Managers of the Chelsea Qua1-tet- Condominium v. 129 W. Residential Partners LLC, 836 N.Y.S.2d 483 (Sup. Ct. N.Y. Co. 2007)... 4, 9 TIAA Global Invs. LLC v. One Astoria Sq. LLC, 127 A.D.3d 75, 7 N.Y.S.3d 1 (1st Dept 2015)...?6 TNS Holdings, Inc. v. MKI Securities Corp., 92 N.Y.2d 335, 680 N.Y.S.2d 891 (1998)... ~~ RE\80311 \0001 \6181 SSv2 -iv-

6 Walkovszkv v. Carlton, 18 N.Y.2d 414, 276 N.Y.S.2d 585 (1996) Wvle Inc. v. ITT Corporation, 130 A.D.3d 438, 13 N.Y.S.2d 375 (1st Dept 2015)... 10, 11 Statutes CPLR 3016(b)... 1, 2, 12 CPLR 3211(a)(1)... 1 CPLR 3211(a)(7)... 1 CPLR 3211(e) Martin Act, Gen. Bus. Law Article 23-A, 353-c and 353 (McKinney 1996) N.Y. Comp. Codes R. & Regs. tit. 13, RE18031 I \0001 \ v2 -v-

7 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X THE BOARD OF MANAGERS OF THE MODERN 23 CONDOMINIUM, Index No /2015 -against- Plaintiff, WEST 23, LLC, MARTIN HOLLANDER, ARTHUR ISRAEL and EREZ ITZHAKI, Defendants X REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF DEFENDANTS' MOTION TO DISMISS Defendants', by and through their attorneys, Rosenberg & Estis, P.C., respectfully submit this reply memorandum of law in further support of their motion, pursuant to CPLR ~ 3211(a)(1), 3211(a)(7) and 3016(b), to dismiss the first, second and third causes of action in the Complaint.2 PRELIMINARY STATEMENT In opposing this motion, Plaintiff ignores the law of the First Department and impermissibly attempts to rewrite its Complaint in its Memorandum of Law. For the reasons set forth in Defendants' Memorandum of Law ("Defs. MOL") and below, the Complaint should be dismissed in its entirety. ~ Capitalized terms herein shall have the same meaning as ascribed to them in Defendants' Memorandum of Law dated January 5, The Complaint and Answer are annexed to the affirmation of Lori Nott dated January 5, 2016 ("Nott Aff.") as Exhibits "A" and "B" respectively. RE \0001 \ v2

8 ARGUMENT I. The First Cause of Action For Fraud Must be Dismissed in its Entirety The first cause of action alleges fraud. (Complaint ) The fraud claim fails as a matter of law because (i) it is precluded by the Martin Act; (ii) it is duplicative of Plaintiffs second cause of action for breach of contract and third cause of action for breach of express warranty; and (iii) Plaintiff has in any event failed to plead its fraud cause of action with the requisite particularity mandated by CPLR ~ 3016(b). 1. The Martin Act Precludes Plaintiff s First Cause of Action For Fraud Plaintiffs fraud cause of action is predicated upon a claim that the Offering Plan, which was incorporated by reference into the Purchase Agreements, contained "omissions". (Complaint ) The law is well settled that a fraud claim predicated upon alleged omissions in an offering plan is no more than an indirect attempt to plead a private cause of action under New York" s Martin Act which is impermissible as only the Attorney General has the ability to enforce Martin Act claims. CPC International Inc. v. McKesson Corporation, 70 N.Y.2d 268, 519 N.Y.S.2d 804 (1987); Kerusa Co. LLC v. W l OZ/515 Real Estate Limited Partnership, 12 N.Y.3d 236, 879 N.Y.S.2d 17 (2009). As detailed in Defs. MOL, the instant case is indistinguishable from Kerusa. Kerusa alleged false and fraudulent representations and material omissions by the sponsor and its principals relating to construction and design defects alleged to have been known but not disclosed. Kerusa also alleged the sponsor and its principals knew the statements and representations were false and omitted material when they were made and the defects were concealed to induce Kerusa to purchase the unit. Kerusa further alleged he believed the statements and representations were true and reasonably relied on them in deciding to purchase the unit. The Court of Appeals concluded the complaint failed to state a cause of action for RE~8031 I \000 I \ v2-2-

9 common-law fraud, as distinct from the Martin Act. See, also, Berenger v. 261 West LLC, 93 A.D.3d 175, 940 N.Y.S.2d 4 (1st Dept 2012) (Appellate Division dismissed fraud claim where gravamen of complaint was predicated on alleged omission in the offering plan as to the location and operation of the cooling tower); Board of Managers of Chelsea 19 Condominium v. Chelsea 19 Associates, et al., 73 A.D.3d 581, 905 N.Y.S.2d 8 (1st Dept 2010) (Absent a confidential or fiduciary relationship, defendants did not have a duty of disclosure and common law fraud may not be asserted against a condominium sponsor based on omissions from the offering plan.) Plaintiff does not address, much less distinguish the holding of the Court of Appeals in Kerusa or the other cases cited by Defendants. Instead, Plaintiff impermissibly seeks to rewrite the Complaint in its Memorandum of Law in an attempt to fit into the active concealment/affirmative misrepresentation exception to the Martin Act preemption. Plaintiff essentially asks the Court to substitute the words "active concealment" in place of its allegations of "omissions." However, Plaintiff cannot change the underlying acts upon which it relies to support its claim. There is no allegation in the Complaint of active concealment such as "walls or bricks [] put up to hide or prevent it from finding leaking pipes or holes in the foundation" [Kerusa, 12 N.Y.3d at ] or affirmative misrepresentation such as misstating the floor dimensions of units to prospective purchasers. Bhandari v. Ismael Leyva Architects, P.C., 84 A.D.3d 607, 607, 923 N.Y.S.2d 484 (1st Dept 2011). Tellingly, Plaintiff fails to address Defendants' moving papers which recite the allegations throughout the Complaint that specifically refer to Sponsor's purported "omissions" and "failure to disclose". See, e.g., Complaint 109, RE\80311 \0001 \618155v2-3-

10 Here, as in Kerusa and Beren~er, the gravamen of Plaintiff's claim for fraud is predicated upon purported omissions from the Offering Plan mandating dismissal of the first cause of action for fraud. The cases cited by Plaintiff do not support a different result. Plaintiff cites to Berens where the Appellate Division, First Department dismissed the fraud cause of action as barred by the Martin Act because it was based on omissions. Sutton Apartments Corporation v. Bradhurst 100 Development LLC, 107 A.D.3d 646, 968 N.Y.S.2d 483 (1st Dept 2013) cited by Plaintiff likewise supports dismissal. There, too, the complaint alleged damages sustained as a result of purported defects in the design and construction of the building. The First Department dismissed the fraud claim finding plaintiffs failed to plead affirmative misrepresentations as opposed to omissions of information required by the Martin Act. The Appellate Division cited to Bhandari, supra, to distinguish an affirmative misrepresentation of material fact, that being the size of the units which were being sold. Similarly, The Board of Managers of the Chelsea puarter Condominium v. 129 W. Residential Partners LLC, 836 N.Y.S.2d 483 (Sup. Ct. N.Y. Co. 2007) cited by Plaintiff supports dismissal. The complaint alleged fraud based upon the sponsor's failure to disclose various defects in the construction of the building. The Court dismissed the fraud claim as precluded by the Martin Act because these allegations are omissions rather than affirmative misrepresentations. Caboara v. Babylon Cove Development, LLC, 920 N.Y.S.2d 191, 82 A.D.3d 1141 (2d Dept 2011) cited by Plaintiff is readily distinguishable because the complaint was based upon affirmative misrepresentations, not omissions. Board of Managers of the 231 Norman Avenue Condominium v. 231 Norman Avenue Property Development, LLC, 959 N.Y.S.2d 87, 36 Misc.3d 1232(A) (Sup. Ct., Kings Co.) cited RE\80311 \0001 \618155v2-4-

11 by Plaintiff is likewise readily distinguishable. In that case, the building already existed at the time the sponsor made representations in the offering plan. The Court held plaintiff adequately alleged active concealment where it was asserted, among other things, the sponsor actively concealed leaks which existed at the time of the offering plan, painted over walls to cover the leaks between rainstorms and misstated the size of the condominium in the offering plan. More instructive from Board of Managers of the 231 Nonnan Avenue Condominium is the Court's dismissal of the fraud claim against the architects. Citing Kerusa, supra, the Court held the allegations against the architects were premised upon omissions rather than affirmative misrepresentations where the architects statements made in connection with the offering plan could not have been false at the time they were made because no construction work to perform the renovations to the building had taken place at the dine the statements were made. See, also, Board of Managers of the Lore Condominium v. Gaetano, 2012 WL (Sup. Ct. N.Y. Co. 2014) cited by Plaintiff where fraud claim was dismissed because it was primarily based upon the mandatory certifications filed pursuant to the Attorney General's implementing regulations. Here, it is undisputed construction had not commenced prior to the Offering Plan and there could not have been active concealment. Plaintiff alleges: "11. In order to promote and sell the Units, Defendants created, authored, certified, promoted and distributed to potential buyers and/or filed with governmental authorities, certain Offering Plans, Purchase Agreements, Declarations and By-Laws (collectively, the "Offering Documents"). Pursuant to the Offering Documents, the Defendants stated that they would develop the Building into newconstruction, residential units. Through the Offering Documents, the Defendants made a series of representations of material fact concerning the Building in an effort to induce potential purchasers to buy Units in the Building. Since the Building was not yet constructed at the time the Offering Documents were circulated, purchasers relied on the representations made by Defendants in the Offering Documents in deciding whether to purchase Units. RE\8031 I \0001 \6181 S S v2-5-

12 ~ ~ 14. Through the Offering Documents, lnaiketing materials, and other communications, the Defendants represented the Building would be designed, built and/or installed according to the drawings and specifications, in a workmanlike manner, free from defects and in compliance with applicable law, codes and regulations. 15. Upon information and belief, these representations were false insofar as Defendants knew at the time these statements were made that Defendants did not intend to build or install the Building in a workmanlike manner, free from defects and in compliance with applicable law, codes and regulations." (Emphasis supplied.) (Complaint ) Plaintiff next argues the Martin Act does not preempt its fraud claim because the Complaint alleges fraud "grounded in [] documents'" other than the Offering Plan, e.g, the "Purchase Agreements". Pl MOL p. 6. This argument is circular. The fraud alleged in the Purchase Agreements is the incorporation of the statements from the Offering Plan into the Purchase Agreements. (Complaint ~ )3 Plaintiff alternatively relies upon its broad, unspecific allegation in the Complaint that "statements" made in ``marketing materials" were false. (Complaint ) As set forth in Defs MOL, the lower Court in Kerusa specifically rejected the plaintiff's reliance upon marketing materials and dismissed the fraud cause of action. Kerusa Co. LLC v. W 1 OZ/515 Real Estate, L.P., 10 Misc.3d 929, 935, 810 N.Y.S.2d 861 (Sup. Ct., N.Y. Co. Dec. 6, 2005). Furthermore, the case law cited by Plaintiff does not support its argument the Martin Act ``does not affect allegations of fraud grounded in documents other than the Offering Plan". P1. MOL at 6. The Second Department in Board of Managers of Marke Gardens Condominium v. 240/242 Franklin Avenue, LLC, 71 A.D.3d 935, 898 N.Y.S.2d 564 (2nd Dept 2010) held the 3 Moreover, as detailed below, Plaintiff's admission that the allegations of fraud are predicated upon the statements made in the Purchase Agreement mandate dismissal because the claim is duplicative of its breach of contract cause of action. RE\80311 \0001 \618155v2-6-

13 complaint stated a viable cause of action because there were allegations of affirmative misrepresentations including a claim that the building was to be constructed with an elevator, which was never installed. Plaintiff selectively quotes portions of the case and misstates the holding. 904 Tower Apartment LLC v. Mark Hotel LLC, 853 F. Supp. 2d 386 (S.D.N.Y. 2012) cited by Plaintiff likewise fails to support its position. The Court analyzed the holdings in Kerusa and its progeny and found a fraud claim will not be precluded under the Martin Act merely because there is overlap if the fraud claim is properly alleged, e.g., it is based upon affirmative misrepresentations and active concealment. There is no discussion, much less a holding by the Court, as to statements made in documents other than the offering plan. 904 Tower Apartment LLC cited by Plaintiff is however quite instructive as to why Plaintiff's fraud claim must in all events be dismissed. As explained by the Court, to state a claim for fraud under New York law a plaintiff must establish all elements including "justifiable reliance". The Court held plaintiffs could not plead justifiable reliance because they specifically disclaimed it in their purchase agreements. ``Such a disclaimer `destroys the allegations in plaintiff s complaint that the agreement was executed in reliance upon these contrary oral representations'." (Emphasis supplied.) In our situation, each of the Purchase Agreements contains such a disclaimer. The Purchase Agreements provide: "2....Purchaser acknowledges that he is purchasing a condominium unit in a condominium to be formed, and that except as stated in this Agreement (and set forth in the Declaration and By-Laws and the Plan), he has not relied on any representations or other statements of any kind or nature made by Sponsor or otherwise, including but not limited to any relating to the description, size or dimensions of the Unit or rooms therein, and the estimated common charges or other expense in connection therewith." (See, Exhibit "F" to the Nott Aff.) RE\80311 \0001 \618155v2-7-

14 In sum, the law is clear that the allegations in the Complaint which form the basis of Plaintiffs fraud claim are preempted by the Martin Act. Moreover, the explicit disclaimers in the Purchase Agreements preclude a cause of action for fraud. 2. Plaintiff s Fraud Claim is Barred as Duplicative While the Court need not reach this point, Plaintiff s fraud claim must also be dismissed on the grounds that it is duplicative of the breach of contract and breach of express warranty causes of action. A cause of action seeking damages for fraud cannot be sustained when the only fraud charged relates to a breach of contract. A fraud claim must be dismissed unless it arises from representations that are collateral or extraneous to the parties' contract. Pine Street Homeowners Association v. 20 Pine Street, LLC, 109 A.D.3d 733, 971 N.Y.S.2d 289 (1st Dept 2013); Board of Managers of Chelsea 19 Condominium v. Chelsea 19 Associates, et al., szcpya. Here, as in the cases cited above, the fraud alleged is Defendants' purported failure to include information regarding purported construction defects in the Offering Plan, which was incorporated into the Unit Owners' respective Purchase Agreements. (Complaint ) The fraud alleged in the Complaint does not just rely upon, but is entirely dependent upon, the Offering Plan and the Purchase Agreements, i.e., the contract that incorporates its representations. See, also, Board of Managers of 184 Thompson Street Condominium v. 184 Thompson Street Owner LLC, 2012 WL (Sup. Ct. NY Co., Apr. 2, 2012, Bransten, J.) aff d, 106 A.D.3d 542, 965 N.Y.S.2d 114 (1st Dept 2013); Moustakis v. Christie's Inc., 68 A.D.3d 637, 892 N.Y.S.2d 83 (1st Dept 2009). In opposing this motion, Plaintiff acknowledges the fraud claim is predicated upon the Offering Plan and Purchase Agreement. Pl. MOL at 6. As such, Plaintiff's fraud claim must be dismissed. RE\80311 \0001 \618155v2-8-

15 Moreover, the cases cited by Plaintiff either support Defendants' grounds for dismissal, or are distinguishable. Board of Managers of the Lore Condominium v. Gaetano, szcpf-a, cited by Plaintiff is on point in favor of dismissal. The fraud claim arose from the same allegations as the breach of contract claim which were allegations that representations were made that the building would be constructed in accordance with the offering plan, applicable laws, codes, and regulations, and it was not. The Court dismissed the fraud claim as duplicative of the breach of contract claim holding "'it is based on the same facts that underlie the contract cause of action, is not collateral to the contract, and does not seek damages that would not be recoverable under a contract measure of damages' Fi~~ancial Strtcctzcj-es Ltd. V. USB AG, 77 A.D.3d 417, 419 [1st Dept 2010]).'' The Board of Managers of the Chelsea Quarter Condominium v. 129 W. Residential Partners LLC, supra, cited by Plaintiff is likewise on point in favor of dismissal. The complaint alleged the sponsor engaged in fraud and made misrepresentations in the purchase agreements. The Court dismissed the fraud claim as redundant of the breach of contract claim. The other cases cited by Plaintiff are distinguishable. In each of those cases, the sponsor had misrepresented present facts in the offerin plan. In our case, it is undisputed the allegations of the Complaint assert misrepresentations of future intent which are not actionable. The Complaint alleges, intey alia, Defendants made representations in the ``Offer Documents'" that "were false insofar as Defendants knew at the time these statements were made that Defendants did not intend to build or install the Building in a workmanlike manner, free from defects and in compliance with applicable law, codes and regulations". (Emphasis supplied.) (Complaint ) Plaintiff concedes its fraud claim rests upon a claim of RE\803 I 1 \0001 \618155v2-9-

16 reliance upon the "Offering Documents" which were "circulated" before the Building was built. See, Pl. MOL at 8 and Complaint ) As discussed in Defendants' moving papers, it is well settled law an allegation that a party never intended to perform its obligations merely states a claim for breach of contract, not fraud. See, e.~., Hudson v. Greenwich I Associates, 226 A.D.2d 119, 640 N.Y.S.2d 46 (1st Dept 1996), lv denied, 89 N.Y.2d 860, 653 N.Y.S.2d 282 (1996); Orix Credit Alliance, Inc. v. R.E. Hable Co., 256 A.D.2d 114, 682 N.Y.S.2d 160 (1st Dept 1998) (Appellate Division dismissed the fraud claim as duplicative of the breach of contract claim explaining that "a viable claim for fraud concerning a contract must allege misrepresentations of present facts (rather than merely of future intent)... Allegations that a party entered into a contract without intent to perform do not state a cause of action for fraud''). 266 West 115th Street Condominium v. 266 West 115th Street, LLC, 2014 WL (Sup. Ct. N.Y. Co. Dec. 2, 2014) cited by Plaintiff is on point in support of dismissal. The complaint alleged the sponsor represented construction would be completed in accordance with the offering plan, and that it would cure any defects in the construction to the extent required under the plan. The Court dismissed the fraud claim because it was "... based on an allegedly insincere promise to perform the contract" and "... it is well-settled that `[g]eneral allegations that defendant entered into a contract while lacking the intent to perform it are insufficient to support' a fraud claim" citing New York University v. Continental Ins. Co., 87 N.Y.2d 308, 318 (1995); Manus v. VMS Assoc., 53 A.D.3d 451, (1st Dept 2008). The recent holding of the Appellate Division in Wyle Inc. v. ITT Corporation, 130 A.D.3d 438, 13 N.Y.S.2d 375 (1st Dept 2015) cited by Plaintiff is readily distinguishable. Plaintiff fails to reveal the critical factual distinction in that case. In W.~, it was undisputed the RE\80311 \0001 \6181 SSv2-10-

17 defendant made a misrepresentation of present fact in the contract. The defendant was required, but did not disclose the existence of an ongoing audit which affected the sales price. The issue addressed by the Court was whether the undisputed misrepresentation was extraneous to the contract itself. The Court found it actionable because there was a separate duty upon which the fraud claim was premised. That holding has no application to the instant case. Similarly, MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 87 A.D.3d 287 (1st Dept 2011) cited by Plaintiff is distinguishable. There, too, it was undisputed there were material misrepresentations of facts which defendants were aware of at the tune the statements were made. Again, the Court addressed the question of whether the misrepresentations were outside the scope of the contract and therefore beyond a claim of contractual misrepresentations. First Bank of the Americas v. Motor Car Funding, 257 A.D.2d 287, 690 N.Y.S.2d 17 (1st Dept 1999) is likewise inapposite. Again, the claims were premised upon the failure to disclose present facts. In that case, the Appellate Division, First Department, specifically noted that "[a] fraud claim should be dismissed as redundant [] when the fraud alleged is that the defendant was not sincere when it promised to perform under the contract." Id. at 291. See, also, Board of Managers of the 231 Norman Avenue Condominium, szcpr-a, cited by Plaintiff dismissing fraud claim against architects where statements made in connection with the offering plan could not have been false at the time they were made because no construction work to perform the renovations to the building had taken place at the time the statements were made. Finally, Board of Managers of Park Slope Views Condominium v. Park Slope Views, LLC, 972 N.Y.S.2d 142 (N.Y. Sup. Kings Cty. 2013) cited by Plaintiff is likewise inapposite. In that case too, the allegations of fraud were based upon a failure to disclose present facts. The complaint alleged, among other things, that the sponsor was in possession of an engineering RE\80311 \0001 \6181 SSv2-11-

18 report np ~or to certifying the condition of the property in the offering plan which showed the existing conditions materially deviated from the description in the offering plan. Plaintiff fails to cite to a single allegation in the Complaint to support its assertion that the fraud claim is not duplicative, e.g., that the fraud claim arises from representations that are collateral or extraneous to the parties' contract [Pine Street Homeowners Association v. 20 Pine Street, LLC, sup,^al and are not merely based upon statements of future intent [Hudson v. Greenwich I Associates, sup,~al. Accordingly, the fi aud cause of action must be dismissed because it is duplicative of the second and third causes of action. 3. Plaintiff s Fraud Cause of Action is not Pled with the Requisite Particularity An additional ground for dismissal is Plaintiff s failure to plead its fraud cause of action with the requisite particularity. As detailed in Defendants" moving papers, each paragraph of the first cause of action for fraud references, either directly or indirectly, the Purchase Agreements and/or the Offering Plan and Defendants" alleged failure to disclose information therein and therefore cannot state a cause of action for fraud. As detailed above, these allegations speak only to Defendants' purported future intent and not to any present facts that they knowingly concealed or affirmatively misstated. As such, there are no allegations to support a claim for fraudulent conduct or intent to deceive, much less specific allegations as mandated by CPLR 3016(b). (Complaint ) Plaintiff fails to refute this in opposing this motion. The majority of the allegations cited by Plaintiff to support its claim of "specificity'' recite the language of the Purchase Agreements and/or the Offering Plan. (P1. MOL at 10.) The balance of the allegations cited by Plaintiff relate to purported events which occurred after the date of the Offering Plan and Purchase Agreements RE\ \0001 \618 I S S v2-12-

19 in which the allegedly fraudulent statements were made. As such, those allegations do not and cannot form the requisite particularity of a fraud claim. (P1. MOL at 10.) Likewise, Plaintiff's allegation regarding the marketing materials for the Condominium is completely devoid of specificity4 and cannot support a fraud claim. (Complaint ) As discussed above, the Court in Kerusa Co. LLC v. W l OZ/515 Real Estate, L.P., szcp~-a, disposed of the same issue before the case reached the Court of Appeals when it refused to allow a fraud claim to be asserted based upon allegedly false statements in brochures and advertisements where the element of falsity was not pleaded with sufficient particularity stating: Defendants. "With respect to allegedly false statements in brochures and advertisements, Kerusa fails to plead the element of falsity with particularity... Some of these statements are sales puffery... and Kerusa does not set forth in what manner the remaining statements are false." Plaintiff fails to address, much less distinguish the applicability of the cases cited by Pludeman v. Northern Leasin~vstems, Inc., 10 N.Y.3d 486, 860 N.Y.S.2d 422 (2008) cited by Plaintiff is readily distinguishable. There was no issue before the Court as to whether the fraud claim was adequately pled against the corporation. There were specific allegations of fraudulent conduct by the corporation including details of a nationwide scheme to defraud that took place over a number of years. The question before the Court was whether the fraud was adequately pled against the individual defendants. The Court permitted the claim to stand against the individuals citing case law that permits a "reasonable inference" that the individuals, who were officers and held key positions in the entity, knew of the fraud which was properly pled against the entity. 4 In fact, paragraph 12 of the Complaint is pled "upon information and belief." RE\80311 \0001 \618155v2-13-

20 In addition, it is a critical part of the holding in Pludeman as well as the other cases cited by Plaintiff that there was a "cognizable claim sounding in fraud". As detailed above, that is not the situation herein. Plaintiff fails to set forth any allegations of fraudulent conduct, much less specific allegations. In Sutton Apartments Corpot ation v Bradhurst 100 Development, LLC, sicpra, cited by Plaintiff the Appellate Division, First Department dismissed the fraud claim for lack of specificity where, as here, it was alleged that damages were sustained as result of purported defects in the design and construction of the building. Obviously cognizant of the impropriety of its pleading, Plaintiff drops a footnote suggesting it should be permitted to amend. First, Plaintiff has not sought affirmative relief from this Court as required by CPLR 3211(e) and therefore there is no basis to permit leave to replead. Moreover, the facts as alleged by Plaintiff cannot in any event form the basis of a fraud claim and therefore leave to replead must be denied. As stated by the Appellate Division, First Department, ``there must be some evidentiary showing that the claim can be supported'' to grant a request for leave to replead. Blaikie v. Borden Co., 29 A.D.2d 932, 932, 289 N.Y.S.2d 260, 261 (1st Dept 1968); see, also, East Hampton Union Free School Dist. v. Sandpebble Blders, Inc., 16 N.Y.3d 775, 919 N.Y.S.2d 496 (2011) cited by Plaintiff where the Court of Appeal held that leave to replead was properly denied where the record affords no basis to conclude the deficiency could have been cured. For all of the reasons stated above, the first cause of action for fraud should be dismissed because it (i) is barred by the Martin Act; (ii) is duplicative of the breach of contract claim; and (iii) lacks the requisite specificity. RE \0001 \ v2-14-

21 II. The Second Cause of Action For Breach of Contract Must be Dismissed The second cause of action must be dismissed because Plaintiffs claims for alleged construction defects are subject to the Limited Warranty set forth in the Offering Plan and Purchase Agreements. 1. The Limited Warranty Precludes a Cause of Action for Breach of Contract Where, as here, the Offering Plan and Purchase Agreement have a Limited Warranty, Plaintiff is precluded from maintaining a cause of action for breach of contract for construction defects. Fuinarelli v. Marsam Development, Inc., 238 A.D.2d 470, 657 N.Y.S.2d 61 (2d Dep't 1997), aff d, 92 N.Y.2d 298, 680 N.Y.S.2d 440 (1998); Pine Street Homeowners Association v. 20 Pine Street LLC, supya. (See, Exhibit "C" to the Nott Aff. at pp ) The cases cited by Plaintiff are inapposite because in each instance the alleged breach of contract either did not fall within the scope of the warranty, e.g., Snow v. Seff, 98 A.D.3d 1019, 950 N.Y.S.2d 591 (2nd Dept 2012), or, the contract did not provide an express warranty at all, e.g., Board of Managers of Soho North 267 West 124th Street Condominium v. NW 124 LLC, 2012 WL , at *4(Sup. Ct., N.Y. Co. Dec. 6, 2012). In addition, Plaintiff cites Board of Managers of Crest Condominium v. City View Gardens Phase II, LLC, 951 N.Y.S.2d 85 (Sup. Ct., N.Y. Co. 2012) which offers no guidance as the Court was "unable'' to determine the warranty issue because the movant did not attach a copy of the offering plan to its papers. However, 266 West 115th Street Condominium v. 266 West 115th Street, LLC, szcpj-a, cited by Plaintiff is instructive. In that case, as here, the claims for breach of contract and breach of warranty were both predicated upon alleged construction defects. The Court would not permit the plaintiff to maintain both causes of action on the grounds they were duplicative. Here, the scope of the Limited Warranty is broad and encompasses the allegations set forth in the Complaint. (See, Exhibit "C" to the Nott Aff. at pp ) Each allegation relates RE\80311 \0001 \618155v2-15-

22 to purported construction "defects" which fall squarely within the Limited Warranty. (Complaint 21-52, ) In fact, Plaintiff's third cause of action for ``Breach of Express Warranty" confines the contract claims are covered by the Limited Warranty wherein Plaintiff ``repeats and realleges the allegations in support of its breach of contract claim as the basis for its breach of Limited Warranty claim. (Complaint 129.) The law is clear Plaintiff cannot maintain a cause of action for breach of contract for any claim which falls within the scope of the Limited Warranty. For all of the foregoing reasons, the second cause of action for breach of contract must be dismissed. III. Plaintiff s Third Cause of Action for Breach of Warranty Must be Dismissed The third cause of action for breach of express warranty must be dismissed because the Limited Warranty precludes a claim for money damages. Moreover, Plaintiff is barred from interposing the claims set forth in the Complaint because they relate to purported defects that were not reported to Sponsor within the one year time period set forth in the Limited Warranty. 1. Plaintiff is Precluded From Seeking Damages The third cause of action is for breach of the Limited Warranty set forth in the Purchase Agreement and Offering Plan and seeks money damages. (Complaint ) The Limited Warranty expressly precludes Plaintiff from seeking money damages. wee, Exhibit "C" to the Nott Aff. at pp ) As set forth in Defendants" moving papers, the law is well settled that a party may not seek damages where there is a valid and specific limited warranty precluding such a claim. Pine Street Homeowners Association v. 20 Pine Street LLC, supra. Plaintiff does not submit any opposition to this point. (Plaintiff MOL pp ) As such, the third cause of action must be dismissed for failure to state a cause of action. RE\80311 \0001 \6181 SSv2-16-

23 2. The Alleged Defects Are Precluded By the One Year Limitation Plaintiff is in any event precluded from maintaining the third cause of action because it failed to plead that notice of the alleged defects was given to Sponsor within the designated time as required by the terms of the Limited Warranty. The Limited Warranty provides in pertinent part: "The Limited Warranty Begins on the date title to the Unit passes to the Unit Owner and extends the following matters for one 1 _year thereafter: (a) for such one (1) year period the home will be free from defects due to a failure to have been constructed in a skillful manner, (b) for such one (1) year period the plumbing, electrical, heating, cooling and ventilation systems of the home will be free from defects due to a failure by the builder to have installed such systems in a skillful manner; and (c) for such one (1) year period the home will be free from material defects. The issuance of a temporary or permanent Certificate of Occupancy shall be deemed presumptive evidence that the construction has been substantially completed in accordance with this Plan and the Plans and Specifications. However, notwithstanding the foregoing, Sponsor or its representatives will correct, repair or replace all defects in the construction, the installation or operation of any appliances, fixtures or equipment in the same, or will cause the same to be corrected, repaired or replaced, but only if such defects are due to improper workmanship or material substantially at variance with the Plans and Specifications, and Sponsor is notified by the Board of Managers and Unit Owner of such defect: (i) as to the Common Elements, within one year from the earlier of the issuance of a temporary Certificate of Occupancy, subject to such defect or the date of substantial completion of the portions) of the Common Elements which is claimed be defective; or (ii) as to a Unit, on or prior to the date of closing for such Unit, except that if RE\80311 \0001 \618155v2-17-

24 any such defect in a Unit can be detected only by occupancy of the Unit, Sponsor will correct such defect if notified in writing by the Unit Owner within one _year from the date of the closing of title to such Unit." (Emphasis supplied.) ~, Exhibit "C" annexed to the Nott Aff. at pp ) (Emphasis supplied.) As to Common Elements, the outside date by which notice of defects must have been given is February 19, 2011 which is one year after the issuance of the temporary certificate of occupancy. (See, TCO annexed to the Nott Aff. as Exhibit "D".) As to individual Units, Sponsor was to be notified in writing within one year of the date title passed to the Unit. Title closed on the Units pursuant to the Purchase Agreements between March 2010 and February ~, deeds annexed to the Nott Aff. as Exhibit "G".) Plaintiffs claim rests on the "defects" set forth in the RAND report. (Complaint 136.) The RAND report is dated June 23, 2014 and Plaintiff alleges it was not provided to Defendants until July 16, 2014, well beyond the applicable deadline for notice under the Limited Warranty. The purported defects set forth in the RAND report include "... among other things,... defects with respect to... roofing, elevator, firestopping, electrical, heating and air conditioning, ventilation, plumping, piping, exterior walls, exterior balconies, exterior window and doors, interior walls, interior flooring..." (Complaint ~ ) As to each of these purported defects in the RAND Report, the Complaint fails to allege notice to Defendants within the requisite one year time period. Plaintiff therefore fails to state a cause of action for breach of the Limited Warranty. Similarly, Plaintiff cites to 25 and 27 of the Complaint and alleges "Sponsor was made aware of improper installation of the brick facade on the Building's chimney" and refers to a "2010 WBMA report'" prepared for the next door building owner. The Complaint does not allege Plaintiff had that report, much less provided it to Defendants' in To the contrary, RE\80311 \0001 \618 I SSv2-18-

25 Plaintiff alleges it provided notice to Sponsor about the chimney on March 16, 2015, again well beyond any applicable deadline for notice under the Limited Warranty. (Complaint 48.) As such, Plaintiff likewise fails to state a cause of action based upon this purported defect. 266 West 115th Street Condominium v. 266 West 115t~' Street, LLC, supra, cited by Plaintiff supports Defendants' grounds for dismissal. In that case, the Court found that pleading compliance with the notice requirement set forth in a warranty is a requisite to maintaining a cause of action under the warranty. As such, Plaintiffs third cause of action for breach of express warranty must be dismissed for the additional reason that Plaintiff failed to comply with the notice provisions set forth in the Limited Warranty. IV. Plaintiff Fails to State a Cause of Action Individually Against Principals of Sponsor Plaintiff seeks to hold Principals of Sponsor individually liable for all three causes of action set forth in the Complaint. As to the first and third causes of action for breach of contract and breach of limited warranty, the Complaint does not allege that anyone other than "Sponsor" was a party to the Purchase Agreements, had an obligation under the Purchase Agreements or purportedly breached the Purchase Agreements. (Complaint 122, 126 and 128.) Moreover, the documentary evidence confirms that Principals of Sponsor were not parties to the Purchase Agreements. The Purchase Agreements were signed by Sponsor only and not by any Principals of Sponsor in their individual capacity. (See, Purchase Agreements annexed to the Nott Aff. as Ex. "F".) As such, the Complaint fails to state a cause of action for breach of contract or breach of the Limited Warranty against Principals of Sponsor. Board of Managers of 184 Thompson Street Condominium v. 184 Thompson Street Owner LLC, supt-a. Plaintiff does not submit any opposition on this point. RE\8031 I \0001 \6181 S S v2-19-

26 As to all three causes of action, New York's Limited Liability Code provides in Section 609 that ineinbers and managers of a limited liability company are not liable for any liabilities of the limited liability company, whether arising in tort, contract or otherwise, solely by reason of being members or managers thereof. Matias v. Mondo Properties LLC, 43 AD 3d 367, 841 N.Y. S.2d 279 (1st Dept. 2007). Again, Plaintiff does not submit any opposition on this point. Plaintiff seeks to hold Principals of Sponsor liable under each of the three causes of action set forth in the Complaint based solely on (i) their execution of the Sponsor Certification; and (ii) a piercing the corporate veil theory. Plaintiff fails to refute the prevailing law that renders both of these claims insufficient to support a claim for personal liability. a. The Sponsor Certification Is Insufficient to Impose Personal Liability The law is well settled in the First Department that the signing of a certification alone is insufficient to impose personal liability. When the statements made in a sponsor certification are mandated by the Martin Act and plaintiff does not posit any basis of liability outside of that statute, the claim must be dismissed. Kerusa Co. LLC v. W l OZ/515 Real Estate L.P., supj-a; Berenger v. 261 LLC, supra; Board of Managers of 184 Thompson Street Condominium v. 184 Thompson Street Owner LLC, supj~a, ("Motion court correctly determined Non-Sponsors may not be held individually liable for any of plaintiff's claims premised solely on alleged violations of the offering plan and certification"); Pasquier v Warren Street Realty LLC, 2015 WL (Sup. Ct. NY Co., Apr. 20, 2015, Rakower, J.) (Individual members of Sponsor that signed certification are not liable for breach of contract claims). Here, the language of the Sponsor Certification is identical to the language mandated by the Martin Act. N.Y. Gen. Bus. Law, Art 23-A, 352-c and 353 (McKinney 1996); N.Y. Comp. Codes R. & Regs. tit. 13, (See, Exhibit "H" to Nott Affirmation). RE\80311 \0001 \6181 SSv2-20-

27 Contrary to this controlling law, Plaintiff argues it may assert a breach of contract claim against Principals of Sponsor based on the Certification alone. To support its position, Plaintiff cites to holdings of the Second Department. Plaintiff does not cite to a single First Department case [the only New York County cases cited by Plaintiff are lower Court and they rely on Second Department holdings]. (See, 266 West 115th Street Condominium v. 266 West 115th Street LLC, supf~a; Board of Managers of the Lore Condominium v. Gaetano, stcpra; Board of Managers of Soho North 267 West 124th Street Condominium v. NW 124 LLC, supra; Board of Managers of Marke Gardens Condominium, supra; and Birnbaum v. Yonkers Contr. Co., 272 A.D.2d 355, 357 (2nd Dept 2000)). Plaintiff does not dispute the law in the First Department which precludes a claim of personal liability based upon the execution of the certification alone. Instead, Plaintiff argues Board of Managers of 184 Thompson Street Condominium v. 184 Thompson Street Owner LLC, supra, cited by Defendants is not applicable because the Complaint alleges a basis for liability for breach of contract separate and apart from the Certification, "a piercing theory.'" Plaintiff MOL at 19. In other words, Plaintiff concedes the Certification alone cannot be the basis to hold Principals of Sponsor personally liable for breach of contract. Plaintiff does not even address the impropriety of its fraud and breach of warranty claims against Principals of Sponsor based on the Certification. For the foregoing reasons, the first, second and third causes of action in the Complaint must be dismissed against Principals of Sponsor as the execution of the Certification cannot form the basis of liability for any of the claims. b. Plaintiff s Piercing Allegations Are Insufficient As a Matter of Law Next, Plaintiff attempts to create personal liability for Principals of Sponsor by asserting a "piercing'' theory of liability. (Complaint ) To state a claim for "piercing" a party RE\80311 \0001 \618155v2-21-

28 must allege (i) the owners [Principals of Sponsor] exercised complete domination of the corporation [Sponsor] in respect to the transaction attacked; and (ii) that such domination was the instrument of fraud or otherwise resulting in wrongful or inequitable consequences. Evidence of domination alone does not suffice without an additional showing that it led to inequity, fraud or malfeasance. TNS Holdings, Inc. v. MKI Securities Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891 (1998). As succinctly stated by the Court in 266 West 115th Street Condominium v. 266 West 115`" Street, LLC, sup,~a, cited by Plaintiff where the piercing claim was found to be insufficient as a matter of law: "To state a claim for piercing the corporate veil, the complaint must plead not only that an individual `exercised complete dominion and control over the corporation' but also that the individual `abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice.' (East Hampto~i Unio~~ Free Sclzool Dist. v. Sandpebble Builders, Inc., 16 NY3d 775, 776 [2011 ] [internal quotations marks and citations omitted], affg 66 AD3d 122 [2nd Dept 2009]. Put another way, a plaintiff seeking to_pierce the corporate veil bears the `heavy burden of showing that the corporation was dominated as to the transaction attached and that such domination was the instrument of fraud or otherwise resulted in wrongful or inequitable consequences... In addition, it is well settled that a claim for veil piercing must be based on `particularized facts' and not on mere conclusory statements. (Andejo Coy p. v. Seaport Watch Co., 40 Aid 407, 407 [ 1st Dept 2007]; Barneli &Cie SA v. Dutch Book Fund SPC, 95 AD3d 736, 737 [ 1st Dept 20112].}". (Emphasis supplied.) See, also, Pasquier v Warren Street Realty LLC, sup~~a. The factual allegations in 266 West 115th Street Condominium are nearly identical to the instant case. The complaint alleged various relationships between the individuals and entities and "conclusorily asserts that the Sponsor is `a mere instrumentality and alter ego..., which are operating and controlled... to advance their financial interests." The Court found the piercing RE\80311 \0001 \6181 SSv2-22-