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BENDER v. CONTINENTAL TOWERS L.P.

April 4, 1986

FLORENCE BENDER, Plaintiff,
v.
CONTINENTAL TOWERS LIMITED PARTNERSHIP, et al.



The opinion of the court was delivered by: GRIESA

GRIESA, J.

This action is brought by nine tenants opposed to the . conversion to condominium ownership of the building in which they rent apartments. The complaint alleges violations of the federal securities laws and the RICO statute by the converting parties, and violation of plaintiffs' civil rights by the Attorney General of the State of New York.

The converting parties, Continental Towers Limited Partnership, American Invsco Corporation and 79th Towers, Inc., move to dismiss pursuant to Rules 12(b)(1) and 12(b)(6), Federal Rules of Civil Procedure. The Attorney General also moves to dismiss pursuant to Rules 12(b)(1) and 12(b)(6). The motions are granted with respect to the first and fourth counts. The second and third counts are dismissed with leave to replead within 60 days. The case is terminated entirely as to the Attorney General. The other defendants are subject to the possible repleading of the second and third counts.

 The Parties

 The building in question is the Continental Towers, located at 301 East 79th Street, New York City. The nine tenant plaintiffs purport to bring this as a class action. However, the present motions are being entertained prior to any decisions on certification of class action status under Local Civil Rule 4(c).

 Defendant Continental Towers Limited Partnership ("Continental") is the sponsor of the offering plan for the conversion of the apartment building to condominium ownership. Continental is an Illinois limited partnership authorized to do business in New York, with its principal office at 301 East 79th Street.

 Defendant American Invsco Corporation ("Invsco") allegedly owns all the shares of stock of 79th Towers, Inc. Invsco is a Delaware corporation with its principle office in Chicago, Illinois.

 Defendant 79th Towers, Inc. ("79th Towers") is the selling agent for Continental and allegedly is its sole general partner. 79th Towers is a New York corporation with its principle office at 301 East 79th Street.

 Defendant Robert Abrams is the Attorney General of the State of New York. The Attorney General reviewed the offering plan before it became effective to ensure compliance with state law.

 Defendants Roseanne Giannone and Roberta Liss allegedly own or control apartments in the building.

 Plaintiffs' Allegations

 The amended complaint alleges that Continental acquired the subject apartment building in April, 1981 at a cost of approximately $42,000,000, and that in December, 1984 Continental filed with the Attorney General a plan to convert the rental apartments to 532 individual condominium units, the total price of the 532 condominiums being approximately $140,000,000. Under the offering plan, tenants who decline to purchase an apartment can be evicted.

 It is alleged that the offering plan provides that tenants can purchase apartments at an "insider" price, a price discounted from what the plan represents as the market price available to "outsiders," and that most of the tenants polled by the Tenants Association indicated that they would not or could not buy at the prices set by Continental. Plaintiffs allege that the Tenants Association obtained "no-buy pledges" from 58% of the tenants, thereby ensuring that they could not be evicted, because an eviction plan requires subscriptions to buy from more than half the tenants.

 The amended complaint alleges that in an effort to undermine the no-buy pledges, Continental "committed many illegal acts of threats, misinformation and favorable dealings," and that on April 4, 1985, the attorney who drafted the no-buy pledges informed the steering committee of the Tenants Association that they "could be in serious legal trouble" if they did not release the tenants from their no-buy pledges. Amended Complaint P 19. It is alleged that the steering committee issued a letter releasing the tenants from the no-buy pledges on April 4, 1985, without stating ...


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