The opinion of the court was delivered by: Shirley Werner Kornreich, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the printed Official Reports.
Plaintiffs, 30 CPS, LLC (LLC), and Dipak Nandi (Nandi)(collectively, "plaintiffs"), move for summary judgment on liability on breach of contract, the first cause of action in the amended complaint. Defendants, The Board of Managers (Board) of Central Park South Medical Condominium (Condominium) and Russ Mandor (Mandor)(collectively, "defendants"), cross-move for summary judgment dismissing plaintiffs' breach of contract claim and their second cause of action for tortious interference with prospective contractual relations.
This action involves plaintiffs' attempt to alter and sell, for residential use, the penthouse unit (Unit) in premises located at 30 Central Park South, New York, NY (Building). The members of the plaintiff LLC are plaintiff Dipak Nandi and his wife. The individual defendant, Mandor, is a member of the Condominium Board and was its President beginning prior to the LLC's acquisition of the Unit.
The amended complaint contains three causes of action: 1) breach of the Condominium by-laws and declaration, 2) tortious interference with prospective economic advantage or contractual relation, and 3) discrimination under New York State Executive Law §296.
The Building was converted to a condominium in 1984 under a plan declared effective by 30 Central Park South Realty Corp. (Sponsor). The Unit was excluded from the Condominium conversion offering plan. The Unit was leased by the Sponsor to an Indian restaurant called Nirvana at the time that the plan was declared effective. Subsequently, the Unit experienced a structural collapse and Nirvana went bankrupt.
There is no dispute that the Building is located in an R10-H residential zoning district, but that it has been used for medical offices and a restaurant, pursuant to a zoning variance, initially issued in 1955, which has been extended to 2015. On March 15, 2004, by quitclaim deed, the Sponsor transferred the Unit to plaintiff LLC.
The declaration of the Condominium provides that the Unit may be used for any lawful use under the New York City Zoning Resolutions and may be altered without approval of the Condominium Board. The by-laws reiterate that the Unit may be used for any legal purpose and that alterations do not require approval of the Board. In addition, the by-laws obligate any person subject to them, including a Board member or Condominium officer, to execute any instrument and take any other action reasonably requested by any unit owner to effectuate the by-laws' provisions, to effectuate any transaction contemplated by them, and to confirm or perfect any right to be created or transferred by them. Finally, the by-laws provide that the rights of the Sponsor shall inure to the benefit of its successors or assigns, which would include the LLC.
In June 2004, the LLC submitted an application to the New York City Board of Standards and Appeals (BSA) for a letter stating that the BSA had no objection to converting the Unit from a restaurant to a Class A apartment. BSA granted the application on July 26, 2004, on the condition that the New York City Department of Buildings (DOB) ensured compliance with all other provisions of the Zoning Resolution and the Building Code. The DOB issued a work permit on November 5, 2005. It is undisputed that plaintiffs did not obtain authorization from the Board for the application to BSA.
When the Board learned of the application to the BSA, it refused to consent to the use of the Unit as a residence. On October 24, 2005, an attorney for the Condominium wrote a letter to plaintiffs' attorney stating that "our client will not permit residential use." In a second letter, dated October 28, 2005, the same attorney wrote that residential use was prohibited by the by-laws because it was illegal under the certificate of occupancy. On November 11, 2005, the lawyer for the Condominium Board wrote to the DOB stating that the permit should be revoked because the application had not been authorized by the Board. On November 21, 2005, the Condominium's attorney wrote to the BSA to request revocation of the permit to renovate the Unit on the grounds that the application had not been made by the Condominium, the Unit owner had not obtained the Board's authorization prior to making the application, residential use would be incompatible with other uses and the Building did not provide services needed for residential use. On December 29, 2005, the DOB issued a notice of intention to revoke its permit due to lack of authorization by the Condominium, citing §§ 27-140 and 27-197of the New York City Administrative Code. On December 30, 2005, the DOB issued a 10-day notice of revocation of the permit. The Board's President, defendant Mandor, also testified that he told Nandi that the Board had decided that it would not permit the use of the Unit as a restaurant again.
On January 9, 2006, the attorney for the plaintiff LLC wrote to the Condominium's property manager requesting that the Board execute a statement addressed to the DOB authorizing an application for a building permit to effectuate the alteration of the Unit to residential use. The Board did not authorize the application.
Nandi claimed at his deposition that he had two potential buyers for the Unit as a residence in December of 2005 through February 2006 . Plaintiffs allege, based upon a January 2006 appraisal, that the value of the Unit as a residence was $13,000,000 in 2006, higher than its value as commercial space. Plaintiffs claim that due to the Board's failure to submit authorization for the conversion of the Unit to a residence, on April 21, 2006, the LLC sold the Unit for $5,200,000 to Cinzia 30 CPS, Inc. (Cinzia) for use as a showroom. The contract damages sought by plaintiff are the difference between the 2006 appraisal and the price paid by Cinzia, which equals $7,800,000. The record reflects that the Cinzia sale contract is dated February 22, 2006.
In February 2006, Cinzia, as contract vendee, entered into a contract with the Board, in which Cinzia agreed to pursue a change of the certificate of occupancy for the Building and the variance for the Unit from restaurant to office use. In ¶6 of the contract, the Board and Cinzia agreed that if Cinzia were unsuccessful in obtaining a change of use, then the Board had an option to buy the Unit within a specified period of time or, if the Board chose not to exercise the option, it would support Cinzia's efforts to convert the Unit to a ...