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Sapphire Investment Ventures, LLC v. Mark Hotel Sponsor LLC

Supreme Court, New York County

July 15, 2013

Sapphire Investment Ventures, LLC, and RUBY INVESTMENT VENTURES, INC., Plaintiffs,
v.
Mark Hotel Sponsor LLC, MARK HOTEL OWNERS CORP., and ALEXICO GROUP LLC, Defendants.

Unpublished Opinion

For Plaintiffs Jerome Tarnoff Esq. and Y. David Scharf Esq., Morrison Cohen LLP

For Defendants, Jeffrey L. Braun Esq., Kramer Levin Naftalis & Frankel LLP

LUCY BILLINGS, J.S.C.

I. BACKGROUND

This action concerns the renovation by defendant developer Alexico Group LLC of the historic landmark Mark Hotel at 25 East 77th Street, New York County, owned by defendant Mark Hotel Owners Corp., to convert the hotel into luxury hotel units on the lower eight floors and residential cooperative units on the upper floors. The cooperative offering plan listed defendant Mark Hotel Sponsor LLC as the sponsor.

Plaintiffs seek rescission of a purchase agreement between them and defendant Mark Hotel Sponsor LLC for one of the residential cooperative units defendant Sponsor offered for sale pursuant to the cooperative offering plan, NY Gen. Bus. Law § 352-e, and declaratory relief nullifying the Sponsor's notice of plaintiffs' default in refusing to proceed with closing of the sale. Plaintiffs seek further equitable relief of specific performance requiring the Sponsor to file an amended offering plan with the New York State Attorney General and return of plaintiffs' down payment. Plaintiffs also seek damages covering losses beyond the down payment, due to the Sponsor's breach of contract and breach of the covenant of good faith and fair dealing, and due to all defendants' fraudulent inducement, negligent misrepresentation, and deceptive trade practices. NY Gen. Bus. Law § 349.

Defendants move to dismiss the amended complaint based on documentary evidence and on res judicata or collateral estoppel, C.P.L.R. § 3211(a)(1) and (5), claiming the Attorney General's ruling dated January 15, 2010, bars plaintiffs' action. The Attorney General determined that the Sponsor's nondisclosure of more than $23, 000, 000 in mortgages encumbering the hotel property did not constitute an omission materially adverse to plaintiffs, entitling them to rescind their contract. For the reasons explained below, the court denies defendants' motion.

II. DOCUMENTARY EVIDENCE

Upon defendants' motion to dismiss plaintiffs' claims pursuant to C.P.L.R.§ 3211(a)(1), the court may not rely on facts alleged by defendants to defeat the claims unless the evidence is in admissible documentary form, demonstrates the absence of any significant dispute regarding those facts, and completely negates the allegations against defendants. Lawrence v. Graubard Miller, 11 N.Y.3d 588, 595 (2008); Goshen v. Mutual Life Ins. Co. of NY, 98 N.Y.2d 314, 326 (2002); Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994); Greenapple v. Capital One, N.A., 92 A.D.3d 548, 550 (1st Dep't 2012). Defendants rely primarily on the Attorney General's January 2010 ruling. The uncertified copy of the Attorney General's determination is inadmissible. C.P.L.R. §§ 4520, 4540(a) and (b); Consolidated Edison Co. of NY v. Allstate Ins. Co., 283 A.D.2d 322, 323 (1st Dep't 2001), aff'd, 98 N.Y.2d 208 (2002); People v. Sikorski, 280 A.D.2d 414 (1st Dep't 2001); People v. James, 4 A.D.3d 774, 775 (4th Dep't 2004); People v. Smith, 258 A.D.2d 245, 249-50 (4th Dep't 1999). See People v. Casey, 95 N.Y.2d 354, 362 (2000); People v. Brown, 221 A.D.2d 270, 271 (1st Dep't 1995); People v. Dockery, 98 A.D.3d 1308, 1309 (4th Dep't 2012); Fiorentino v. TEC Holdings, LLC, 78 A.D.3d 766, 767 (2d Dep't 2010).

Defendants also present the offering plan and purchase agreement in support of the motion, but these documents also are unauthenticated and thus inadmissible. The offering plan, insofar as it may have been filed with the Attorney General, for example, is uncertified by that office. Nor does any witness authenticate the offering plan or, assuming defendants present it for the truth of its contents, lay a foundation for its admissibility as an exception to the rule against hearsay. Insofar as defendants offer the purchase agreement to bind plaintiffs, no witness attests to plaintiffs' signature or to circumstantial authentication. Colbourn v. ISS Intl. Serv. Sys., 304 A.D.2d 369, 370 (1st Dep't 2003); Acevedo v. Audubon Mgt., 280 A.D.2d 91, 95 (1st Dep't 2001); Fields v. S & W Realty Assoc., 301 A.D.2d 625 (2d Dep't 2003); Bank of New York v. Dell-Webster, 23 Misc.3d 1107 (Sup. Ct. Bronx Co. 2008). See Yonkers Ave. Dodge, Inc. v. BZ Results, LLC, 95 A.D.3d 774 (1st Dep't 2012); 225 Fifth Ave. Retail LLC v. 225 5th, LLC, 78 A.D.3d 440, 441-42 (1st Dep't 2010); Singer Asset Fin. Co., LLC v. Melvin, 33 A.D.3d 355, 357-58 (1st Dep't 2006); Bell Atl. Yellow Pages Co. v. Padded Wagon, 292 A.D.2d 317, 318 (1st Dep't 2002).

Since defendants fail to support their motion with evidence in admissible form, the court denies dismissal on the grounds of documentary evidence. Greenapple v. Capital One, N.A., 92 A.D.3d at 550; Advanced Global Tech., LLC v. Sirius Satellite Radio, Inc., 44 A.D.3d 317, 318 (1st Dep't 2007); 1911 Richmond Ave. Assoc., LLC v. G.L.G. Capital, LLC, 60 A.D.3d 1021, 1022 (2d Dep't 2009). See Muhlhahn v. Goldman, 93 A.D.3d 418, 419 (1st Dep't 2012). Even considering the document on which defendants primarily rely, the Attorney General's ruling, it does not negate plaintiffs' claims, as discussed below.

III. RES JUDICATA AND ...


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