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Mann v. Apthorp Associates LLC

Sup Ct, New York County

August 5, 2013

MAURICE A. MANN, Plaintiff,
v.
APTHORP ASSOCIATES LLC, BROADWALL MANAGEMENT and ANDREW RATNER, Defendants. Index No. 102685/2011 Motion Sequence No. 001

Unpublished Opinion

DECISION & ORDER

ANIL C. SINGH, JUDGE.

In this action for alleged breach of contract, defendants Apthorp Associates LLC (Apthorp), Broadwall Management (Broadwall) and Andrew Ratner (Ratner) move to cancel the "Notice of Pendency" placed by plaintiff Maurice Mann against certain property, and, pursuant to CPLR 3211, to dismiss the complaint in its entirety.

BACKGROUND

Apthorp owns real property located at 2201-2219 Broadway, New York County (the Property). Broadwall manages the Property; Ratner is an executive at Broadwall with responsibility for the Property. Plaintiff was a co-developer of the Property, reserving certain rights including an option to purchase a residential unit at the Property. In or about February 2007, plaintiff and Apthorp executed an "Operating Agreement" providing plaintiff, at section 4.1 (e), the right to purchase one residential unit at the Property.[1] Ratner aff, exhibit D. The Operating Agreement was apparently amended on more than one occasion, but the parties focus upon the "Second Amendment of the Operating Agreement, " dated April 22, 2009 (id., exhibit E), which deals with plaintiffs right to purchase a residential unit, and the "Omnibus Amendment and Reaffirmation of Loan Documents, " dated May 31, 2009 (Omnibus Amendment) (id., exhibit F), which specifies Apartment 2C for the first time, the apartment he had been occupying since November 2008. Defendants refer throughout their papers to the relevant portions of the Operating Agreement and its amendments collectively as the "Option Agreement." For the sake of clarity, the Option Agreement will be the term used herein. Note that none of the agreements were subscribed to by Broadwall or Ratner. Only Apthorp and plaintiff executed them, in addition to other non-parties.

The operative language of the Omnibus Amendment, after defining plaintiff as the Original Guarantor, Apartment 2C as the Option Unit, and the Option Date, provides

"for a period of thirty (30) days following the Option Date (the 'Purchase Option Period'). Original Guarantor shall have the option, by providing written notice of such election to Administrative Agent, to elect to purchase the Option Unit at a purchase price equal to the average square foot price for the first 25 Residential Units that have either closed or are under [contract, subject to certain adjustments]

Omnibus Amendment, ¶ 17 (b) (i).

The proposed assignment of Apartment 2A to plaintiff also appears in the "Second Amendment to Building Loan Agreement, " dated May 31, 2009 (Second Amendment), in almost identical language to the Omnibus Amendment. Ratner aff, exhibit G, ¶ 34 (b) (i).

According to the complaint (Ratner aff, exhibit A), in October 2009, Broadwall and Ratner asked plaintiff to substitute his right to purchase Apartment 2C for one of several alternate residential units at the Property. Plaintiff selected Apartment 6A, allegedly with the initial agreement of Broadwall and Ratner. However, Broadwall and Ratner informed plaintiff that Apartment 6A was intended for use as a model apartment, and indicated other alternatives. Plaintiff then chose Apartment 10A, but was told that the transfer of this unit could not be effected until the Property's conversion plan was approved by New York State's Attorney General. When the approval was secured, plaintiff submitted a "Memorandum of Understanding" (the Memorandum)[2] to the defendants. On September 23, 2010, defendants allegedly informed plaintiff that they would not proceed with the transaction. Later financial settlement talks were unsuccessful.

Plaintiff filed a Notice of Pendency against four units at the Property, namely Apartments 2C, 10A, 10M and 11M, on January 21, 2011. Ratner aff, exhibit B. The instant action commenced on March 4, 2011, with the complaint asserting causes of action for specific performance, breach of contract and fraud. On July 13, 2011, the court issued an interim order cancelling the subject Notice of Pendency forthwith. This leaves open defendants' application to dismiss the complaint.

DISCUSSION

Defendants contend that the Option Agreement gave plaintiff a 30-day option period in which to purchase Apartment 2C at a price determined by the average price per square foot of previously-sold apartments. Ratner aff, ¶ 11. They aver that the calculation resulted in a prospective purchase price of over $4.6 million. They argue that the Attorney General approved the Property's conversion plan on May 14, 2010, and attach a letter, signed by an assistant attorney general, confirming this. Id., exhibit H (AG Letter). According to defendants, plaintiff did not exercise his option on or by June 13, 2010, which, therefore, has expired. Consequently, he now has no right to Apartment 2C, or any other residential unit at the Property under the Option Agreement.

Plaintiff claims that, "[i]mmediately upon approval by the Attorney General's office, Mann submitted to Defendant a Memorandum of Understanding reflecting the terms of the exchange of Units 2C for 10A as modified." Complaint, ¶ 22. The AG Letter is undated, but it refers to May 14, 2010 as the "Date Amendment Filed, " and states that "the offering plan for the subject premises is hereby accepted and filed . . . effective for the greater of six months from the date of filing this amendment or twelve months from the acceptance of the original offering literature." The Memorandum itself is undated, but defendants maintain that it was first forwarded to their counsel on June 30, 2010, about 45 days after the offering plan's effective date, and more than two weeks after the end of the option period. They provide a ...


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