Cooperatives & Condominiums

Attorney General Need not Accept Plan Without Required Certification

Academy Street Associates v. Spitzer

NYLJ 4/3/08, p. 34, col. 6

AppDiv, First Dept.

(memorandum opinion; concurring opinion by McGuire, J.)

In an article 78 proceeding by sponsors of a condominium conversion plan seeking to compel the Attorney General to accept for filing an amendment to the offering plan, sponsors appealed from Supreme Court's denial of the petition. The Appellate Division affirmed, holding that one of the sponsors had failed to provide the required certification that the submission set forth the complete terms of the offering.

Sponsors first filed an offering plan in 1987. After the 12^th amendment to the plan was accepted for filing in 1991, no further amendments were filed until 2004. At that time, the Attorney General began an investigation, and sponsors then submitted a 13^th amendment. The Attorney General issued a deficiency letter rejecting that plan, and sponsors brought this article 78 proceeding. Supreme Court dismissed the proceeding.

In affirming, the Appellate Division started by noting the failure by one of the sponsors to make the required certification, under penalty of perjury, that the submission did not omit any material fact or contain any misstatement of a material fact. Although the entire court concluded that this omission was, by itself, sufficient to sustain the Attorney General's determination, a majority of the court went further, noting that the Attorney General's deficiency letter noted specific deficiencies in the 13^th amendment, including failure to make adequate disclosure about the identify and background of certain principals of the sponsors, prior litigation involving the sponsors, and sales practices in which the sponsors had engaged. The Appellate Division majority concluded that the Attorney General's determination that these were facts material to the investor was not arbitrary and capricious. Justice McGuire, concurring, would not have reached those issues, concluding that some of the Attorney General's determinations were questionable, and that it was imprudent to sustain them when the court could reach the same result on a narrower ground.

Attorney General Need not Accept Plan Without Required Certification

Academy Street Associates v. Spitzer

NYLJ 4/3/08, p. 34, col. 6

AppDiv, First Dept.

(memorandum opinion; concurring opinion by McGuire, J.)

In an article 78 proceeding by sponsors of a condominium conversion plan seeking to compel the Attorney General to accept for filing an amendment to the offering plan, sponsors appealed from Supreme Court's denial of the petition. The Appellate Division affirmed, holding that one of the sponsors had failed to provide the required certification that the submission set forth the complete terms of the offering.

Sponsors first filed an offering plan in 1987. After the 12^th amendment to the plan was accepted for filing in 1991, no further amendments were filed until 2004. At that time, the Attorney General began an investigation, and sponsors then submitted a 13^th amendment. The Attorney General issued a deficiency letter rejecting that plan, and sponsors brought this article 78 proceeding. Supreme Court dismissed the proceeding.

In affirming, the Appellate Division started by noting the failure by one of the sponsors to make the required certification, under penalty of perjury, that the submission did not omit any material fact or contain any misstatement of a material fact. Although the entire court concluded that this omission was, by itself, sufficient to sustain the Attorney General's determination, a majority of the court went further, noting that the Attorney General's deficiency letter noted specific deficiencies in the 13^th amendment, including failure to make adequate disclosure about the identify and background of certain principals of the sponsors, prior litigation involving the sponsors, and sales practices in which the sponsors had engaged. The Appellate Division majority concluded that the Attorney General's determination that these were facts material to the investor was not arbitrary and capricious. Justice McGuire, concurring, would not have reached those issues, concluding that some of the Attorney General's determinations were questionable, and that it was imprudent to sustain them when the court could reach the same result on a narrower ground.