Cooperatives & Condominiums

'No Representations' Clause Does Not Bar Claim

The Plaza PH 2001 LLC v. Plaza Residential Owner LP

NYLJ 7/3/12, p. 21, col. 1

AppDiv, First Dept.

(Opinion by Saxe, J.)

In an action by co-op purchaser against the sponsor for breach of contract to sell a to-be-constructed penthouse apartment atop the Plaza Hotel, purchaser appealed from Supreme Court's award of summary judgment to the sponsor. The Appellate Division reversed, holding that the “No Representations” clause in the purchaser agreement did not bar claims based on material changes to the apartment described in the offering plan.

In 2005, purchaser contracted to buy the subject unit for $31 million. When purchaser's representative was permitted to see the completed unit in 2008, the representative complained about smaller windows (rather than the 11-foot-high windows purchaser had expected), lower and steeply pitched ceilings, and columns interrupting the openness of the apartment. Purchaser brought an action for breach. Supreme Court dismissed, relying on a “No Representations” clause in the purchaser agreement, but the Appellate Division reinstated the complaint. Purchaser then amended the complaint, and sponsor submitted additional documentation in response to the amended complaint. Supreme Court then awarded summary judgment to sponsor, and purchaser appealed.

In reversing Supreme Court for a second time, the Appellate Division relied on provisions in the offering plan, which was incorporated by reference into the purchaser agreement. The offering plan provided that any material changes that would materially affect a purchaser would not be made unless dictated by construction conditions, and disclosed by the sponsor in an amendment to the plan. Moreover, the offering plan required the sponsor to offer an affected purchaser a right to rescind. Although Supreme Court had concluded that the changes made by the sponsor were not material, the Appellate Division held that questions of fact remained on that issue, particularly with respect to changes in ceiling height and reduction in the number and size of windows. As a result, the court reinstated the complaint.

'No Representations' Clause Does Not Bar Claim

The Plaza PH 2001 LLC v. Plaza Residential Owner LP

NYLJ 7/3/12, p. 21, col. 1

AppDiv, First Dept.

(Opinion by Saxe, J.)

In an action by co-op purchaser against the sponsor for breach of contract to sell a to-be-constructed penthouse apartment atop the Plaza Hotel, purchaser appealed from Supreme Court's award of summary judgment to the sponsor. The Appellate Division reversed, holding that the “No Representations” clause in the purchaser agreement did not bar claims based on material changes to the apartment described in the offering plan.

In 2005, purchaser contracted to buy the subject unit for $31 million. When purchaser's representative was permitted to see the completed unit in 2008, the representative complained about smaller windows (rather than the 11-foot-high windows purchaser had expected), lower and steeply pitched ceilings, and columns interrupting the openness of the apartment. Purchaser brought an action for breach. Supreme Court dismissed, relying on a “No Representations” clause in the purchaser agreement, but the Appellate Division reinstated the complaint. Purchaser then amended the complaint, and sponsor submitted additional documentation in response to the amended complaint. Supreme Court then awarded summary judgment to sponsor, and purchaser appealed.

In reversing Supreme Court for a second time, the Appellate Division relied on provisions in the offering plan, which was incorporated by reference into the purchaser agreement. The offering plan provided that any material changes that would materially affect a purchaser would not be made unless dictated by construction conditions, and disclosed by the sponsor in an amendment to the plan. Moreover, the offering plan required the sponsor to offer an affected purchaser a right to rescind. Although Supreme Court had concluded that the changes made by the sponsor were not material, the Appellate Division held that questions of fact remained on that issue, particularly with respect to changes in ceiling height and reduction in the number and size of windows. As a result, the court reinstated the complaint.