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Co-ops & Condominiums
Merger Doctrine Precludes Unit Owner's Action Against Sponsor
Von Ancken v. 7 East 14 LLC NYLJ 4/8/19, p. 18, col. 1 AppDiv, First Dept. (memorandum opinion)
In co-op unit owner's action against sponsor for breach of contract, misrepresentation, and fraud, unit owner appealed from Supreme Court's dismissal of the complaint. The Appellate Division affirmed, holding that the merger doctrine precluded breach of contract claims and that unit owner could not establish reasonable reliance on any misrepresentations.
The listing for unit owner's apartment was accompanied by a floor plan, prepared by sponsor, which stated that the unit was “ ~1,966 ” square feet when, in fact, the unit was approximately 1,495 square feet. Unit owner contends that the floor plan was incorporated by reference into the offering plan, which was, in turn incorporated by reference into the purchase agreement. Based on the misrepresentation in the listing, unit owner brought this action for breach of the purchase contract, for misrepresentation and fraud, and for violations of the Martin Act. Supreme Court dismissed the complaint.
In affirming, the Appellate Division first rejected the breach of contract claim on two grounds: 1) the listing was not identified in any of the purchase documents and was therefore not incorporated by reference; and 2) the purchase agreement itself provided that sponsor was making no representations and that the unit was purchased as is with the buyer's obligation to inspect the premises to determine actual determinations. The court then noted that because the unit owner had the opportunity to measure the apartment, they could not reasonably have relied on any misrepresentation by sponsor. Finally, the court concluded that the type of misrepresentation involved in this case is not the type of deceptive act covered by the Martin Act.
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