Sponsor’s Attempt to Avoid Liability for Construction Defects and to Limit Valid Claims of the Condominium Unit Owners Soundly Rejected by the Appellate Division

Sponsor’s Attempt to Avoid Liability for Construction Defects and to Limit Valid Claims of the Condominium Unit Owners Soundly Rejected by the Appellate Division

Adam Leitman Bailey

Adam Leitman Bailey

January 17, 2023 02:40 PM

In a hotly contested dispute between the Board of a Condominium and the Sponsor of the Condominium, the Board brought suit alleging, among other things, that there were numerous construction defects that the Sponsor was obligated to remedy but failed to do so. The Board’s complaint noted that the defects included were not limited to the eleven most serious defects which were listed in the complaint. The complaint also referenced the engineer’s report which set forth other numerous defects. The Engineer’s Report and a listing of all the defects found were also provided to the Sponsor in discovery.

The Sponsor disclaimed responsibility for any repairs or damages asserting that the Offering Plan contained a broad and controlling disclaimer stating that the buyers were taking the units and the building in an “as is” condition.

Subsequently, the Sponsor moved for summary judgment to dismiss the cause of action asserting the construction defects claim. Sponsor also argued that the additional defects which were set forth by the Board in discovery amounted to an improper indirect attempt to amend the Board’s complaint. The Board opposed the motion and the trial court denied the Sponsor’s motion for summary judgment, but granted that portion of the Sponsor’s motion which sought to limit the claims for the eleven items listed in the complaint. Both parties appealed to the Appellate Division, First Department.

On appeal, Adam Leitman Bailey, P.C. established that the Offering Plan, contained only limited waivers and that the Sponsor could not waive away its statutory obligations with respect to violations that had been found. Moreover, Adam Leitman Bailey, P.C. pointed out that the Sponsor failed to submit an affidavit from anyone with personal knowledge to demonstrate that the claimed defects fell within the disclaimers set forth in the Offering Plan or that the defects were not within the Sponsor’s obligation to comply with the law. The Appellate Division agreed and affirmed the denial of summary judgment.

The Appellate Division also adopted Adam Leitman Bailey, P.C.’s arguments that the information regarding the defects that was provided in discovery could be proven at trial. The Court found that the Board’s complaint was sufficiently particular to give the Sponsor notice of the matters that the Board intended to prove at trial. Further, the Court found that there was no need for the Board to move to amend its complaint.

Jeffrey R. Metz, Courtney Lerias, and Adam Leitman Bailey represented the Board before the Supreme Court and at the Appellate Division.

Click here for the Published Decision

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