Board of Mgrs. of E. Riv. Tower Condominium v Empire Holdings Group, LLC
Annotate this CaseDecided on February 15, 2018
Supreme Court, Queens County
Board of Managers of East River Tower Condominium, Plaintiff,
against
Empire Holdings Group, LLC, PHOTIOS COUGENTAKIS, CONSTANTINE IORDANOU, METROPOLIS REALTY, LLC, ADG ARCHITECTURE AND DESIGN, P.C., and CHRISTOPHER CARRANO, Defendants.
703957/2017
Robert J. McDonald, J.
The following electronically filed documents read on this motion by defendants EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS for an Order pursuant to CPLR 3211(a)(5), dismissing plaintiff's claims for violations of consumer protection law and negligent misrepresentation asserted against defendants EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS; pursuant to CPLR 3211(a)(7), dismissing plaintiff's claims for breach of contract asserted against defendants EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS; pursuant to CPLR 3211(a)(7) and (3) and CPLR 3016(b), dismissing plaintiff's claim for fraudulent conveyance asserted against defendants EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS; and granting defendants EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS attorneys' fees, costs and expenses for defending the instant action:
Papers
Numbered
Notice of Motion-Affirmation-Exhibits-Memo. of Law EF 48 - 55
Affirmation-Memo. of Law in Opposition-Affidavit EF 60 - 64
Reply Affirmation-Memo. of Law EF 69 - 70
_________________________________________________________________
By way of relevant background, plaintiff is the Board of Managers for the condominium located at 11-24 31st Avenue, Long Island City, New York (the Building). Plaintiff alleges that Empire Holdings Group, LLC (Empire) was the sponsor of the conversion of the Building. Plaintiff further alleges that Photios Cougentakis is a principal of Empire and signed a certification in connection with the Offering Plan. The first closing on the sale of a condominium unit occurred on April 27, 2011.
Plaintiff commenced this action by filing a summons with notice on March 23, 2017. Thereafter, plaintiff filed an Amended Complaint. The Amended Complaint alleges three causes of action against defendant Empire for violations of consumer protection law, negligent misrepresentation, and breach of contract. In addition to these three causes of action, the Amended Complaint asserts a fraudulent conveyance claim against Mr. Cougentakis. Empire and Mr. Cougentakis now seek to dismiss the fourth cause of action for violations of the consumer protection law and the second cause of action for negligent misrepresentation as they are barred by the applicable statute of limitations, the first cause of action for breach of contract as it fails to state a claim for which relief can be granted, and the fifth cause of action for fraudulent conveyance on the grounds that plaintiff lacks standing to assert such claim and as plaintiff fails to plead same with particularity.
Plaintiff does not oppose that branch of the motion seeking to dismiss the fourth cause of action alleging consumer protection violations, which is governed by a three-year statute of limitations. Accordingly, the cause of action alleging consumer protection violations is dismissed as time-barred.
Metropolis Realty, LLC (Metropolis) previously moved to dismiss the causes of action asserting consumer protection violations, negligent misrepresentation, and breach of fiduciary duty as against it. By Short Form Order dated February 5, 2018, this Court granted the motion to the extent that the second cause of action alleging negligent misrepresentation and the fourth cause of action alleging consumer protection violations were dismissed as against Metropolis pursuant to CPLR 3211(a)(5). Thus, as this Court already found that the negligent misrepresentation claim was time-barred, that branch of the [*2]motion seeking to dismiss the cause of action alleging negligent misrepresentation shall be granted pursuant to the law of the case doctrine (see Gilligan v Reers, 255 AD2d 486 [2d Dept. 1998][holding that the law of the case doctrine applies to legal determinations that were necessarily resolved on the merits in the prior decision and to the same questions presented in the same case]).
Turning to that branch of the motion seeking to dismiss the breach of contract claim on the grounds that plaintiff failed to plead a cognizable claim, it is well settled that in considering a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7), the pleadings must be liberally construed. The sole criterion is whether, from the complaint's four corners, factual allegations are discerned which taken together manifest any cause of action cognizable at law (Leon v Martinez, 84 NY2d 83 [1994]; Guggenheimer v Ginzburg, 43 NY2d 268 [1977]; Rochdale Vil. v Zimmerman, 2 AD3d 827 [2d Dept. 2003]). The facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although bare legal conclusions as well as factual claims flatly contradicted by the record are not entitled to any such consideration (see Morone v Morone, 50 NY2d 481 [1980]; Gertler v Goodgold, 107 AD2d 481 [1st Dept. 1985], affirmed 66 NY2d 946 [1985]). The Court's role is limited to determining whether the pleading states a cause of action, not whether there is evidentiary support to establish a meritorious cause of action (see EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11 [2005]; Guggenheimer v Ginzburg, 43 NY2d 268 [1977]; Sokol v Leader, 74 AD3d 1180 [2d Dept. 2010]).
The essential elements for pleading a cause of action to recover damages for breach of contract are the existence of a contract, the plaintiff's performance pursuant to the contract, the defendant's breach of his or her contractual obligations, and damages resulting from the breach (see Dee v Rakower, 112 AD3d 204 [2d Dept. 2013]; Elisa Dreier Reporting Corp. v Global NAPS Networks, Inc., 84 AD3d 122 [2d Dept. 2011]). Empire and Mr. Cougentakis contend that plaintiff failed to plead its own performance. In opposition, plaintiff contends that performance of the contract on plaintiff's part consisted of the unit owners' paying the purchase prices of their respective units. Such payment can be reasonably inferred from the Amended Complaint which states "[t]he Offering Plan included the Purchase Agreement pursuant to which the unit owners purchased their apartments from the Sponsor Defendants". Plaintiff also submits an affidavit from William Schneider, the President of plaintiff, who affirms that he, as well as other unit owners, paid for their units. Viewing the factual allegations of the Amended Complaint as true, and [*3]based on Mr. Schneider's affidavit, this Court finds that the complaint sufficiently sets forth a cause of action for breach of contract. Here, the Amended Complaint states that the parties entered into the Offering Plan, the unit owners purchased their apartments, defendants breached their obligations, and plaintiff has been damaged by such breach.
As to whether plaintiff stated a claim for breach of contract against Mr. Cougentakis, plaintiff contends that since Mr. Cougentakis signed the Offering Plan twice, once as a representative and once in his individual capacity, Mr. Cougentakis is liable. A principal of a sponsor may be held separately liable where the principal executes the certification to the offering plan in his or her separate capacity and thereby knowingly and intentionally advanced the misrepresentations of the offering plan (see Birnbaum v Yonkers Contr. Co., 272 AD2d 355 [2d Dept. 2000]; Zanani v Savad, 228 AD2d 584 [2d Dept. 1996];(Board of Mgrs. of the 231 Norman Ave. Condominium v 231 Norman Ave. Prop. Dev., 36 Misc 3d 1232[A][Sup. Ct., Kings Cnty. 2012]). Although counsel for Mr. Cougentakis contends that the breach of contract claim must be dismissed because Mr. Cougentakis signed the Offering Plan solely in accordance with the regulations promulgated by the Attorney General, (citing Board of Mgrs. of the 125 N. 10th Condominium v 125North10, LLC, 150 AD3d 1065 [2d Dept. 2017], no affidavit has been presented from Mr. Cougentakis affirming such. Additionally, on a motion to dismiss for failure to state a claim, the Court need only determine whether the complaint states a cause of action, not whether there is evidentiary support to establish a meritorious cause of action. This Court does note that plaintiff cannot impose contractual liability upon Mr. Cougentakis based on a piercing the corporate veil theory as the Amended complaint fails to allege that Mr. Cougentakis abused the privilege of doing business in the corporate form (See East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 66 AD3d 122 [2d Dept. 2009]).
Lastly, regarding plaintiff's claim for fraudulent conveyance asserted against Mr. Cougentakis, Mr. Cougentakis contends that plaintiff lacks standing to assert such claim as plaintiff was not a creditor of Empire (see Drenis v Haligiannis, 452 F. Supp. 2d 418, 428 [S.D.NY 2006]["In order to bring a cause of action for fraudulent conveyance, the plaintiff must be a creditor of the transferor of the alleged fraudulent conveyance"]). Here, the alleged transferor is Empire. The Amended Complaint fails to allege that plaintiff is a creditor of Empire. Although the Amended Complaint does allege a claim against Empire for damages based on various defects in the Building, the Amended Complaint fails to allege that despite [*4]receiving notice of such defects, Mr. Cougentakis made distributions or other transfers of property (see Board of Mgrs. of 14 Hope Street Condominium v Hope Street Partners, LLC, 40 Misc 3d 1215[A][Sup. Ct., Kings Cnty. 2013]). Thus, plaintiff lacks standing to assert a fraudulent conveyance claim.
That branch of the motion seeking fees, costs and expenses for defending the instant action is denied.
Accordingly, for the reasons stated above, it is hereby
ORDERED, that defendant EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS' motion to dismiss is granted to the extent that the second cause of action alleging negligent misrepresentation and the fourth cause of action alleging consumer protection violations are dismissed as against EMPIRE HOLDINGS GROUP, LLC and PHOTIOS COUGENTAKIS pursuant to CPLR 3211(a)(5); and the fifth cause of action alleging fraudulent conveyance is dismissed as against PHOTIOS COUGENTAKIS pursuant to CPLR 3211(a)(3).
Dated: Long Island City, NY
February 15, 2018
______________________________
ROBERT J. McDONALD
J.S.C.
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