The following e-filed documents, listed by NYSCEF document number (Motion 001) 12, 13, 14, 15, 16, 17, 18, 19, 20, 39, 42, 45, 46, 47, 55, 56, 57, 58, 59 were read on this motion to DISMISS.

This action involves claims of breach of contract, fraudulent and negligent misrepresentation, malpractice, and negligence, all arising from the purchase of residential co-op shares appurtenant to a triplex penthouse apartment. Plaintiff, Peter M. Carren, as trustee of the 1228 Trust, alleges that defendants—1228 Madison Development Lessee, LLC, its principals Abram Shnay and Scott Shnay (collectively, the sponsor defendants), Gloria B. Glas and SLCE Architects (architects), and Igor Bienstock and Icor Associated LLC [*2](engineers)—misrepresented the condition of the apartment and failed to comply with building-code requirements.

Plaintiff purchased the apartment shares for approximately $25 million under a purchase agreement dated October 14, 2020, with the closing occurring on June 7, 2022. Plaintiff alleges that after the closing, he discovered defects rendering the apartment unfit for residential use; and that these defects were concealed through false statements in the co-op offering plan and Martin Act certifications.

Plaintiff raises a claim for breach-of-contract against 1228 Madison. He brings fraud, negligent misrepresentation, and negligence claims against all defendants. Plaintiff further brings a malpractice/negligence claim against the architect and engineer defendants. He seeks damages for repair costs, alternative living expenses, and mortgage interest.

On motion sequence 001, the sponsor defendants move to dismiss the claims against them. The motion is granted in part and denied in part. On motion sequence 002, the architect defendants move to dismiss the claims against them. The motion is granted. On motion sequence 003, the engineer defendants move to dismiss the claims against them. The motion is granted.

All defendants argue that the claims should be dismissed because they were assertedly released when plaintiff entered into an agreement regarding alteration work. Defendants contend that § 8 of the alteration agreement—an indemnity provision—releases all claims against the sponsor and the corporation's officers, including those related to ongoing work. The agreement defines "Work" as the work outlined in the approved plans, drawings, and specifications or any other work by or for the unit owner. (NYSCEF No. 17 at 6). Plaintiff argues that the release applies only to claims arising from the alteration work. This court agrees.

Under New York law, releases are enforceable when they are "fairly and knowingly made." (Centro Empresarial Cempresa S.A. v America Movil, S.A.B. de C.V., 17 NY3d 269, 276 [2011].) Indemnity provisions must be strictly construed to avoid extending their application beyond what was clearly intended. (Hooper Assocs., Ltd. v AGS Computers, Inc., 74 NY2d 487, 491 [1989].)

Here, the indemnity provisions exist within a contract that deals with later alterations to the premises, namely work on the apartment's terrace—not with the initial construction and condition of the premises (i.e., the basis of plaintiff's claims in this action). (Compare NYSCEF No. 24 at 2 [alteration agreement], with NYSCEF No. 1 at 15-17 [complaint]. Additionally, the alteration agreement is only between the 1228 Trust and 1228 Madison Owners Corp. Defendants are neither parties to the agreement nor intended third-party beneficiaries. As a result, the agreement's release provision does not apply to them regardless.

Defendants' requests based on the alteration agreement for dismissal of all claims against them are denied.

A. First Cause of Action (Breach of Contract)

Plaintiff alleges that the sponsor defendants failed to deliver the apartment according to the standards in the offering plan, purchase agreement, and building codes, causing him over $9 million in damages. (NYSCEF No. 14, ¶109). The sponsor defendants move to dismiss this claim on the ground that plaintiff failed to specify sufficiently which provisions of the purchase [*3]agreement were breached. (NYSCEF No. 18 at 12-13).

To state a breach-of-contract claim, a plaintiff must allege (1) a contract, (2) performance by the plaintiff, (3) breach by the defendant, and (4) resulting damages. (34-06 73, LLC v Seneca Ins. Co., 39 NY3d 44, 52 [2022].) Plaintiff has satisfied these elements by showing the existence of a written agreement dated on October 14, 2020, his own performance through closing on the apartment purchase, the sponsor defendants' failure to comply with the offering plan and building codes, and resulting financial harm suffered by plaintiff.

The cases cited by sponsor defendants—Sud v Sud (211 AD2d 423 [1st Dept 1995]) and AmTrust N. Am., Inc. v Share (2022 NY Slip Op 51081[U] [Sup Ct, NY County 2022])—are distinguishable. In both those cases plaintiff did not provide the contract at issue or allege its material terms, or even allege whether that contract was written or oral. Here, the complaint identifies the contractual documents and specifies the obligations at issue (including to comply with the offering plan and building codes); and copies of the purchase agreement and offering plan have been submitted on this motion. No more is required. The motion to dismiss the breach-of-contract claim is denied.

B. Second Cause of Action (Fraud) and Third Cause of Action (Negligent Misrepresentation)

The sponsor defendants contend that plaintiff's fraud and negligent-misrepresentation claims against them do not state a cause of action because they are within the scope of the Martin Act, over which the New York Attorney General enjoys exclusive enforcement authority. (See NYSCEF No. 18 at 7.) Plaintiff counters that these claims do not depend on the Martin Act, and are therefore not preempted by it. (NYSCEF No. 47 at 10.) This court need not, and does not reach this question: Even assuming that plaintiff's claims are not barred as an impermissible end-around the Martin Act, the claims do not state a cause of action.

1. On his fraud claim, plaintiff alleges that sponsor defendants made material misrepresentations about the apartment's construction and outfitting in the offering plan accompanying certifications; that these misrepresentations induced plaintiff to enter into the purchase agreement; and that he suffered millions of dollars in damages as a result. (NYSCEF No. 14 at ¶119.) The sponsor defendants contend that the fraud claim should be dismissed as duplicative. This court agrees.

Plaintiff's breach-of-contract claim already seeks damages for the injuries he claims to have suffered as a result of the alleged failure of the building (and apartment) to conform to the terms of the offering plan and its accompanying certifications, as incorporated by reference in the apartment-purchase agreement. Plaintiff does not allege that the sponsor defendants made (or that he relied on) any material misrepresentations external to the contract itself. And though plaintiff's fraud claim seeks a larger amount in damages than the contract claim ($12.5 million versus $9 million, see NYSCEF No. 1 at ¶¶ 109, 119), neither the complaint nor plaintiff's opposition papers explain why the difference between these two amounts corresponds to damages that plaintiff could recover only in fraud, not also in contract.

To be sure, as plaintiff points out, the Appellate Division has held that alleged knowing misrepresentations of present fact in contract documents—as opposed to misrepresentations of future intent to perform—can support both fraud and breach-of-contract claims. (See Wyle Inc. v ITT Corp., 130 AD3d 438, 440-442 [1st Dept 2015].) But plaintiff has not alleged that the sponsor defendants knew, at the time of execution of the purchase agreement, that some of the representations in the incorporated offering plan were materially false. At most, plaintiff points [*4]out that the purchase agreement was executed after the offering plan/certifications, so it is possible that at the time he entered into the contract, the alleged misrepresentations were no longer merely predictions of future performance but now (mis)statements of present fact. (See NYSCEF No. 47 at 13.) That is different from having alleged in the complaint that the alleged misrepresentations underlying the fraud claim were knowing misstatements of present fact.^[FN1]

Plaintiff has not alleged fraudulent misrepresentations by the sponsor defendants that were outside, or collateral to, the purchase agreement. Plaintiff's fraud claim thus duplicates the breach-of-contract claim and is subject to dismissal on that basis.^[FN2]

2. On his negligent-misrepresentation claim, plaintiff alleges that the sponsor defendants misrepresented the building's compliance with the 1228 Offering Plan and New York City building codes; and that as a result of his reliance on these misrepresentations, he was damaged by $12.5 million. (NYSCEF No. 1 at 22-25.)

The sponsor defendants contend that no negligent-misrepresentation claim lies here, because they lacked the requisite relationship with plaintiff; and that the claim duplicates plaintiff's breach-of-contract cause of action. (See NYSCEF No. 14 at 19-22.) This court agrees. A claim for negligent misrepresentation requires a showing that the parties had "a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff." (J.P. Morgan Secs. v Ader, 127 AD3d 506, 506 [1st Dept 2015].) Plaintiff does not allege, or contend on this motion, that he had a relationship of this kind with the sponsor defendants.

Regardless, plaintiff has not established for pleading purposes that the offering-plan representations/certifications at issue gave rise to a duty in tort, as well as in contract. (Soames v 2LS Consulting Eng'g, D.P.C., 187 AD3d 490, 491 [1st Dept 2020].) Plaintiff has not sufficiently alleged that the statements at issue were misrepresentations of "material existing fact[s]" at the time they were incorporated into the purchase agreement, as distinguished from "statement[s] merely of expectation or prediction" that are not actionable in negligence. (Hefter v Citi Habitats, Inc., 121 AD3d 408, 409 [1st Dept 2014] [internal quotation marks omitted].)

The branch of the sponsor defendants' motion to dismiss the negligent-misrepresentation claim against them is granted.

C. Fifth Cause of Action (Negligence)

Plaintiff alleges that the sponsor defendants breached their duty of reasonable care by delivering a poorly constructed unit, causing him over $9 million in damages. (See NYSCEF No. 14 at 28.) Plaintiff's complaint asserts that the sponsor defendants owed him a duty of reasonable care to "to design and construct the Triplex Apartment and the Building in accordance with good workmanship, the 1228 Offering Plan and the applicable laws, codes and regulations." (NYSCEF No. 1 at ¶ 148.) In opposing the motion to dismiss, plaintiff clarifies that his claim is that the sponsor defendants owed him "an independent duty to comply with the Building Code and the Fire Code," and that in "breaching this duty, Sponsor Defendants proximately caused damage" to him. (NYSCEF No. 47 at 20 [emphasis in original].) Plaintiff's claim fails.

Plaintiff has not alleged facts supporting the existence, or breach, of a tort duty owed to him by the sponsor defendants to build his apartment in compliance with the City's building and fire codes. To the extent plaintiff relies on his purchase of the apartment as giving rise to parallel duties to him in tort and contract, plaintiff has not shown that the "nature of [his] injury, the manner in which the injury occurred and the resulting harm" support the existence of a duty in tort, as well as in contract. (Verizon NY, Inc. v Optical Communications Group, Inc., 91 AD3d 176, 181 [1st Dept 2011].) Instead, plaintiff's allegations reflect that he "is essentially seeking enforcement of the bargain" struck in his purchase agreement—a theory of recovery sounding in contract, not tort. (Dormitory Auth. of the State of NY v Samson Constr. Co., 30 NY3d 704, 711 [2018] [internal quotation marks omitted].) Further, allegations that the sponsor defendants failed to comply with the City's building and fire codes are not, standing alone, sufficient to show a breach of any duty that did exist: Violation of these codes is only evidence of negligence, not negligence per se. (See Baez v 1749 Grand Concourse LLC, 178 AD3d 520, 522 [1st Dept 2019].)

The branch of the sponsor defendants' motion to dismiss the negligence claim against them is granted.

A. Fraud and Negligent-Misrepresentation Claims

Plaintiff's fraud and negligent-misrepresentation claims against the architect defendants are similar to that against the sponsor defendants. Plaintiff claims that these defendants knowingly or negligently made false statements in the offering plan/accompanying certifications; and he alleges that his reliance on those false statements when purchasing the apartment led him to suffer an estimated $12.5 million in damages. Like the sponsor defendants, the architect defendants raise a Martin Act preemption defense to these claims. And, as with the sponsor defendants, this court need not reach the merits of that defense because these claims fail to state a cause of action regardless.

Plaintiff has not sufficiently alleged that the challenged statements made by the architect defendants in the offering plan/certifications (as incorporated in the purchase agreement) constituted misstatements of present fact, as opposed to predictions of future performance. Plaintiff, thus, has not stated a fraud or a negligent-misrepresentation cause of action against the architect defendants. (See Hefter, 121 AD3d 408 at 409.)

Plaintiff's negligent-misrepresentation claim against the architect defendants fails to state a cause of action for the further reason that he has not alleged that he was in privity with them or that a privity-like relationship existed between them, either. For the requisite relationship to exist, it is not enough for a professional to "kn[o]w in general that prospective purchasers of apartments would rely on the offering plan," absent allegations that the professional knew—or even could know—that "these plaintiffs would be among them." (Sykes v RFD Third Ave. 1 Assoc. LLC, 15 NY3d 370, 372 [2010].) Plaintiff's complaint does not include allegations of this kind.

B. Malpractice and Negligence Claims

Plaintiff's professional-malpractice claim against the architect defendants fails for the same reason as his negligent-misrepresentation claim. This cause of action will lie only if plaintiff and these defendants were in privity or had a privity-like relationship. (See Board of Managers of a Bldg. Condominium v 13th & 14th St. Realty, LLC, 121 AD3d 432, 433 [1st Dept 2014].) As discussed above, plaintiff's allegations do not establish for pleading purposes that such a relationship existed here.

On his negligence claim, plaintiff alleges that defendants "owed a duty of reasonable care to design and construct the Triplex Apartment and the Building in accordance with good workmanship, the 1228 Offering Plan and the applicable laws, codes and regulations." (NYSCEF 1 at ¶ 148.) More specifically, plaintiff alleges that these defendants were responsible for monitoring the construction work to ensure that the building did conform to the offering plan and applicable codes (id. at ¶ 25). And in opposing the motion to dismiss, plaintiff asserts that defendants had an "independent duty to comply with the Building Code and the Fire Code." (NYSCEF No. 50 at 18.)

Plaintiff has not established for pleading purposes that the architect defendants owed him a tort duty to ensure that the building, as constructed, conformed to the building as designed and described in the offering plan. A contractual obligation like the one alleged here will give rise to a tort duty of care to third parties like plaintiff in only three scenarios: (i) the party has negligently created or exacerbated a dangerous condition; (2) the party's performance of its contractual obligations has induced the third party to detrimentally rely on the continued performance of those obligations; or (iii) the party's assumption of contractual obligations to maintain premises safely has completely displaced the safety duties that would otherwise be owed by the premises owners. (See Espinal v Melville Snow Contractors, Inc., 98 NY2d 136, 139-142 [2002].) Plaintiff does not allege that the architect defendants created or exacerbated a dangerous condition—at most, that they failed to correct a condition that others had created. He does not allege these defendants' contractual monitoring duties completely displaced the obligation of other parties to build the building safely and in compliance with applicable building/fire codes. And he does not allege that he changed position in reliance on these defendants' initial proper performance of their construction-monitoring obligations, as required for them to owe him a duty to continue to perform that monitoring.

There is no merit to plaintiff's argument that he has made out a negligence claim against [*5]the architect defendants for breach of an independent tort duty owed to him to comply with the City's building and fire codes. This claim fails to state a cause of action for the same reasons as plaintiff's parallel claim against the architect defendants.

Plaintiff brings causes of action for fraud, negligent misrepresentation, malpractice and negligence against the engineer defendants. For the same reasons as stated in motion sequences 001 and 002, these claims are dismissed. The court does not consider the parties' remaining arguments.

Accordingly, it is

ORDERED that the sponsor defendants' motion to dismiss (mot seq 001) is denied with respect to plaintiff's breach-of-contract claim, and otherwise granted; and it is further

ORDERED that the architect defendants' motion to dismiss (mot seq 002) is granted, and the complaint is dismissed as against the architect defendants, with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that the engineer defendants' motion to dismiss (mot seq 003) is granted, and the complaint is dismissed as against the engineer defendants, with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further

ORDERED that the breach-of-contract claim against the sponsor defendants is severed and shall continue; and it is further

ORDERED that plaintiff shall serve a copy of this order with notice of its entry on all parties and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.