BOARD OF MANAGERS OF WALTON CONDOMINIUM v. Robert Quaco, et al., Defendants–Appellants. (2020)

Order, Supreme Court, New York County (Arlene P. Bluth, J.), entered on or about January 29, 2018, which, insofar as appealed from as limited by the briefs, denied defendants Robert Quaco and David Levine's motion to dismiss the fraud claim as against them pursuant to CPLR 3211(a)(7), unanimously affirmed, without costs.

Contrary to defendants' contention, the fraud cause of action is based on affirmative misrepresentations, not omissions. Therefore, the motion court correctly found that it was not barred by the Martin Act (see Board of Mgrs. of the S. Star v. WSA Equities, LLC, 140 A.D.3d 405, 30 N.Y.S.3d 876 [1st Dept. 2016]). The court also correctly found that defendants, who are principals of the sponsor, and who signed the certification in the offering plan, could be held liable (see id.; see also State of New York v. Sonifer Realty Corp., 212 A.D.2d 366, 367, 622 N.Y.S.2d 516 [1st Dept. 1995]).

Although the complaint does not specify the source of its on-information belief allegations (see DDJ Mgt., LLC v. Rhone Group L.L.C., 78 A.D.3d 442, 443, 911 N.Y.S.2d 7 [1st Dept. 2010]), plaintiff remedied this defect in opposition to defendants' motion to dismiss (see Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635–636, 389 N.Y.S.2d 314, 357 N.E.2d 970 [1976]).

It is true, as defendants point out, that the document submitted by plaintiff shows only that they had knowledge of leaks in December of 2013, five months after they signed the certification. However, the facts as pleaded and as amplified by documents submitted in opposition to the motion are “sufficient to permit a reasonable inference of the alleged conduct,” especially as discovery may reveal that defendants knew about the defects in the roof earlier than December 2013 (see generally Pludeman v. Northern Leasing Sys., Inc., 10 N.Y.3d 486, 491–492, 860 N.Y.S.2d 422, 890 N.E.2d 184 [2008]).