GARENDEAN REALTY OWNER LLC v. 14 LINCOLN PLACE LLC (2019)

DECISION & ORDER

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendant 14 Lincoln Place, LLC, pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against it is denied.

After the plaintiff purchased a multifamily residential apartment building in Brooklyn (hereinafter the building) from the defendant 14 Lincoln Place, LLC (hereinafter Lincoln), tenants in one of the apartments filed a complaint with the New York State Division of Housing and Community Renewal (hereinafter the DHCR), contending, inter alia, that they were entitled to a renewal lease under the Rent Stabilization Code. The plaintiff then commenced this action against, among others, Lincoln, alleging, inter alia, causes of action to recover damages for fraud and breach of contract based on Lincoln's alleged misrepresentation that the apartment in question was exempt from rent regulation.  The Supreme Court granted Lincoln's motion pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against it on the ground that the action was premature and thus did not present a justiciable controversy.  The plaintiff appeals.

Contrary to the Supreme Court's determination, the issues of whether Lincoln breached the contract and misrepresented the rent-regulated status of the apartment in question were not premature, as the viability of the plaintiff's causes of action was not contingent on the DHCR's ultimate resolution of the tenants' complaint.  The plaintiff adequately alleged that it sustained damages at the time the action was commenced by virtue of having been fraudulently induced to enter into the contract of sale, and to pay an inflated purchase price for the building, as a result of the alleged misrepresentation (see Rodin Props.-Shore Mall v. Ullman, 253 A.D.2d 403, 404, 676 N.Y.S.2d 594).

We have not considered Lincoln's additional contention, which was improperly raised for the first time in its reply papers on the motion and was not addressed by the Supreme Court (see Kaziu v. Human Care Servs. for Families & Children, Inc., 167 A.D.3d 588, 589, 90 N.Y.S.3d 66;  Gottlieb v. Wynne, 159 A.D.3d 799, 801, 74 N.Y.S.3d 46;  State of New York v. Defoe Corp., 149 A.D.3d 889, 890, 49 N.Y.S.3d 897).

Accordingly, the Supreme Court should have denied Lincoln's motion pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against it.

MASTRO, J.P., DILLON, MALTESE and BRATHWAITE NELSON, JJ., concur.