Summary Judgment Premature As To Condominium Builder’s Liability For Burst Pipe Damage Where Operative Agreement On Builder’s Obligations Was Not Before The Court

In The Charles Condominiums, LLC v. Victor RPM First, LLC, Index No. 657040/2019 (April 5, 2024), Justice Margaret A. Chan denied a motion for summary judgment, as to liability only, by a luxury condominium developer seeking millions of dollars from its development manager (i.e., the contractor, “Victor”) for breach of contract related to a burst pipe.

Under the parties’ development agreement, Plaintiff and certain of its affiliates were to pay Victor to supervise the construction of a new luxury condominium. In July 2016, a pipe on the 16th floor of the project burst, causing a leak of water and glycol. Plaintiff spent more than $2 million to investigate the cause of, and to remediate, that incident. Plaintiff suspended marketing and sale of condominium units from July 2016 to November 2017 which, it claims, cost it the opportunity to sell the six units that remained unsold at the time of the incident at favorable prices.

In July 2023, Plaintiff moved for summary judgment as to Victor’s contractual liability. Victor opposed, arguing that ambiguities in the development agreement and the lack of meaningful discovery left disputed issues of material fact.

The Court rejected Victor’s contention that the relevant terms of the development agreement were ambiguous as to its responsibility to see the project through to completion. The Charles Condominiums, LLC, Slip Op. at 5 (“There is no reason why the unambiguous term ‘supervise’ should not be construed according to its plain, ordinary meaning such that Victor is responsible for making certain that everything is done correctly”). However, Victor’s liability for its failure to properly supervise the project through completion depended on whether it had met its obligation to “Complete the Project” within the terms of the Construction Loan Documents. Because the parties had failed to place the Construction Loan Documents before the Court, the Court held that summary judgment was premature. Id. at 6.