Summary Judgment Granted To Third Party Defendant In Real Estate Development Action

On December 4, 2024, Justice Joel M. Cohen granted a third-party defendant’s motion to dismiss claims against it brought by the sponsor of a Manhattan real estate development. The case is Board of Managers of the 443 Greenwich Street Condominium v. SGN 443 Greenwich Street Owner LLC, Index No. 656934/2021

The Board of Managers of the 443 Greenwich Street Condominium sued various affiliates of the condominium sponsor (the “Sponsor Defendants”) for breach of contract, breach of fiduciary duty, and fraud. Plaintiffs’ claims included allegations against the Sponsor Defendants relating to restoration of the building’s façade.

The Sponsor Defendants sued CTS Group (“CTS”), among others, alleging that CTS had subcontracted, with respect to the façade restoration, to 1) purchase and maintain commercial general liability insurance, 2) name the Sponsor Defendants as additional insured, and 3) indemnify, defend and hold them harmless “to the fullest extent permitted by law,” Slip op., p. 3.

Sponsor Defendants relied on a proposal from CTS to non-party 443 Developer LLC (the “Proposal”) as the contract giving rise to their claims. Dismissal was warranted because that Proposal did not contain any language “whereby CTS agreed to indemnification or to maintain commercial general liability insurance.” Id., p. 5.

Justice Cohen rejected Sponsor Defendants’ argument that dismissal was not warranted because their pleading supported an inference that an AIA Owner-Architect Agreement, which was called for by the Proposal but never secured by CTS, would have included indemnification and insurance provisions extending to the Sponsor Defendants. “This string of inferences is not at all persuasive. Even assuming for present purposes that the Sponsor Defendants could enforce the terms of the CTS ‘Proposal,’ to which it was not a party, there is simply no basis in the document to support an agreement by CTS to indemnify or to procure insurance. The document expressly contemplates a subsequent contract, which was never executed. . . . [B]ased on the documentary evidence attached to the Third-Party Complaint itself, there are no grounds to infer a binding agreement by CTS to indemnify or to procure insurance for the benefit of Sponsor Defendants.” Id., pp. 5-6.

CTS’ motion to dismiss the third party complaint as against it was therefore granted.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning condominiums or contractual disputes.