Individual Liability of Condominium Sponsor's Principals

The case arose out of sponsor's development of a 25-story building. Once the sponsor's control of the condominium board ended, the board brought an action seeking damages for alleged construction defects and mismanagement of the condominium during the sponsor control period. In addition to a breach of contract claim against the sponsor, the board alleged that the sponsor and its principals had committed fraud in the offering plan by misrepresenting the condominium's operating expenses and projected common charges. The board also allege that sponsor members of the initial sponsor-controlled board had breached their fiduciary duty by understating common charges and keeping them low until the sponsor sold nearly all of the units. The complaint alleged that the sponsor members acted to benefit themselves and the sponsor by inducing purchasers to buy units at prices reflecting the artificially low common charges — charges the condominium board raised by 65% once most of the units had been sold.