Co-ops and Condominiums

Limited Warranty Establishes Defense to Consequential Damages Claim Against Sponsor
Board of Managers of the 37, 39 Madison Street Condominium v. 31 Madison Street Development, LLC 2024 WL 4219497 AppDiv, Second Dept. (memorandum opinion)
In an action by a condominium board against the sponsor and its principals seeking damages for defective construction, the sponsor appealed from Supreme Court’s denial of the branch of its motion seek dismissal of claims for consequential damages, unjust enrichment, negligence, and breach of an implied housing merchant warranty. The Appellate Division modified to grant the motion, relying on language in the purchase agreements.
The purchase agreements between sponsor and the condominium unit owners provide that the sponsor’s limited warranty “excludes all consequential, incidental, special damages and indirect damages.” The board of managers of the 12-unit condominium brought an action for defective construction of some of the condominium’s common areas, asserting claims for breach of contract, negligence, unjust enrichment, and breach of an implied housing merchant warranty. Sponsor moved to dismiss, and Supreme Court denied the motion.
In modifying, the Appellate Division held that documentary evidence — the limited warranty — conclusively established a defense to the consequential damages claim. The court went on to hold that the purchase agreements and limited warranty also precluded the condominium’s other claims.