Gidumal v. Site 16/17 Development LLC, et al., N.Y. County Index No. 105958/10 (New York County Supreme Court, May 5, 2010), is the first reported case against a developer of a green building alleging the developer failed to deliver a project as represented during pre-construction.
On May 5, 2010, unit owners of the 31-story, 264-unit Riverhouse condominium located in Battery Park City, filed a $1.5 million lawsuit against the project’s developer, Sheldrake Organization, and the building’s manager, Centurion Real Estate Partners, for breach of contract under the condominium offering plan and fraud based upon alleged misrepresentations in the offering plan about the building and its units.
Riverhouse was marketed as being at the cutting edge of green technology and advertised as a LEED Gold-rated building, which is supposed to feature fresh filtered air, filtered water, eco-friendly materials and low energy consumption. The green features the developer allegedly promoted include a geothermal heating and cooling system, photovoltaic cells, low-E double-pane windows, a green roof, Energy Star appliances, recycled-content and locally-sourced building materials, a $1 million wastewater treatment plant, and a 60kW microturbine installation.
The complaint alleges that owners consistently experienced cold drafts and insufficient heat in their units and that the air temperature for heating the units was too low, which the plaintiffs claim are signs that the building is not maximizing energy efficiency. The complaint further asserts that the pipes are not insulated, the heating unit covers are not sealed, and the air filters are clogged.
It will be interesting to follow this case and see if it paves the way for more green lawsuits based upon contract and fraud theories arising from a developer’s offering plan or pre-sale/pre-construction representations to purchasers.
Submitted by Jeffrey S. Wertman of Berger Singerman (JWertman@bergersingerman.com).