The following e-filed documents, listed by NYSCEF document number (Motion 008) 363, 364, 368, 369, 370, 371, 374, 375, 376 were read on this motion for SUMMARY JUDGMENT OR TRIAL ON STIPULATED FACTS The following e-filed documents, listed by NYSCEF document number (Motion 009) 365, 366, 372, 373, 377 were read on this motion for SUMMARY JUDGMENT OR TRIAL ON STIPULATED FACTS DECISION + ORDER ON MOTION This case is about the condominium conversion of an apartment building at 184 Thompson Street, New York, New York (the “Building”). Defendant 184 Thompson Street Owner LLC was the “Sponsor” behind the conversion, responsible for pricing the condominium units, establishing a reserve fund for the Building, and undertaking certain capital improvement work on the Building, among other things. Plaintiff Board of Managers of 184 Thompson Street Condominium (the “Board”) alleges that the Sponsor (i) miscalculated the amount of the reserve fund, (ii) claimed reserve fund credits to which it was not entitled, and (iii) performed shoddy repair work in the Building for which the Board is entitled to damages. Years of litigation have winnowed the parties’ dispute to three discrete issues, which the parties now ask the Court to resolve, either as a matter of summary judgment or bench trial determination, on the basis of stipulated facts: 1. What is the correct amount of the reserve fund? The options are: (A) 3 percent of the total tenant-offeree price; (B) 3 percent of the total non-tenant-offeree price; or (C) 3 percent of (A) plus $71,100, the additional amount paid by Mr. Rangoolie for Apartment 1N. 2. What reserve fund credit, if any, can the Sponsor claim for elevator modernization? The options here are: (A) the full amount of the modernization costs; (B) the amount of the modernization costs minus $15,000, which is the stipulated cost of only curing the code violations; or (C) zero. 3. Is the Board entitled to recover as damages the costs it has incurred for repairing the Sponsor’s allegedly defective work in the Building? The options here are Yes or No. See Def.’s Mot. for S.J. at 2-3. For the reasons set forth in greater detail below, the Court finds that: 1. the Sponsor correctly calculated the correct amount of the reserve fund to be 3 percent of the total tenant-offeree price — that is, Option A to question 1 above; 2. the Sponsor is entitled to a reserve fund credit for elevator modernization costs, except for the $15,000 portion attributed (by stipulation) to curing code violations — that is, Option B to question 2 above; and 3. the Board is not entitled to damages for the repair costs it incurred following the Sponsor’s work — that is, No to question 3 above. BACKGROUND The Offering Plan for the Condominium Conversion 1. Insider Price vs. Outsider Price In September 2005, the Sponsor submitted a non-eviction Condominium Offering Plan (the “Offering Plan”) to the Office of the New York Attorney General (the “AG”) for review. Stipulated Facts in Supp. of Motions (“Stipulated Facts” or “SF”), 2. The Offering Plan included important details about, inter alia, how much the condominium units would cost, how much the Sponsor would contribute to a dedicated fund for Building improvements, and other obligations the Sponsor would undertake. See Joint Ex. M-1 (NYSCEF Doc. No. 337).1 On August 10, 2006, the Offering Plan, as modified by the AG as part of its review, was accepted for filing. Id. 3. Under the Offering Plan — and in accordance with applicable law — tenants of the Building at the time the Offering Plan was accepted for filing had an exclusive 90-day period in which they could purchase their apartments at a reduced price (the “Exclusive Period”). Id. 5. Schedule A to the Offering Plan listed this reduced price — the “Price to Tenant-Offerees” — for each apartment unit in the Building. See Joint Ex. M-1. This reduced price is also sometimes termed the “Insider Price.” During the Exclusive Period, a tenant in occupancy could accept the Sponsor’s offer by submitting a Purchase Agreement at the Insider Price stated in the Plan, which the Sponsor then was legally bound to accept. Id. 6. In the column next to the Insider Price, Schedule A also listed the “Price to Non-Tenant-Offerees” — the higher “Outsider Price” — for each apartment. Joint Ex. M-1. 2. Establishing the Reserve Fund The Offering Plan also set forth the amount the Sponsor intended to contribute to the “reserve fund.” New York law — namely, Section 26-703 of the New York City Administrative Code (the “Reserve Fund Law”) — requires, as part of a condominium conversion, that sponsors establish “a reserve fund to be used exclusively for making capital repairs, replacements and improvements necessary for the health and safety of the residents of such buildings.” Reserve Fund Law, §26-703(a); Joint Ex. M-1 at 91. Just how much money the Sponsor was required to deposit into the reserve fund is one of the main disputes in this case. The Reserve Fund Law required the Sponsor to deposit “three per cent of the total price,” with “total price” defined as “the sum of the cost of all units in the offering at the last price which was offered to tenants in occupancy prior to the effective date of the plan regardless of number of sales made.” Reserve Fund Law §26-702(b)(2) (emphasis added).2 As noted above, the Offering Plan showed two columns of prices in Schedule A. The aggregate Price to Tenant-Offerees, for all apartments in the Building, was $83,172,200. Id. 7. The aggregate Price to Non-Tenant-Offerees was $92,348,000. Id. 20.3 The Effective Date of the Offering Plan was February 21, 2007. Id.
21-22. The Reserve Fund Law also allows the Sponsor to “claim and receive credit against the mandatory initial contribution to the reserve fund for the actual cost of capital replacements,” defined to mean “a building-wide replacement of a major component” of certain systems. Reserve Fund Law, §26-703(c); id., §26-702(c). “[R]eplacements made to cure code violations,” however, “shall not be included” in calculating the credit. Id. §26-702(c). And the total credit cannot exceed the actual cost of the capital replacements, or 1 percent of the “total price,” whichever is less. Id. 26-703(c). In the Offering Plan, the Sponsor announced that it “intend[ed] to take a [reserve fund] credit against the mandatory initial contribution” in the amount of $831,722. SF 11. That credit, as the Offering Plan shows, was contingent on the Sponsor making capital improvements to several different systems in the Building: At the current time, the capital replacements and costs thereof which Sponsor intends to commence after the Plan is submitted for filing, but before the Plan is declared effective, and as to which Sponsor intends to take a credit against the mandatory initial contribution to the fund, consist of the following: Windows/Terrace Doors $340,000.00 Roofs and Terraces $282,700.00 Security $25,000.00 HVAC $94,500.00 Electrical $53,208.00 Elevators $215,000.00 Total Qualifying Work $1,010,408.00 TOTAL CREDIT (max.) $831,722.00 SF,
