1113 8th Avenue Owners Corp. v. Rivieccio

Order of the Supreme Court, Kings County (Joseph Williams, J.), entered on May 25, 1988, which, inter alia, granted defendants’ cross motion to dismiss the verified complaint for failure to state a cause of action, and denied plaintiffs’ motion to strike defendants’ affirmative defenses, unanimously modified, on the law, to the extent of denying the cross motion and granting leave to file an amended complaint, and granting leave to renew the motion to strike the affirmative defenses upon completion of discovery, and is otherwise affirmed, without costs.

According to the complaint, the offering plan for this eight-unit cooperative building contained a misrepresentation concerning the first mortgage on the premises. The plan described the mortgage as "self-liquidating”, while in fact it requires a $48,404.12 balloon payment upon maturity.

Both the verified complaint and the proposed amended verified complaint improperly attempt to plead private rights of action under the Martin Act. (See, CPC Intl. v McKesson Corp., 70 NY2d 268.)

However, while the motion court correctly struck the Martin Act causes, its dismissal of the complaint’s common-law causes was erroneous.

*715While defendants grounded their motion on both CPLR 3212 and 3211 (a) (7), they phrased it as one for summary judgment dismissing the complaint for failure to state a cause of action. Accordingly, we view the motion as one testing the sufficiency of the pleading. The allegations are therefore deemed true and plaintiff should be afforded the benefit of all reasonable inferences in its favor. (See, Rovello v Orofino Realty Co., 40 NY2d 633.) The facts pleaded sufficiently state a common-law cause of action for fraud and misrepresentation. (Black v Chittenden, 69 NY2d 665.) These causes should, however, be effectively severed from the dismissed Martin Act causes and it is for this purpose that we grant leave to file an amended complaint.