$16M Ruling Based on Typo, Developer Says

MANHATTAN (CN) – A developer claims New York Attorney General Andrew Cuomo forced it to return $16 million in down payments on 40 condos because of a typographical error in a contract. CRP/Extell sued Cuomo and its former customers in the Upper West Side project, The Rushmore, in Federal Court.

     CRP/Extell says it offered buyers of condos in The Rushmore two options to rescind their contracts, in a 757-page offering plan. It claims that a lawyer’s typo on one digit of that document allowed the defendants to pull out of the closings.
     CRP/Extell claims the down payments would be placed in escrow pending completion of The Rushmore. It claims that the contract guaranteed that the first closing would take place within 1 year of the projected closing date, but the document listed both dates as the same day: Sept. 1, 2008.
     The lawyer had meant to type Sept. 1, 2009, CRP/Extell says.
     “The first closing of title to a unit in The Rushmore took place on Feb. 12, 2009, within six months of the projected first closing date and well within the twelve month deadline included in such offering plans and required by the operative regulations,” according to the complaint.
     “Yet more than five months after the projected commencement of operations date of September 1, 2008,” one purchaser filed an “Application for a Determination of the Disposition of Down Payments” with the Attorney General based on the error, the complaint states.
     “Over the next year, as the downturn in the economy and real-estate market continued, thirty-nine other purchasers” followed suit, the complaint states.
     “An attorney for many of the purchasers publicly admitted that they filed their applications with the motivation of ‘the chance to buy in at a lower price’ and thus opportunistically get out from under their purchase agreements during the downturn,” according to the complaint.
     Cuomo granted all of the purchasers’ applications in April 2010, CRP/Extell says. And he ordered that the money be released by May 12 – two days after the filing of this lawsuit, the company says.
     CRP/Extell claims Cuomo violated due process. It seeks an injunction preventing the release of the money held in escrow, and damages.
     The company is represented by Edward Normand with Boies Schiller & Flexner.

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