Legal Battle Ensues as Kips Bay Hotel Nears Completion
Lauren Elkies Schram June 18, 2014, 7:45 a.m.
A drawn out legal case over who’s responsible for a Kips Bay hotel’s incompletion is casting a black cloud over the project as its developer works to obtain a final certificate of occupancy.
At issue is the building at 67-69 Lexington Avenue between 25th and 26th Streets, which Delex Building LLC developed with architect Jung Wor Chin of the eponymous firm. Legal wrangling began in 2011 when Delex sued Mr. Chin for more than $1 million for negligence and breach of contract.
“This is a fairly common instance of an owner suing its architect for breach of contract and/or negligence when the plans prepared and filed by the architect, and relied upon by the owner, turn out to be unusable,” said real estate attorney Terrence Oved of Oved & Oved who is not involved in the case. “Owners generally seek damages for the amounts paid, any amounts paid to another architect and any interest paid during the period they were unable to build in accordance with the defective plans.”
Delex bought the five-story, 1910 commercial loft building from Arista Surgical Supply Company for $7.2 million in January 2006. Delex then gutted it, replaced the facade and erected a seven-story, 50-room hotel with outdoor recreation space on the rooftop, as Curbed previously reported.
Prior to the building purchase, in July 2005, Delex hired Mr. Chin as the architect and structural engineer in the “renovation, remodeling and reconstruction” of the property, according to the 2011 complaint, including making sure the building would comply with the building code. Mr. Chin advised Delex that it could legally build a 10-story building, but he couldn’t “obtain the approval of the [Department of Buildings] since they were in violation of [DOB] codes,” the complaint says. Three years later, Mr. Chin drew up plans for a seven-story building, but those were “defective and improperly prepared, and could not be utilized,” the suit claims.
Before 2012, the building was hit with 32 Environmental Control Board violations. All of them have been resolved and fines paid, according to DOB records.
Delex then allegedly had to hire another architect and engineer for the project and the final plans weren’t approved by DOB until October 2010.
At this point, each side is blaming the other for the inability to complete the project—with Delex claiming Mr. Chin was incompetent and Mr. Chin accusing Delex of not having the funding. A Supreme Court judge ruled on June 10 that Delex must supply proof of damages within 20 days or else it won’t be able to use that proof at trial.
Delex has active DOB permits, some renewed as recently as February, for minor construction work related to plumbing and boilers. The firm has a temporary certificate of occupancy that expires in July and has 12 outstanding requirements to meet before it can obtain a final certificate of occupancy.
Craig A. Blumberg, Delex’s attorney, did not respond to a request for comment. A woman who answered the phone at the office of Farber Brocks & Zane said that Richard Camarda was the attorney representing Mr. Chin and then added that they declined to comment. A worker at the Mott Street office of Jung Wor Chin Architect said a reporter would need to speak with a manager, who was unavailable.
The case boils down to whether it’s the architect’s fault or it’s about a lack of funding for the project, said real estate attorney Adam Leitman Bailey who has no involvement in the case.