Supreme Court of the State of New York, Appellate Division, First Department, November 27, 2018
Plaintiffs, the purchasers of a cooperative apartment, commenced an action against the sponsor of the co-op and the listing agent (together, the “Defendants”) alleging that Defendants made a material misrepresentation about the size of the apartment and that plaintiffs “reasonably relied on that misrepresentation in purchasing the apartment.” Specifically, plaintiffs allege that a floor plan prepared with the listing stated that the apartment was approximately 1,966 square feet when it was only 1,495 square feet. Plaintiffs alleged that the floor plan was incorporated into the offering plan by reference which was then incorporated into the purchase agreement. Premised upon that alleged misrepresentation, plaintiffs asserted claims for breach of contract and express warranty, fraud, aiding and abetting fraud, negligent misrepresentation and violations of sections 349 and 350 of the General Business Law (“GBL”), relying upon specific language contained in the offering plan:
“Any floor plan or sketch shown to a prospective purchaser is only an approximation of the dimensions and layout of a typical apartment. The original layout of an apartment may have been altered. All apartments and terraces appurtenant thereto are being offered in their ‘as is’ condition. Accordingly, each apartment should be inspected prior to purchase to determine its actual dimensions, layout and physical condition.”
The Defendants moved to dismiss the complaint, the lower court granted Defendants’ motion, and the Appellate Division affirmed. The Appellate Division held that the lower court properly dismissed plaintiff’s breach of contract claims finding that the doctrine of incorporation by reference did not apply because it is “appropriate only where the document to be incorporated is referred to and described in the instrument as issued so as to identify the referenced document beyond all reasonable doubt.” The Appellate Division reasoned that since the listing was not identified in any of the relevant purchase documents it is not incorporated by reference and therefore “any alleged representation in the listing cannot form the basis of a breach of contract claim because the listing is not a part of the purchase agreement” and there was “no express warranty made in the purchase agreement.”
Additionally, the Appellate Division held that any alleged misrepresentations were refuted by the terms of the purchase agreement, which stated that no representations are being