New York is full of real estate stories, and has been since Dutch times.  Whether it was acquisitions in Old Breuckelen, or in the narrow streets of the lower east side, real estate and development has always been a New York sort of activity.

180 Ludlow Dev. LLC v Olshan Frome Wolosky LLP   2017 NY Slip Op 31780(U) August 22, 2017 Supreme Court, New York County  Docket Number: 651473/2013  Judge: Debra A. James arises from the same urge.  A new hotel, built in an unusual cantilever method would require air rights from the neighboring tenements.  The neighboring building had its own history as well.  As one might guess, the project did not fare well.

“In this legal malpractice action, plaintiff 180 Ludlow Development LLC (Ludlow) moves for an order granting partial summary judgment of liability on its complaint against defendant Olshan Frome Wolosky LLP (Olshan) . Olshan cross-moves for an order of summary judgment dismissing the complaint. ”

“In late 2006, Ludlow, a real estate developer, retained Olshan, a law firm, to represent Ludlow with respect to the acquisition of air rights over a parcel of land owned by Ithilien Realty Corp (Ithilien) that adjoined the property that Ludlow owned and was developing as a hotel at 180-184 Ludlow Street, on the Lower East Side of Manhattan (Project).

There is no dispute that Ludlow retained Olshan as its transactional lawyer to prepare documents for the Project, under which, among other things, Ludlow would purchase air rights from Ithilien, and Ithilien would consent to Ludlow’s construction of a cantilever over Ithilien’s parcel and its building (Building) thereon. Ludlow hired other lawyers, who provided consultations on light and air easement issues, including a land use attorney, who at Ludlow’s request, reviewed Olshan’s draft of the contract of sale and the Zoning Lot Development Agreement (ZLDA, including the cantilever provision, prior to their execution. Ludlow also retained other professionals in connection with the Project, including an architect; a building consulting firm; a building expediting service company; a land use planning consultant; and a specialist .on regulatory issues, including the zoning code.”

“In March 2007, seven months before execution of the ZLDA, Ludlow’s architects and consultants exchanged e-mail messages that stated that were the cantilever structure built over the courtyard on Ithilien’s parcel thereby enclosing such courtyard as then proposed, it would block the light and windows that provided the ventilation for Ithilien’s Building. All such messages show that Ludlow was copied on these emails, but Olshan was not. In one such message sent tb Ludlow’s regulatory/building code consultant on March 21, 2007, Ludlow’s building consultant wrote: “We need to briefly review this issue and advise if it is possible to cover (enclose) the courtyard and inform us of any provisions required by such. If we are unable to utilize these air rights, we will not purchase.” In an e-mail sent on that same day to Ludlow and all of its consultants, except Olshan, Ludlow’s regulatory/building code consultant replied: “We have briefly looked at the plot plan, and it loo~s like you can cantilever on other areas over the adjoining building but you can not cantilever over the court. The court is being used for existing building light and ventilation windows and can not be covered. Unless you are able to alter the existing building and remove all the rooms that open to that court. (sic)” ”

“Olshan was unable to obtain Ithilien’s consent to the proposed installation of permanent mechanical ventilation on its Building. Ludlow asserts that, because it was unable to resolve the issue of whether the construction of cantilever rendered the Ithilien Building in violation of· the building code, which would thus jeopardize Ludlow’s ability to obtain a certificate of occupancy, Ludlow halted the Project construction work on December 3, 2008. Ludlow served a Notice to Cure dated October 20, 2008 (Notice to Cure) upon Ithilien asserting that Ithilien breached the ZLDA § 8(a) in neither curing nor allowing Ludlow to cure the Violation resulting from Ludlow’s construction of the cantilever in a manner that blocked the light and window ventilation to Ithilien’s Building, specifically, to the residential units therein. ”  (The decision explains, in great detail, the court’s reasoning)

“Accordingly, it is ORDERED that the plaintiff’s motion for partial summary judgment of liability is denied; and it is further ORDERED that the defendant’s cross motion for summary judgment dismissing the complaint is granted and the complaint is dismissed with costs and disbursements to defendant as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further ORDERED that the Clerk is directed to enter judgment. ”