FILED: ti NEW YORK COUNTY CLERK 08/03/ :25 PM INDEX NO /2015 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 08/03/2016

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1 FILED: ti NEW YORK COUNTY CLERK 08/03/ :25 PM INDEX NO /2015 NYSCEF DOC. NO. 25 RECEIVED NYSCEF: 08/03/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X BOARD OF MANAGERS OF THE RESIDENTIAL SECTION OF THE PLAZA CONDOMINIUM, - against - Plaintiff, KRISTIN FRANZESE, as President of the Board of Index No.: /2015 Managers of the Plaza Condominium, CPS 1 REALTY, LP, EL-AD PROPERTIES NY LLC, SAHARA DREAMS LLC, SAHARA US CORP, SAHARA PLAZA LLP d/b/a THE PLAZA HOTEL, SAHARA PLAZA LLC, KINGDOM HOLDING AMENDED COMPLAINT COMPANY, EL AD US HOLDINGS, INC., KINGDOM XXII (USA) LTD, BOARD OF MANAGERS OF THE PLAZA CONDOMINIUM, PLAZA ACCESORY OWNER GP LLC, BOARD OF MANAGERS OF THE HOTEL SECTION OF THE PLAZA CONDOMINIUM, PLAZA ACCESSORY OWNER LP, PLAZA CLUB OWNER LP, PLAZA RESIDENTIAL OWNER LP, PLAZA RESIDENTIAL OWNER GP LLC, CPS 1 REALTY GP LLC, CPS EVENTS, ANNA HU LLC d/b/a ANNA HU, ASSOULINE PUBLISHING LLC d/b/a ASSOULINE, CAUDALIE SPAS, INC. d/b/a CAUDALIE VINOTHERAPIE SPA AT THE PLAZA, DEMEL NEW YORK, INC. d/b/a DEMEL BAKERY, IRADJ MOINI COUTURE LTD d/b/a IRADJ MOINI, KENNETH JAY LANE INC. d/b/a KENNETH JAY LANE, ASSOULIN, LTD d/b/a MAURICE FINE JEWELRY, QIVIUK BOUTIQUE NEW YORK, INC. d/b/a QIVIUK, RADU PHYSICAL CULTURE OF NEW YORK, LLC d/b/a RADU PHYSICAL CULTURE, SEIZE SUR VINGT PLAZA LLC d/b/a SEIZE SUR VINGT, STEM BY DAVID TUTERA, INC., d/b/a STEM BY DAVID TUTERA, WARREN TRICOMI MADISON AVENUE LLC, d/b/a THE PLAZA BEAUTY BY WARREN TRICOMI, VERTU USA INC. d/b/a 1 VERTU, HAMPSHIRE HOTELS MANAGEMENT LLC, HAMPSHIRE HOTELS & RESORTS LIMITED LIABILITY COMPANY, DREAM HOTEL GROUP, LLC, FRHI HOTELS & 1 of 76

2 RESORTS (U.S.) INC., FHR (NY) LLC, FHR (NYC) LLC, SAHARA DREAMS CO. II INC., SAHARA DREAMS LIMITED, SAHARA PLAZA INC., SAHARA PLAZA II INC., SAHARA HAMPSHIRE HOTEL MANAGEMENT LLC, SAHARA HAMPSHIRE HOSPITALITY MANAGEMENT LIMITED, SAHARA HAMPSHIRE HOTEL MANAGEMENT CO. II INC., SAHARA HAMPSHIRE HOTEL MANAGEMENT CO. INC., and JOHN DOE NOS. 1-50, being unknown parties related to, associated with, or responsible for the named parties. Defendants. X Plaintiff, Board of Managers of the Residential Section of the Plaza Condominium (hereinafter the "Residential Board" or "Plaintiff'), by their attorneys, Harris Beach PLLC, as and for its Complaint against the above-named defendants, respectfully alleges as follows: INTRODUCTION 1. This complaint arises out of the gross, negligent, careless, reckless, wrongful, intentional, unlawful and fraudulent misallocation of utility charges of the residential unit owners of the mixed use condominium known as The Plaza Condominium (the "Condominium"). Defendants failed and refused to properly design, construct, operate, maintain, activate, install and/or implement the utility metering systems necessary and required under the Offering Plan, Condominium Documents and Purchase Agreements to ensure that the usage and consumption of such utilities were appropriately allocated among the different sections of the Condominium. Defendants' wrongful, gross, negligent, careless, reckless, wrongful, intentional, unlawful and fraudulent actions effectively resulted in the unit owners of the Residential Section of the Condominium subsidizing the utility charges incurred by the Non-Residential Units within the Condominium, including, for example, the costs associated with the operation of the air 2 2 of 76

3 conditioning system used, essentially, entirely by the Hotel and Commercial Units, including but not limited to, the Palm Court, Oak Room and Bar and The Todd English Food Hall. A. Plaintiff PARTIES 2. Plaintiff is the board of managers of the Residential Section of the Condominium and consists of the duly elected members of the board of managers of the Residential Section of the Condominium with a principal place of business of 1 Central Park South, New York, New York Plaintiff is charged, pursuant to Section 2 of Article 2 of the Residential By-Laws, with governing the affairs of the Residential Section of the Condominium. Plaintiff is the owner in fee of residential unit 1304, Tax Map Info, Block 1274, Lot The Condominium ("Condominium") is an unincorporated association of the unit owners of the mixed-use condominium building, located at 768 Fifth Avenue, New York, New York (the "Building"), and was formed pursuant to a Declaration of Condominium (the "Declaration") filed and recorded, pursuant to Article 9-B of the Real Property Law, in the New York County Office of the Register of the City of New York on March 13, B. Board Defendants 4. Defendant Kristin Franzese, as the President of the Board of Managers of The Plaza Condominium with a principal place of business 768 Fifth Avenue, New York, New York 10019, is the President of the Condominium Board. 5. Defendant Board of Managers of the Hotel Section of the Plaza Condominium ("Hotel Board") is the board of managers of the Hotel Section of the Condominium and consists 3 3 of 76

4 of the duly elected members of the board of managers of the Hotel Board with a principal place of business 768 Fifth Avenue, New York, New York The Hotel Board is charged with governing the affairs of the Hotel Section of the Condominium. 6. Defendant Board of Managers of the Plaza Condominium ("Condominium Board") is the board of managers of the Condominium and consists of the duly elected members of the board of managers of the Condominium Board, with a principal place of business 768 Fifth Avenue, New York, New York The Condominium Board is comprised of seven members: three members designated by the Residential Board, three members designated by the Hotel Board and one member designated by the Accessory Unit Owner. C. The El-Ad Defendants 7. Upon information and belief, at all times hereinafter mentioned, Defendant CPS 1 Realty LP ("CPS 1"), is a limited partnership organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business, care of El-Ad Group Ltd., at 575 Madison Avenue, New York, New York CPS 1 was the original sponsor for the Condominium ("CPS 1 or "Sponsor Defendant"). 8. Upon information and belief, at all times hereinafter mentioned, Defendant El-Ad Properties NY LLC ("El-Ad Properties") is a limited liability company organized and existing under the laws of the State of New York, with a principal place of business, care of El-Ad Group Ltd., at 575 Madison Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Plaza Residential Owner LP ("Plaza Owner LP"), is a limited partnership organized and existing under 4 4 of 76

5 the laws of the State of Delaware, doing business in the State of New York, with a principal place of business, care of El-Ad US Holdings Inc., at 575 Madison Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Plaza Residential Owner GP LLC, ("Plaza Owner LLC") is a limited liability company organized and existing pursuant to the laws of the State of Delaware, doing business in the State of New York, with a principal place of business, care of El-Ad US Holdings Inc., 575 Madison Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, CPS 1 assigned all of its rights as sponsor of the Residential Section of the Plaza Condominium to its affiliate Plaza Owner LP on or about April 7, CPS 1 and Plaza Owner LP are collectively referred to herein as the "Sponsor Defendants". 12. Upon information and belief, at all times hereinafter mentioned, Defendant Plaza Accessory Owner LP ("Plaza Accessory LP"), is a limited partnership organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business, care of El-Ad Us Holdings Inc., 575 Madison Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Plaza Accessory Owner GP LLC, ("Plaza Accessory LLC"), is a limited liability company organized and existing under the laws of the State of Delaware, doing 1 business in the State of New York, with a principal place of business, care of El-Ad US Holdings Inc., 575 Madison Avenue, New York, New York of 76

6 14. Upon information and belief, at all times hereinafter mentioned, Defendant Plaza Club Owner LP ("Plaza Club"), is a limited partnership organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business, care of El-Ad US Holdings Inc., at 575 Madison Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant El Ad US Holding, Inc. ("El Ad") is a corporation organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business at 575 Madison Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant CPS 1 Realty GP LLC, ("CPS 1 LLC", together with CPS 1, El-Ad Properties, Plaza Owner LP, Plaza Owner LLC, Plaza Accessory LP, Plaza Accessory LLC, Plaza Club and El-Ad the "El-Ad Entities"), is a limited liability company organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business care of El- Ad Group Ltd., at 575 Madison Avenue, New York, New York Upon information and belief, the El-Ad Entities are shell entities completely controlled and dominated by the same principals with similar board members, comingled assets, and in some instances no or few assets, with no or few employees and no proper on-going business purpose other than to shield the Principals from liability and pass through profits to the Principals. 6 6 of 76

7 D. The Sahara Defendants 18. Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Dreams LLC ("Sahara Dreams"), is a limited liability company organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business in New York County. 19. Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Dreams Co. II Inc., ("Sahara Dreams Co."), is a corporation organized and existing under the laws of the State of New York with a principal place of business at 1251 Avenue of Americas, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Dreams Limited, ("Sahara Dreams Limited"), is a corporation organized and existing under the laws of the State of New York with a principal place of business at 1251 Avenue of Americas, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Plaza Inc., ("Sahara Plaza Inc."), is a corporation organized and existing under the laws of the State of New York with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Plaza II Inc., ("Sahara Plaza II Inc."), is a corporation organized and existing under the laws of the State of New York with a place of business at 768 Fifth Avenue, New York, New York of 76

8 23. Upon information and belief, at all times hereinafter mentioned, Defendant Sahara US Corporation ("Sahara US"), is a corporation organized and existing under the laws of the State of New York with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Plaza LLP d/b/a The Plaza Hotel ("Sahara LLP"), is a limited liability partnership organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Dream Hotel Group, LLC ("Dream Group"), is a limited liability company organized and existing under the laws of the State of New York with a principal place of business at 200 West 55 Street, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Hampshire Hotel Management LLC, ("Sahara Hampshire LLC"), is a limited liability company organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Hampshire Hospitality Management Limited, ("Sahara Hampshire Limited"), is a corporation organized and existing under the laws of the State of New York with a principal place of business 1251 Avenue of Americas, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Hampshire Hotel Management Co. II Inc., ("Sahara Hampshire Management II"), is a 8 8 of 76

9 corporation organized and existing under the laws of the State of New York with a principal place of business 1251 Avenue of Americas, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Hampshire Hotel Management Co. Inc., ("Sahara Hampshire Management"), is a corporation organized and existing under the laws of the State of New York with a principal place of business 1251 Avenue of Americas, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Sahara Plaza LLC ("Sahara LLC" together with Sahara Dreams, Sahara US, Sahara LLP and Dream Group, the "Sahara Entities"), is a limited liability company organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, the Sahara Entities are shell entities completely controlled and dominated by the same principals with similar board members, comingled assets, and in some instances no or few assets, with no or few employees and no proper on-going business purpose other than to shield the Principals from liability and pass through profits to the Principals. E. The Kingdom Defendants 32. Upon information and belief, at all times hereinafter mentioned, Defendant Kingdom Holding Company ("KHC") is a diversified investment holding company with a place of business at 6 East 43rd Street, New York, New York 10016, that holds itself out as having "a controlling interest in The Plaza, one of New York's most distinctive landmarks." 9 9 of 76

10 33. Upon information and belief, at all times hereinafter mentioned, Defendant FRHI Hotels & Resorts (U.S.) Inc., ("FHRP), is a corporation organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a principal place of business at 137 National Plaza, Suite 300, Unit 306 National Harbor, Maryland and a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant FHR (NYC) LLC ("MR NYC'), is a corporation organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant FHR (NY) LLC ("FHR LLC" together with FHRI and FHR NYC THE "Fairmont Entities"), is a corporation organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Kingdom XXII (USA) Ltd., ("Kingdom USA" together with "KHC", "FHRI", "FHR NYC" and "FHR LLC" the "Kingdom Entities"), is a corporation organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, the Kingdom Entities are shell entities completely controlled and dominated by the same principals with similar board members, comingled assets, and in some instances no or few assets, with no or few employees and no proper on-going of 76

11 business purpose other than to shield the Principals from liability and pass through profits to the Principals. F. Commercial Defendants 38. Upon information and belief, at all times hereinafter mentioned, Defendant CPS Events ("CPS Events") is a partnership organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Anna Hu LLC, d/b/a Anna Hu ("Anna Hu"), is a limited liability company organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Assouline Publishing, Inc., d/b/a Assouline ("Assouline"), is a corporation organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Caudalie Spas, Inc., d/b/a Caudalie Vinotherapie Spa at the Plaza,("Caudalie"), is a corporation organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant,Demel New York, Inc., d/b/a Demel Bakery ("Demel"), is a corporation organized and existing under of 76

12 the laws of the State of New York with a place of business Plaza Hotel Grand Concourse, 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant ftadj Moini Couture Ltd. D/B/A Iradj Moini ("Iradj"), is a business corporation organized and existing under the laws of the State of New York with a Place of Business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Kenneth Jay Lane, Inc., d/b/a Kenneth Jay Lane ("Kenneth Jay Lane"), is a corporation organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Assoulin LTD., d/b/a Maurice Fine Jewelry, ("Maurice"), is a domestic corporation organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Qiviuk Boutique New York, Inc., d/b/a Qiviuk ("Qiviuk"), is a corporation organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Radu Physical Culture of New York, LLC, D/B/A Radu Physical Culture ("Radu"), is a limited of 76

13 liability comp-any organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Seize Sur Vingt Plaza LLC d/b/a Seize Sur Vingt ("Seize Sur"), is a limited liability company organized and existing under the laws of the State of New York with a Place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Stem by David Tutera Inc., d/b/a Stem by David Tutera ("David Tutera") is a corporation organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Warren Tricomi Madison Avenue LLC D/B/A The Plaza Beauty by Warren Tricomi ("Tricomi"), is a limited liability company organized and existing under the laws of the State of New York with a place of business 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Vertu USA Inc., d/b/a Vertu ("Vertu", together with CPS Events, Anna Hu, Assouline, Caudalie, Demel, Iradj, Kenneth Jay Lane, Maurice, Qiviuk, Radu, Seize Sur, David Tutera and Tricomi "Commercial Entities"), is a corporation organized and existing under the laws of the State of Delaware, doing business in the State of New York, with a place of business 768 Fifth Avenue, New York, New York of 76

14 52. Upon information and belief, at all times hereinafter mentioned, Defendant Hampshire Hotels Management LLC, is a limited liability company organized and existing under the laws of the State of New York with a place of business at 768 Fifth Avenue, New York, New York Upon information and belief, at all times hereinafter mentioned, Defendant Hampshire Hotels & Resorts Limited Liability Company is a limited liability company organized and existing under the laws of the State of New York with a place of business at 768 Fifth Avenue, New York, New York G. John Doe Defendants 54. John Doe No. 1 through 50, inclusive (the "Doe Defendants"), are or may be other persons or entities, unknown to Plaintiffs related to, associated with or responsible for the named parties, who (a) own in whole or in part, either directly or indirectly, any of the Non- Residential Units; (b) are tenants of any of the Non-Residential Units, including, for example the retail vendors located leasing space in the Accessory Unit; (c) failed or refused to design, construct, operate, maintain, activate, install and/or implement the utility metering systems necessary and required under the condominium documents to ensure that the usage and consumption of such utilities were properly allocated among the different sections of the Plaza Condominium, and (d) whose actions substantially damaged the Plaintiff in violation of New York State Law. JURISDICTION AND VENUE 55. This Court has personal jurisdiction over Defendants pursuant to CPLR 301 and 302. Defendants own, use, operate, maintain or possess real property situated in New York, of 76

15 conduct substantial business operations in New York, and the actions complained of arose in New York. 56. Venue is proper within this judicial county pursuant to CPLR 503 in that Plaintiff and Defendants are residents of New York County and the causes of action arose in New York County. FACTS COMMON TO ALL CAUSES OF ACTION A. The Development of the Condominium 57. The Plaza Hotel, one of the world's great hotels since it opened in 1907, is located at 768 Fifth Avenue, New York, New York, on a prominent site overlooking Central Park. In 1971, The New York Times architecture critic, Ada Louis Huxtable, called it "New York's most celebrated symbol of cosmopolitan and turn-of-the-century splendor, inside and out." The exterior was designated a New York City Landmark in In 2004, the El-Ad Entities and the Kingdom Entities or their affiliate(s) to which they are related to, associated with and responsible for acquired the land and building formerly known as The Plaza Hotel for $675,000,000, intending to renovate it and convert it to a luxury mixed-use condominium building comprised of: (a) A "Residential Section", originally including 181 residential apartments (the "Residential Units") located on portions of Floors 2 through 21, together with the entrance and lobby on the First Floor at Central Park South and certain other common elements including, among other things, 126 Storage Bins (collectively, the "Residential Limited Common Elements"); of 76

16 (b) A "Hotel Section", including: (i) a single commercial unit (the "Transient Hotel Unit") located on portions of Floors 4 through 10 of the Building and configured as 130 transient hotel guest rooms; and (ii) 152 individual hotel condominium apartments (the "Condo Hotel Units") located on portions of Floors 11 through 21 of the Building; together with the entrance and lobby on the First Floor at West 58th Street and certain common elements (such as lobbies, hallways, corridors and other service areas) in the Building serving both the Transient Hotel Unit and the Condo Hotel Units (collectively, the "Hotel Limited Common Elements"); (c) A commercial unit designated as an "Accessory Unit", located principally on portions of the Lower Concourse C, Main Concourse A, and Floors 1 through 4 of the Building; containing hotel accessory space, restaurants, banquet and meeting facilities, and retail space, accessed via Central Park South, Fifth Avenue and 58th Street; and (d) A commercial unit designated as a "Club Unit", located principally on portions of Main Concourse A and the First Floor of the Building; initially to be used as a health club and spa center. 59. The conversion, which took place over a period of years, required, among other things, major interior rehabilitation including replacing substantially all of the existing mechanical equipment, plumbing, and electrical systems. 60. On December 7, 2005, defendant CPS 1, as original Sponsor, filed a condominium offering plan for the sale of residential units and their appurtenant common of 76

17 elements within the Residential Section of the Condominium, as amended from time to time (the "Offering Plan"). 61. On or about March 13, 2006, defendant CPS 1 filed an Amended and Restated Declaration (the "Amended Declaration") with the Condominium By-Laws, Residential By- Laws, and Hotel By-Laws attached, as amended from time to time (collectively, the "Condominium Documents.") 62. The El-Ad Entities, Sahara Entities and Kingdom Entities have complete control and dominion over the Sponsor Defendant. 63. On or about December 5, 2012, the El-Ad Entities transferred their interest in The Plaza to the Sahara Entities. Upon information and belief, the Sahara Entities assumed responsibility, control, liability and dominion over all interest held by the El-Ad Entities in The Plaza. Upon information and belief, the El-Ad entities still retain ownership, control and dominion over certain portions or interests in The Plaza. 64. The Offering Plan has been amended, restated and updated on multiple occasions, and upon information and belief, the most recent amendments, restatements and updates to the Offering Plan took place in B. Allocation of Utility Charges Under the Offering Plan and Condominium Documents 65. The Offering Plan, Condominium Documents and Purchase Agreements expressly provide for the delivery, distribution and allocation of charges with respect to the utilities supplied to the Building of 76

18 66. Importantly, the Offering Plan, Condominium Documents and Purchase Agreements provide for metering and sub-metering systems for the Building's utilities, including, without limitation, electricity, chilled water, and condenser water, to ensure that costs associated with those utilities (except those related to the Common Elements of the Building) are allocated based on usage, not common interest. 67. Part I, Section A(6) of the Offering Plan defines "Plans and Specifications" as "[t]he plans and specifications for the renovation of the Building which (to the extent required by applicable Legal Requirements) have been or will be filed with the Department of Buildings and which may, from time to time, hereafter be amended in accordance with the provisions of the Plan." 68. Part I, Section P(1)(a) of the Offering Plan provides: Sponsor will perform such work and supply such materials, or will cause the same to be performed and supplied, as is necessary to complete the renovation of the Residential Section with a quality of construction comparable to the currently prevailing local standards and substantially in accordance with the Plans and Specifications for the work filed with the Department of Buildings of the City of New York and other appropriate governmental authorities... Sponsor is obligated to complete its renovations and construction in accordance with all applicable codes and filed building plans and specification. 69. Exhibit 4 to the Offering Plan, and incorporated therein, is a Description of Property and Building, (the "Property Description"). Part D of the Description describes the Utilities for the Building, including expressly providing for the metering and sub-metering of Electricity is provided by Consolidated Edison Company ("Con Edison"), a regulated company, and is direct metered to the of 76

19 Building. The electricity consumed by each Residential Unit (including the electricity required to power water-source heat pumps) is individually sub-metered by the Building. The electricity consumed in the Commercial Units will be separately sub-metered and paid for by the owners of such Units or their tenants. Finally, the electricity consumed in the common areas of the Building will be separately sub-metered and the cost of the same will be borne by the Unit Owners as a common expense and be allocated to each Unit as noted in the budget. 70. Part L of the Property Description describes the Building's Heating, Ventilation and Air Conditioning systems and expressly provides for the metering and sub-metering of chilled water and condenser water systems: 2. Air Conditioning Air conditioning is provided for all Residential Units by new water source heat pumps. Air conditioning for common areas will be provided by new chilled water air handling units and associated costs will be borne by all Unit Owners as a common expense. New roof mounted cooling towers and piping, via plate and frame heat exchangers, provide the heat rejection for the heat pump water loop. The associated condenser water will be sub-metered and the associated costs will be borne by all Unit Owners as a common expense. 3. Chilled Water/Condenser Water: Chilled water used in the central air conditioning systems serving Building common areas and Hotel and Club Units is produced by new electric centrifugal chillers having a total rated capacity of 1,140 tons. Chilled water used for the Building common areas and Hotel and Club Units will be metered, and costs allocated accordingly. The cost of chilled water for Residential Unit public areas (e.g. the main lobby) and allocated share of Building common areas will be borne by all Unit Owners as a common expense. ( The condenser water to 'be used by the chillers and the Commercial Units is produced by new cooling towers located on the roof. Condenser water use by the Commercial Units will be metered and of 76

20 associated costs will be borne by the Commercial Units or their tenants. 71. Part N of the Property Description describes the Building's Electrical Systems and expressly provides for the metering and sub-metering for the Commercial and Residential Section of the Condominium: Electric service is provided by Con Edison at 120/208 Volts, 3 phase, 4 wire to an electric Switchboard Room and distributed through various size service and distribution switches for the Residential Units and the Commercial Units...The Commercial Units will be separately sub-metered and all costs will be borne by the Commercial Units or their tenants. There will be sub-metering for common areas of the Building. Electric service will be provided to the Residential Units from new Electrical Closets located on every floor. Individual feeders, which will vary in capacity, will be run to each Residential Unit. Metering for each residential unit is sub-metered by the Condominium Board. 72. Part I, Section P(1)(a) of the Offering Plan prohibits Sponsor, including defendant CPS 1 or its successor, defendant Plaza Residential, from making any material changes to the Plan without disclosing it in a duly filed amendment to the Offering Plan. 73. Upon information and belief, there have been at least fourteen (14) amendments filed to the Offering Plan. In all amendments, the Sponsor represents that there were no material changes in the Offering Plan other than as set forth in the respective amendment. 74. Two of the amendments involved revisions to the Property Description. Both amendments (Ninth and Twelfth) indicated that the revisions to the. Property Description reflected changed specifications and/or materials that "are equal to or better than (or which are immaterially different from) those originally specified in the initial Description of Property and Building Condition Report." of 76

21 75. The Thirteenth Amendment to the Offering Plan included budgets for the first year of operation of the Residential Section and the Condominium overall. The Notes to the Residential Section budget explained how electricity charges, which were estimated at $260,135 for the year were calculated: Electricity for the entire Building will be purchased in bulk by the Condominium Board from Consolidated Edison. Usage of electricity within the Residential Section will be sub-metered by the Condominium Board and will be billed to the Residential Board based on total monthly consumption by the Residential Section as measured by its sub-meter. Each Residential Unit will in turn be separately sub sub-metered through a computerized sub metering system. The Residential Board will bill each Residential Unit for the cost of electricity consumed in such Unit Owner's Unit as reflected on such Unit Owner's sub sub-meter and will pay such charges to the Residential Board. The balance of the charges reflected on the sub meter for the Residential Section will represent the electricity for the Residential Limited Common Elements and the cost thereof will be borne by all Residential Unit Owners as a Residential Common Expense on the basis of each Residential Unit Owner's proportionate Common Interest. Additionally, the Condominium Board will sub-meter separately electricity consumed by the Condominium's central cooling plan. The cooling plant will have a meter measuring but consumption by the Residential Section as well as all other Units of the Condominium served by the central cooling plant. A portion of the electricity costs for the central cooling plan will be allocated to the Residential Section based on its proportionate btu consumption as reflected on its cooling plant btu meter, and such cost will be born by all Residential Unit Owners as a Residential Common Expense on the basis of each such Unit Owner's proportionate Common Interest. The projected total cost for electricity in this budget includes both electricity consumed to power the Residential Limited Common Elements and electricity allocated to the Residential 'Section from the central cooling plan of the Building of 76

22 76. Upon information and belief, the actual electrical charges paid by the Residential Section for the period of time set forth in the Notes of the Thirteenth Amendment were approximately $1,120, The Condominium By-Laws also expressly provides that charges related to electricity as well as chilled water and condenser water are based on usage and allocated among Residential Section, Hotel Section, Accessory Unit and Club Unit using meters and sub-meters. 78. Article 6, Section 6.4 of the Condominium By-Laws provides: "Utilities are provided and supplied to the Property and are distributed within the Building to each Utility Service Area and to the General Common Elements, and shall be paid for, as hereinafter set forth. For the purposes of this Section 6.4, a "Utility Service Area" means the Accessory Unit, the Club Unit, the Hotel Section and the Residential Section." part: 79. Section 6.4 of the Condominium By-Laws, as amended, also provides, in relevant Electricity. Electricity service for the Building will be provided by Consolidated Edison Company of New York, Inc. ("Con Ed") or other utility company/ies or supplier(s) from time to time serving the Property and distributed to and for each Utility Service Area. The Accessory Unit has its own direct Con Ed electricity meter and will be responsible for paying directly to Con Ed or the utility supplying such electricity for the usage therein. To the extent any portion of the Accessory Unit is not so directly metered, usage therein will be submetered or otherwise appropriately allocated and the Accessory Unit Owner will pay the costs thereof Electricity usage in the remainder of the Building will be measured through one or more direct electric meters; and then submetered to each of the Hotel Section, Residential Section, and Club Unit. Each of the Hotel Board, Residential Board and Club Unit Owner shall be required to make payment for electricity usage in its applicable portion of the Property in accordance with such meters or submeters to the Condominium Board which shall of 76

23 be responsible for paying the utility company/ies or supplier(s) supplying such electricity Chilled Water. Chilled water (for air conditioning) will be provided by the Condominium Board throughout the Building. Chilled water supplied to each Utility Service Area for the benefit of the applicable General Common Charge Obligor will be submetered by the Condominium Board; and each General Common Charge Obligor shall be required to make payment to the Condominium Board in respect of the allocated costs and charges therefor Utilities for General Common Elements. The usage and consumption of electricity, gas, domestic water, sewer service, chilled water, steam and any other utility by, for or in respect of the General Common Elements will be separately metered, submetered or otherwise determined and the costs and charges therefor will be allocated among the General Common Charge Obligors as a General Common Expense on the basis of Common Interest. C. The Marketing and Sale of the Residential Units 80. With the Offering Plan as a promotion tool, the Sponsor Defendants commenced selling residential units of the Condominium, after the Offering Plan became effective, and continued through the completion of the Building's construction and thereafter. Upon information and belief, the Sponsor Defendants are still continuing with sales for the Condominium through the date of this Complaint. The Sponsor Defendants are responsible for the costs associated with all unsold units. 81. The Sponsor Defendants and the Condominium Board controlled by the El-Ad Entities, Sahara Entities and Kingdom Entities knowingly concealed the defect in the design, construction, operation, maintenance, activation, installation of the Building's metering and submetering systems of 76

24 82. Despite the foregoing, the Sponsor Defendants never amended the Offering Plan to reflect the defects in the Building's metering and sub-metering systems or otherwise disclosed these conditions to persons purchasing units in the building. Thus, after the Building was completed, the Offering Plan came to contain material misrepresentations and intentional misleading statements as to the Building's true condition. 83. In essence, the Offering Plan and other promotional materials ceased to serve as accurate sources of information for potential purchasers who, like Plaintiff bought residential units in the Condominium. Yet, the Defendants continued to disseminate the Offering Plan in an effort to ensure that every unit of the Condominium was sold, and repeatedly represented in fourteen (14) amendments to the Offering Plan, that the Offering Plan was still accurate. 84. On or about December 14, 2010 the Plaintiff purchased residential unit 1304, Tax Map Info, Block 1274, Lot 1558 ("Premises") from the Sponsor Defendants. The Purchase Agreement references the Offering Plan and Condominium Documents as a means of establishing the operation and costs associated with ownership of the Premises. Upon information and belief the Purchase Agreements are the same for all unit purchases. D. The Condominium Board Improperly Allocates Utility Usage Based on Common Interest 85. The Condominium Board is controlled by the owners of the Hotel Section, Accessory Unit and Club Unit. The El-Ad Entities, Sahara Entities and Kingdom Entities have complete control and dominion over the Condominium Board. Upon information and belief, the El-Ad Entities and the Sahara Entities appointed three (3) Members of the Condominium Board and the Kingdom Entities appointed one (1) member of the Condominium Board of 76

25 86. The Condominium Board failed to ensure the Building's metering and submetering systems were properly designed, constructed, operated, maintained, activated, installed, implemented and in compliance with the Offering Plan and Condominium Documents. 87. The Condominium Board failed to properly utilize the Building's metering and sub-metering systems to ensure that the utility charges incurred by the Hotel Section, Accessory Unit, and Club Unit are allocated based their respective usage. 88. The Condominium Board improperly included utility charges incurred by the Non-Residential Units, including electricity, chilled water, and condenser water, as a Common Expense and grossly misallocated those costs to the Residential Section based on percentage common interest. 89. Prior to the Plaintiff commencing this action, the Condominium Board was provided with notice of the claims asserted herein. The Condominium Board refused to take any actions to resolve the claims asserted herein. 90. Defendants' gross, negligent, careless, reckless, wrongful, intentional and fraudulent actions resulted in the Plaintiff subsidizing the utility charges incurred by the Non- Residential Units within the Building, including, for example, the costs associated with the operation of the chilled water air conditioning system used by the Transient Hotel Unit and Condo Hotel Units and their tenants. 91. The Plaintiff asserts the claims herein pursuant to its authority under New York State law, derivatively on behalf of all residential unit owners and as an owner in fee title interest of residential unit of 76

26 FIRST CAUSE OF ACTION (Permanent Injunction Against the Condominium Board) 92. Plaintiff repeats and realleges each and every allegation contained heretofore as if fully set forth at length herein. 93. Pursuant to the Offering Plan, Condominium Documents and Purchase Agreements, the Condominium Board is required to allocate utility charges based on usage as calculated by the Building's metering and sub-metering systems. 94. The Condominium Board has failed and refused to properly design, construct, operate, maintain, activate, install and/or implement the metering and sub-metering systems required under the Offering Plan, Condominium Documents and Purchase Agreements, including BTU meters for the Building's central cooling system, to ensure that the utility charges incurred by the Hotel Section, Accessory Unit, and Club Unit are allocated based their respective usage. 95. The Condominium Board has failed to ensure the Sponsor Defendants properly designed, constructed, operated, maintained, activated, installed and/or implemented the metering and sub-metering systems required under the Offering Plan, Condominium Documents and Purchase Agreements, including BTU meters for the Building's central cooling system, to ensure that the utility charges incurred by the Hotel Section, Accessory Unit, and Club Unit are allocated based their respective usage. 96. The Condominium Board, instead, continues to grossly, negligently, carelessly, wrongfully, recklessly, unlawfully, intentionally and fraudulently misallocate utility costs of 76

27 incurred by the Non-Residential Unit owners to the Residential Section based on percentage of common interest. 97. The Condominium Board must be (i) directed to properly design, construct, operate, maintain, activate, install and/or implement the metering and sub-metering systems required under the Offering Plan, Condominium Documents and Purchase Agreements, including BTU meters for the Building's central cooling system, to ensure that the utility charges incurred by the Hotel Section, Accessory Unit, and Club Unit are allocated based on their respective usage, and (ii) enjoined from allocating the Non-Residential Unit utility charges to the Residential Section based on percentage of common interest. 98. The balance of the equities tips decidedly in Plaintiff's favor as the Plaintiff is continuing to be overcharged for utility services consumed by the Non-Residential Section of the Condominium. not granted. 99. Plaintiff will continue to sustain serious and irreparable injury if the injunction is 100. By reason of the foregoing, Plaintiff is entitled to a permanent injunction (i) directing and requiring the Condominium Board to properly design, construct, operate, maintain, activate, install and/or implement the metering and sub-metering systems required under the Offering Plan, Condominium Documents and Purchase Agreements, including BTU meters for the Building's central cooling system, (ii) ensuring that the usage and consumption of utilities are appropriately allocated among the different sections of the Condominium based their 1 respective usage, and (iii) enjoining the Condominium Board from allocating the Non- Residential Unit utility charges to the Residential Section based on percentage common interest of 76

28 SECOND CAUSE OF ACTION (Against the Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities, and Kingdom Entities for Conspiracy to Commit Fraud) 101. Plaintiff repeats and realleges each and every allegation contained heretofore as if fully set forth at length herein The Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities have engaged in a concerted and coordinated effort to inflate the value of their interests and assets in the Condominium by engaging in wrongful, intentional and fraudulent acts designed to decrease the value of the Plaintiff and residential unit owners assets The El-Ad Entities, Sahara Entities and Kingdom Entities have complete control and dominion over the Sponsor Defendants and the Condominium Board. The El-Ad Entities, Sahara Entities and Kingdom Entities have controlling stakes in the Sponsorship Defendants and Sponsorship Defendants are subsidiaries, affiliates and/or directly related to the El-Ad Entities, Sahara Entities and Kingdom Entities. The El-Ad Entities, Sahara Entities and Kingdom Entities have complete control and dominion over the Condominium Board, by among other things, appointing a majority of the Condominium Board The Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities conspired among themselves and with each other to, among other things: (a) cause the Residential Section to float the costs and operation of the Non-Residential Section of the Condominium by overcharging the Plaintiff and residential unit owners for utility services consumed by the Non-Residential Section; (b) conceal the true facts concerning the utility metering systems necdssary and required under the Offering Plan, Condominium Documents and Purchase Agreements to ensure that the usage and consumption of such utilities were of 76

29 appropriately allocated among the different sections of the mixed use Condominium; (c) avoid, and excuse the Sponsor Defendants responsibility for compliance with its obligations under the Offering Plan; (d) refuse to ensure the Sponsor Defendants complied with its obligations under the Offering Plan in direct breach and violation of the Condominium Documents and Purchase Agreements; (e) conceal any and all actions undertaken to overcharge the Residential Section from this wrongful, intentional, unlawful and fraudulent scheme to defraud the Plaintiff and all residential unit owners Upon information and belief, The Sponsor Defendants, Condominium Board, El- Ad Entities, Sahara Entities and Kingdom Entities have routinely had financial difficulty and been under significant financial distress concerning the their interest in the Condominium. These instances of continued financial distress, upon information and belief, caused the misappropriation of funds by the Sponsor Defendants. Upon information and belief, the Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities have concealed the misappropriation of funds by the Sponsor Defendants The Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities had a tacit agreement to defraud the Plaintiff and residential unit owners by failing to fulfill their obligations under the Offering Plan and Condominium documents, and by violating the Purchase Agreements, thereby causing the Plaintiff and residential unit owners to pay for the utility services consumed by the Non-Residential Section of the Condominium. The El-Ad Entities, Sahara Entities and Kingdom Entities complete dominion and control over the Sponsor Defendants and the Condominium Board ensured the Sponsor Defendant did not fulfill its obligations under the Offering Plan and Purchase Agreements and ensured the Condominium Board did not fulfill its obligations under the Condominium Documents of 76

30 107. The Condominium Board continued to wrongfully, intentionally, unlawfully and fraudulently overcharge the Plaintiff and residential unit owners for utility services consumed by the Non-Residential Section of the Condominium. The Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities willfully, intentionally and knowingly participated in a scheme to have the Plaintiff and residential unit owners pay for the Non-Residential Section utility consumption thereby decreasing the Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities ownership and operation costs in the Condominium The agreement by the Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities to overtly overcharge the Plaintiff and residential unit owners for consumption of utilities by the Non-Residential Section substantially decreased the value of the assets owned by the Plaintiff and residential unit owners. The increased costs associated with ownership of a residential unit in the Condominium under the scheme currently in place by the Sponsor Defendants, Condominium Board, El-Ad Entities, Sahara Entities and Kingdom Entities has substantially decreased the value of the Plaintiff and residential unit owners' assets The Sponsor Defendants, El-Ad Entities, Sahara Entities and Kingdom Entities have consistently been in financial distress and, have continually engaged in this scheme to increase the value of their assets as a means of extricating themselves from potential bankruptcy and foreclosure proceedings. The Sponsor Defendants, El-Ad Entities, Sahara Entities, and Kingdom Entities have continually thwarted any effort by the Plaintiff to have the Condominium Board fulfill its obligations under the Condominium Documents and have estopped the Condominium Board from ensuring the interests of the Plaintiff are protected of 76