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FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Index No. /2022
BRIAN STEMPECK,
as Trustee of The Stempeck-Miura Family Trust,
Date Filed: _________, 2022
dated April 3, 2019,
SUMMONS
Plaintiff,
Plaintiff designates New York County
-against-
as the place of trial pursuant to
TOWNHOUSE WEST 83RD, LLC, CARRIE CPLR 503 and 507.
CHIANG, and SPENCER TING,
Defendants.
TO THE ABOVE-NAMED DEFENDANT:
YOU ARE HEREBY SUMMONED to answer the Verified Complaint in this action
and to serve a copy of your answer, or if the Verified Complaint is not served with this
Summons, to serve a Notice of Appearance on Plaintiff's attorneys within twenty (20) days after
service of this Summons, exclusive of the day of service (or within thirty (30) days after service
is complete if this Summons is not personally delivered to you within the State of New York);
and in case of your failure to appear or answer, judgment will be taken against you by default for
the relief demanded in the Verified Complaint.
Dated: New York, New York
October 13, 2022
AKERMAN LLP
Attorneys for Plaintiff
/s/ Massimo F. D’Angelo__________
By: Massimo F. D’Angelo
1251 Avenue of the Americas, 37th Floor
New York, New York 10020
(212) 880-3800
massimo.dangelo@akerman.com
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DEFENDANTS’ ADDRESS(ES):
Townhouse West 83rd, LLC
c/o Carrie Chiang
200 East 69th Street, Apt. 39A
New York, New York 10021
Carrie Chiang
200 East 69th Street, Apt. 39A
New York, New York 10021
Spencer Ting
c/o Corcoran Group
590 Madison Ave
New York, New York 10022
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Index No. /2022
BRIAN STEMPECK,
as Trustee of The Stempeck-Miura Family Trust,
VERIFIED COMPLAINT
dated April 3, 2019,
Plaintiff,
-against-
TOWNHOUSE WEST 83RD LLC d/b/a
TOWNHOUSE WEST 83RD, LLC, CARRIE
CHIANG, and SPENCER TING,
Defendants.
Plaintiff BRIAN STEMPECK, as Trustee of The Stempeck-Miura Family Trust, dated
April 3, 2019 (“Plaintiff” or "Mr. Stempeck"), by his attorneys, Akerman LLP, for his verified
complaint against defendants TOWNHOUSE WEST 83RD, LLC d/b/a TOWNHOUSE WEST
83RD, LLC ("Townhouse"), CARRIE CHIANG ("Ms. Chiang"), and SPENCER TING (“Mr.
Ting”, and together with Ms. Chiang and Townhouse, "Defendants"), alleges as follows:
NATURE OF THIS ACTION
1. This lawsuit arises from a real estate transaction where the seller, acting together
with its real estate agents, who are also, upon information and belief, the seller's manager and
one of its principals, brazenly deceived the purchaser by concealing and misrepresenting the
property's condition to close a multi-million dollar sale, in clear violation of those parties' ethical
and legal obligations to the purchaser.
2. Mr. Stempeck, acting in his capacity as trustee for a family trust, entered into a
residential contract of sale, dated February 5, 2022 (the "Contract") to purchase the single-
family home located at 51 West 83rd Street, New York, New York 10024 (the "Property").
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3. The Property was owned by defendant Townhouse, a multi-member New York
LLC, which acquired the Property in 2013.
4. Upon information and belief, Townhouse is a "special purpose entity" of the type
commonly formed in real estate transactions for the purpose of owning a specific property.
5. Since Townhouse's formation in June, 2013, Ms. Chiang has been listed as
Townhouse's agent for service of process registered with the Department of State, Division of
Corporations.
6. Mr. Ting has been listed on numerous recorded mortgage and tax documents as
Townhouse's manager since 2013.
7. Mr. Ting has also acted as Ms. Chiang's agent pursuant to power of attorney
forms in connection with Townhouse obtaining mortgage financing at various times.
8. Upon information and belief, Ms. Chiang and Mr. Ting are Townhouse's owners
and principal members.
9. Upon information and belief, shortly after acquiring the Property in 2013,
Townhouse conducted an extensive renovation of the Property to convert it from a two (2)
family into a single-family home, including significant alterations to the Property's building
systems and interior layout, water, gas, and sewer piping, and particularly its heating and cooling
systems.
10. Ms. Chiang is a licensed real estate broker, and the leader of "The Carrie Chiang
Team" at the non-party Corcoran Group ("Corcoran").
11. On the Corcoran website, Ms. Chiang describes herself as "a master of complex
transactions," who "has sold more than 100 townhouses" while being "[r]enowned as the
industry's most successful, savvy, and sought-after real estate professional[.]"
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12. Mr. Ting is a licensed real estate salesperson, and upon information and belief,
worked with Ms. Chiang on her team at Corcoran during all relevant times.
13. Shortly after these renovations were "completed," Ms. Chiang listed the Property
for sale in 2015 as a newly-renovated, single-family home, through her team at Corcoran, for
more than double the 2013 purchase price.
14. In her 2015 listing for the Property, Ms. Chiang described the Property as follows:
"This beautifully crafted federal style single family red brick home
has undergone a complete renovation. The rare and outstanding
features of this superb and extraordinary light filled home includes
an expansive design which offers two levels of gardens and lofty
indoor/outdoor entertaining space while accommodating
generously sized bedrooms. Boasting over 6300sf, the house offers
5 bedrooms + staff room/7 full & 2 half bath, hydraulic elevator,
soaring ceilings, masterfully handcrafted box staircase filtering
natural light to the core of the house, a glass curtain wall, video
security system, central air/heat and wired for audio are just a few
features that make this house a dream home."
15. The Property was re-listed for sale by Ms. Chiang and Mr. Ting at various times
between 2015 and 2021, until being purchased by Plaintiff in 2022.
16. Upon information and belief, Ms. Chiang and Mr. Ting also listed the Property for
rent during several of those years, and rented it to tenants in 2020 and 2021.
17. Suffice to say, upon information and belief, from the time that Townhouse
acquired the Property in 2013, from the extensive renovations, managing the Property, multiple
rentals and attempted sales, through the date that Townhouse entered into the Contract, the
Defendants were well aware of the Property's condition.
18. The listing photos for the Property displayed by Ms. Chiang in her most recent
2021 sales listing on the Corcoran website reflected a beautiful, brand-new, completely
renovated townhouse.
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19. Mr. Stempeck became interested in the Property in late 2021, and contacted
Defendants to arrange a showing.
20. Mr. Stempeck had an inspector conduct a visual inspection, and prepare a visual
inspection report for the Property, in December, 2021. The report identified several potential
areas of concern, including what appeared to be evidence of a prior water leak near the hot water
heater.
21. The Defendants, and their agents, repeatedly reassured Mr. Stempeck that there
were no active leaks in the Property, and that there was no reason for concern regarding the
Property's condition, including all of the Property's heating and cooling systems, and water pipes,
all of which were in perfect working order.
22. Based upon that visual inspection, Mr. Stempeck's counsel negotiated a number of
provisions into the Contract, including the following paragraph R2:
Condition of Premises. Seller represents that the air conditioning,
hot water heater, plumbing, furnace, electrical systems, alarm
system, fireplaces, where applicable, and appliances included in
this sale will be in good working order and the roof free of leaks
and the basement will be free of standing water at time of closing
of title.
23. Furthermore, the Contract made clear that these Seller representations superseded
any of the other purported "disclaimers" concerning the purchaser's opportunity to inspect the
Property, or its "as is" condition, embodied in the Contract's form provisions or the seller's rider
appended thereto.
24. Based upon these material representations concerning the Property's condition,
Mr. Stempeck entered into the Contract.
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25. At the time of the closing, which took place remotely on May 4, 2022, Defendants
again represented, in sum and substance, that all of their representations set forth in the Contract
were still true.
26. In that regard, paragraph 16(a) of the Contract expressly stated that Seller
reaffirmed, as a condition of closing: "[t]he accuracy, as of the date of Closing, of the
representations and warranties of Seller made in this contract."
27. Furthermore, paragraph 16(e) of the Contract clearly represented to Mr. Stempeck
that, "[a]ll plumbing (including water supply and septic systems, if any), heating and air
conditioning, if any, electrical and mechanical systems, equipment and machinery .. . being in
working order as of the date of the Closing."
28. Mr. Stempeck and his family took possession of the Property shortly after the
closing in June, 2022.
29. Almost immediately, defects in the Property started to manifest.
30. The heating, ventilation, and cooling ("HVAC") system was defective and in
severe disrepair, and unable to cool the Property.
31. This HVAC system was particularly important, because it is a single, integrated
system that provides both cool air during the summer and heat during the winter.
32. The HVAC system is also a "ductless" system, which requires cleaning the air
filters on a regular basis so that they do not become clogged with dust and dirt, which would
render the system ineffective.
33. Astoundingly, Mr. Stempeck learned that the Defendants had covered up and
"walled in" all of the access panels necessary to change or clean the air filters.
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34. Upon information and belief, after the HVAC system was installed, between at
least 2015 and the summer of 2022, the air filters were literally never accessed, or cleaned, and
could not have been accessed or cleaned, because Defendants literally built walls over all of the
ducting where the filters would have been accessed.
35. Upon information and belief, the failure to maintain the HVAC system, or ever
change the air filters, has also damaged the HVAC system by shortening its lifespan, and is
evidence that no maintenance had ever taken place until the system had to be opened at Mr.
Stempeck's request post-closing to ascertain the reason for the system's failure.
36. When access panels were finally cut into the Property's walls to remedy this
problem, Mr. Stempeck learned that the HVAC ducting was not even properly connected in
many places, resulting in air blowing uselessly into walls and other cavities rather than heating or
cooling the Property.
37. This has likely resulted in significant energy inefficiencies and utility bills, all to
Mr. Stempeck's detriment.
38. Other defects were quickly uncovered that all proved the HVAC system was not
in the "good working order" condition required by the Contract:
a. Defendants installed 14 separate thermostats that were not linked into a central
heating or cooling control system;
b. The HVAC roof components were improperly mounted, and lacked adequate
clearance from walls and other components;
c. The HVAC system failed to remove humidity from the Property as a result of its
improper size relative to the Property;
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d. As a result of the improper HVAC size, condensation collected and pooled in
various locations in the Property;
e. Interior components of the HVAC were improperly mounted, resulting in
excessive vibration and noise; and
f. Testing revealed that the HVAC is incapable of properly heating the Property
during colder winter temperatures.
39. Taken together, these defects constitute insurmountable evidence of the
Defendants' misrepresentation that the HVAC was in "good working condition" at the time the
Contract was signed in February, 2022, and again at the closing in May, 2022.
40. During this time period, Mr. Stempeck also learned from Defendants' former
tenant, who lived in the Property during 2021 and 2022, that there had been repeated failures of
the HVAC system during their occupancy, resulting in several maintenance visits to attempt to
fix the HVAC, and extensive correspondence between Defendants and the tenant.
41. The tenant went so far as to describe the HVAC system as "constantly breaking
down."
42. Additionally, Mr. Stempeck learned that there had been repeated issues with leaks
into the Property along the entire rear façade, which resulted in warped, misaligned doors and
windows from water damage, and defective seals, all of which were represented as being in good
working order in the Contract.
43. The disconnected HVAC ducting inside walls, and deliberately covered up
HVAC filter access panels are all crystal-clear examples of deceptive practices that could not
have been discovered without extensive destructive testing to open the Property's walls and trace
every vent and duct.
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44. Defendants also installed an improper temperature release valve on the hot water
heater that initially raised concerns, which when replaced with a proper valve revealed that the
heater was leaking between one (1) to two (2) gallons of water per day into the Property's
basement.
45. Upon information and belief, the deception of plastering and painting over HVAC
access panels and unconnected ductwork is a clear example of Defendants' intentional
concealment of the Property's defecting, non-working HVAC, heating, cooling and other systems
and equipment throughout the house.
46. Defendants behavior during the December, 2021 visual inspection was now
revealed to be part of their strategy of concealing these issues.
47. Specifically, Mr. Ting repeatedly attempted to rush the visual inspection and
conclude it prematurely.
48. Ms. Chiang also called Mr. Stempeck's agent, and began berating her verbally in
front of Plaintiff's family member and the inspector, going so far as to scream at her concerning
the inspection.
49. This behavior was clearly designed to minimize the chances that the visual
inspection discovered Defendants' concealment of the Property's defective conditions.
50. Upon information and belief, Defendants concealed these issues, because no
reasonable buyer would ever close at the agreed-upon purchase price when their seller was in
breach of their contract's representations and the property was rife with defective systems and
appliances.
51. Concealing the HVAC problems, hot water heater, leaks, and rear façade damage
from Mr. Stempeck and his inspector was critical to Defendants "closing" on the sale and
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receiving both the purchase price, and, for Mr. Ting and Ms. Chiang, their portion of the sales
commission paid to Corcoran.
52. Having now obtained possession of the Property in summer 2022, and continuing
to uncovering Defendants' concealment of these issues, Mr. Stempeck has been left with a
defective HVAC system that has already cost more than $20,000 in repairs, to date, and will
require hundreds of thousands of dollars of additional repair and/or replacement costs, in
addition to the cost of repairs for the rear façade, various other leaking windows, and other issues
that were never properly disclosed or were concealed by the Defendants.
53. In fact, repair estimates for some (but not all) of the HVAC issues have ranged as
high as $786,000.00, and estimates for the façade repair are approximately $432,000.
54. Taken together, it is likely that Mr. Stempeck may be forced to spend more than
$1,000,000 to even begin to bring the Property, his family's home, into the condition that it
should have been in from the start of the transaction, pursuant to the Contract's express terms.
55. It is unconscionable that Defendants, by way of misrepresentation, concealment,
and other unethical and duplicitous practices, have harmed Mr. Stempeck in this manner.
56. Accordingly, Mr. Stempeck has been forced to bring this action to correct
Defendants' wrongdoing.
PARTIES
57. Plaintiff, trustee of The Stempeck-Miura Family Trust, dated April 3, 2019, is a
natural person, residing in the State of New York, County of New York.
58. Upon information and belief, Townhouse is a New York limited liability
company, having a principal place of business in the State of New York, County of New York.
59. Upon information and belief, Mr. Ting is a natural person, residing in the State of
New York, County of New York.
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60. Upon information and belief, Ms. Chiang is a natural person, residing in the State
of New York, County of New York.
JURISDICTION AND VENUE
61. The Court has subject matter jurisdiction over this action.
62. Venue in this County is proper pursuant to CPLR 503 because Defendant's
principal office is located in the county and pursuant to CPLR 507 because the real property in
this action is situated in the county.
FIRST CAUSE OF ACTION
(Breach of Contract by Townhouse)
63. Plaintiff repeats the allegations above as if set forth here.
64. The Contract is a valid contract.
65. Plaintiff has performed all or substantially all of its obligations under the
Contract.
66. Townhouse has breached the Contract by, inter alia, failing to deliver the
Property and its systems and/or appliances in good working order at the closing, pursuant to
paragraphs 16 and/or R2.
67. Among other things, Townhouse failed to deliver the Property's HVAC system in
good working order at closing.
68. Plaintiff has been directly and proximately injured, and deprived of its specific,
bargained-for rights and interests, pursuant to the Contract.
69. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount
to be determined at trial, but not less than $2,000,000.
SECOND CAUSE OF ACTION
(Breach of Implied Covenant of Good Faith and Fair Dealing)
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70. Plaintiff repeats the allegations above as if set forth here.
71. Implied in the Contract is a duty that Townhouse act in good faith and deal fairly
with Plaintiff.
72. Townhouse breached that implied covenant of good faith and fair dealing by,
among other things, taking active measures to conceal the HVAC system's myriad defects,
improper construction, and repeated failures, of which all Defendants were well aware.
73. Upon information and belief, Townhouse's breach of the implied covenant of
good faith and fair dealing is a result of Defendants' desire to close on the sale that Defendants
had sought since 2015, and finally reap the benefit of the sales proceeds and broker commissions
for Mr. Ting and Ms. Chiang.
74. As a direct and proximate result of Townhouse's breach, Plaintiff has suffered
damages in connection with the Property.
75. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount
to be determined by the Court, together with an award of punitive and exemplary damages.
THIRD CAUSE OF ACTION
(Attorney's fees)
76. Plaintiff repeats the allegations above as if set forth here.
77. The Contract's Rider provides in paragraph 16 for the prevailing party to be
awarded attorney's fees.
78. Plaintiff is therefore entitled to recover from Townhouse its reasonable attorneys'
fees, in the event it is deemed the prevailing party in this action.
79. Based on the forgoing, Plaintiff is entitled to a declaratory judgment that he is the
prevailing party in this action, and a monetary judgment in an amount of its reasonable attorneys'
fees and costs, to be determined by the Court.
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FOURTH CAUSE OF ACTION
(Fraudulent Misrepresentation - Townhouse)
80. Plaintiff repeats the allegations above as if set forth here.
81. Townhouse made multiple material misrepresentations and omissions of fact in
the Contract.
82. Specifically, Townhouse misrepresented that the Property's HVAC system was in
good working order, when Townhouse's manager Mr. Ting was well aware that there were grave
defects with the HVAC system, and that it had repeatedly stopped working in the past year
preceding entering into the Contract.
83. Additionally, Townhouse misrepresented that the plumbing, heating and air
conditioning, electrical and mechanical systems, equipment and machinery were in working
order.
84. Townhouse also failed to disclose the defects with the HVAC and other systems
of which tenants had notified Townhouse.
85. Townhouse also omitted the material fact that the rear façade of the Property had
suffered water leaks, resulting in damage on multiple prior occasions.
86. These material misrepresentations and omissions were made by Townhouse's
manager with knowledge of their falsity.
87. Townhouse intended to defraud Plaintiff by closing on the sale of the Property
when it knew or should have known that it had not complied with its own obligations.
88. Plaintiff reasonably relied on Townhouse's material misrepresentations.
89. Plaintiff has been directly and proximately injured, and deprived of its specific,
bargained-for rights and interests, pursuant to the Contract.
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90. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount
to be determined at trial, but not less than $5,000,000, together with an award of punitive and
exemplary damages.
FIFTH CAUSE OF ACTION
(Fraudulent Inducement – Mr. Ting)
91. Plaintiff repeats the allegations above as if set forth here.
92. Mr. Ting acted during this sales transaction in multiple capacities, including as a
real estate salesperson marketing the Property as a member of Ms. Chiang's team at Corcoran, as
the manager of Townhouse, and, upon information and belief, as either as principal of
Townhouse or as the agent for its principal, Ms. Chiang.
93. In these various capacities, Mr. Ting made multiple material misrepresentations
and omissions of fact, in his interactions with Plaintiff and Plaintiff's agent and other
representatives, including but not limited to Plaintiff's property inspector, and in the Contract.
94. Specifically, Mr. Ting repeatedly misrepresented that the Property's HVAC
system was in good working order, when he had personal knowledge, having served as property
manager since 2013, that the HVAC system, and likely other systems, were improperly installed
and defective, that the HVAC system's air filters had never been cleaned or maintained, and that
the HVAC system had repeatedly stopped working in the past year preceding entering into the
Contract.
95. Additionally, Mr. Ting repeatedly misrepresented that the plumbing, heating and
air conditioning, electrical and mechanical systems, equipment and machinery were in working
order.
96. Mr. Ting also failed to disclose the defects with the HVAC and other portions of
the Property which tenants had notified Townhouse were leaking and/or not working.
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97. Mr. Ting also omitted the material fact that the rear façade of the Property had
suffered water leaks, resulting in damage on multiple prior occasions.
98. These material misrepresentations and omissions were made by Mr. Ting with
knowledge of their falsity.
99. Mr. Ting made these material misstatements and omissions to Plaintiff, Plaintiff's
real estate agent, and Plaintiff's property inspector with the intend to defraud Plaintiff into
closing on the sale of the Property when he knew or should have known that Townhouse had not
complied with its own obligations.
100. Mr. Ting, upon information and belief, intended to profit from the sale of the
Property by receiving both a portion of the sales proceeds from Townhouse and/or Ms. Chiang,
and a portion of the real estate broker's commission paid to Corcoran.
101. Plaintiff reasonably relied on Mr. Ting's material misrepresentations.
102. Plaintiff has been directly and proximately injured, and deprived of its specific,
bargained-for rights and interests, pursuant to the Contract.
103. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount
to be determined at trial, but not less than $5,000,000, together with an award of punitive and
exemplary damages.
SIXTH CAUSE OF ACTION
(Fraudulent Inducement – Ms. Chiang)
104. Plaintiff repeats the allegations above as if set forth here.
105. Ms. Chiang acted during this sales transaction in multiple capacities, including as
one of Townhouse's principals and the company's members, and as the principal real estate
broker marking the Property for sale using her team at Corcoran.
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106. Upon information and belief, the strategy that resulted in the Property's serious
defects was Ms. Chiang's idea – she acquired the Property in 2013, converted it from a two (2)
family home to a (1) family home, "renovated" it with the defective HVAC system, leaking rear
façade, and then has tried since 2015 to sell the Property for almost double what she paid in
2013.
107. Upon information and belief, Ms. Chiang was well aware, either directly or
through Townhouse's manager, Mr. Ting (who acted as Ms. Chiang's agent to obtain financing
for the Property, and also listed himself as the Property's owner in certain Department of
Buildings filings), of the defects in the Property that had arisen over the years, and the fact that
the HVAC system was a major problem.
108. In these various capacities, Ms. Chiang, either directly or through her agents and
affiliates, made or caused others to make multiple material misrepresentations and omissions of
fact, both in the Contract, and in her interactions with Plaintiff and Plaintiff's agent and other
representatives, with the clear objective of finally selling the Property.
109. Specifically, Ms. Chiang repeatedly misrepresented that the Property's HVAC
system was in good working order, when she had personal knowledge that the HVAC system,
and likely other systems, were improperly installed and defective, that the HVAC system's air
filters had never been cleaned or maintained, and that the HVAC system had repeatedly stopped
working in the past year preceding entering into the Contract.
110. Additionally, Ms. Chiang repeatedly misrepresented that the plumbing, heating
and air conditioning, electrical and mechanical systems, equipment and machinery were in
working order, and caused Townhouse to make similar misrepresentations in the Contract.
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FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No. /2022 BRIAN STEMPECK, as Trustee of The Stempeck-Miura Family Trust, Date Filed: _________, 2022 dated April 3, 2019, SUMMONS Plaintiff, Plaintiff designates New York County -against- as the place of trial pursuant to TOWNHOUSE WEST 83RD, LLC, CARRIE CPLR 503 and 507. CHIANG, and SPENCER TING, Defendants. TO THE ABOVE-NAMED DEFENDANT: YOU ARE HEREBY SUMMONED to answer the Verified Complaint in this action and to serve a copy of your answer, or if the Verified Complaint is not served with this Summons, to serve a Notice of Appearance on Plaintiff's attorneys within twenty (20) days after service of this Summons, exclusive of the day of service (or within thirty (30) days after service is complete if this Summons is not personally delivered to you within the State of New York); and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Verified Complaint. Dated: New York, New York October 13, 2022 AKERMAN LLP Attorneys for Plaintiff /s/ Massimo F. D’Angelo__________ By: Massimo F. D’Angelo 1251 Avenue of the Americas, 37th Floor New York, New York 10020 (212) 880-3800 massimo.dangelo@akerman.com Verified Complaint 1 1 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 DEFENDANTS’ ADDRESS(ES): Townhouse West 83rd, LLC c/o Carrie Chiang 200 East 69th Street, Apt. 39A New York, New York 10021 Carrie Chiang 200 East 69th Street, Apt. 39A New York, New York 10021 Spencer Ting c/o Corcoran Group 590 Madison Ave New York, New York 10022 Verified Complaint 2 2 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No. /2022 BRIAN STEMPECK, as Trustee of The Stempeck-Miura Family Trust, VERIFIED COMPLAINT dated April 3, 2019, Plaintiff, -against- TOWNHOUSE WEST 83RD LLC d/b/a TOWNHOUSE WEST 83RD, LLC, CARRIE CHIANG, and SPENCER TING, Defendants. Plaintiff BRIAN STEMPECK, as Trustee of The Stempeck-Miura Family Trust, dated April 3, 2019 (“Plaintiff” or "Mr. Stempeck"), by his attorneys, Akerman LLP, for his verified complaint against defendants TOWNHOUSE WEST 83RD, LLC d/b/a TOWNHOUSE WEST 83RD, LLC ("Townhouse"), CARRIE CHIANG ("Ms. Chiang"), and SPENCER TING (“Mr. Ting”, and together with Ms. Chiang and Townhouse, "Defendants"), alleges as follows: NATURE OF THIS ACTION 1. This lawsuit arises from a real estate transaction where the seller, acting together with its real estate agents, who are also, upon information and belief, the seller's manager and one of its principals, brazenly deceived the purchaser by concealing and misrepresenting the property's condition to close a multi-million dollar sale, in clear violation of those parties' ethical and legal obligations to the purchaser. 2. Mr. Stempeck, acting in his capacity as trustee for a family trust, entered into a residential contract of sale, dated February 5, 2022 (the "Contract") to purchase the single- family home located at 51 West 83rd Street, New York, New York 10024 (the "Property"). Verified Complaint 3 3 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 3. The Property was owned by defendant Townhouse, a multi-member New York LLC, which acquired the Property in 2013. 4. Upon information and belief, Townhouse is a "special purpose entity" of the type commonly formed in real estate transactions for the purpose of owning a specific property. 5. Since Townhouse's formation in June, 2013, Ms. Chiang has been listed as Townhouse's agent for service of process registered with the Department of State, Division of Corporations. 6. Mr. Ting has been listed on numerous recorded mortgage and tax documents as Townhouse's manager since 2013. 7. Mr. Ting has also acted as Ms. Chiang's agent pursuant to power of attorney forms in connection with Townhouse obtaining mortgage financing at various times. 8. Upon information and belief, Ms. Chiang and Mr. Ting are Townhouse's owners and principal members. 9. Upon information and belief, shortly after acquiring the Property in 2013, Townhouse conducted an extensive renovation of the Property to convert it from a two (2) family into a single-family home, including significant alterations to the Property's building systems and interior layout, water, gas, and sewer piping, and particularly its heating and cooling systems. 10. Ms. Chiang is a licensed real estate broker, and the leader of "The Carrie Chiang Team" at the non-party Corcoran Group ("Corcoran"). 11. On the Corcoran website, Ms. Chiang describes herself as "a master of complex transactions," who "has sold more than 100 townhouses" while being "[r]enowned as the industry's most successful, savvy, and sought-after real estate professional[.]" Verified Complaint 4 4 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 12. Mr. Ting is a licensed real estate salesperson, and upon information and belief, worked with Ms. Chiang on her team at Corcoran during all relevant times. 13. Shortly after these renovations were "completed," Ms. Chiang listed the Property for sale in 2015 as a newly-renovated, single-family home, through her team at Corcoran, for more than double the 2013 purchase price. 14. In her 2015 listing for the Property, Ms. Chiang described the Property as follows: "This beautifully crafted federal style single family red brick home has undergone a complete renovation. The rare and outstanding features of this superb and extraordinary light filled home includes an expansive design which offers two levels of gardens and lofty indoor/outdoor entertaining space while accommodating generously sized bedrooms. Boasting over 6300sf, the house offers 5 bedrooms + staff room/7 full & 2 half bath, hydraulic elevator, soaring ceilings, masterfully handcrafted box staircase filtering natural light to the core of the house, a glass curtain wall, video security system, central air/heat and wired for audio are just a few features that make this house a dream home." 15. The Property was re-listed for sale by Ms. Chiang and Mr. Ting at various times between 2015 and 2021, until being purchased by Plaintiff in 2022. 16. Upon information and belief, Ms. Chiang and Mr. Ting also listed the Property for rent during several of those years, and rented it to tenants in 2020 and 2021. 17. Suffice to say, upon information and belief, from the time that Townhouse acquired the Property in 2013, from the extensive renovations, managing the Property, multiple rentals and attempted sales, through the date that Townhouse entered into the Contract, the Defendants were well aware of the Property's condition. 18. The listing photos for the Property displayed by Ms. Chiang in her most recent 2021 sales listing on the Corcoran website reflected a beautiful, brand-new, completely renovated townhouse. Verified Complaint 5 5 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 19. Mr. Stempeck became interested in the Property in late 2021, and contacted Defendants to arrange a showing. 20. Mr. Stempeck had an inspector conduct a visual inspection, and prepare a visual inspection report for the Property, in December, 2021. The report identified several potential areas of concern, including what appeared to be evidence of a prior water leak near the hot water heater. 21. The Defendants, and their agents, repeatedly reassured Mr. Stempeck that there were no active leaks in the Property, and that there was no reason for concern regarding the Property's condition, including all of the Property's heating and cooling systems, and water pipes, all of which were in perfect working order. 22. Based upon that visual inspection, Mr. Stempeck's counsel negotiated a number of provisions into the Contract, including the following paragraph R2: Condition of Premises. Seller represents that the air conditioning, hot water heater, plumbing, furnace, electrical systems, alarm system, fireplaces, where applicable, and appliances included in this sale will be in good working order and the roof free of leaks and the basement will be free of standing water at time of closing of title. 23. Furthermore, the Contract made clear that these Seller representations superseded any of the other purported "disclaimers" concerning the purchaser's opportunity to inspect the Property, or its "as is" condition, embodied in the Contract's form provisions or the seller's rider appended thereto. 24. Based upon these material representations concerning the Property's condition, Mr. Stempeck entered into the Contract. Verified Complaint 6 6 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 25. At the time of the closing, which took place remotely on May 4, 2022, Defendants again represented, in sum and substance, that all of their representations set forth in the Contract were still true. 26. In that regard, paragraph 16(a) of the Contract expressly stated that Seller reaffirmed, as a condition of closing: "[t]he accuracy, as of the date of Closing, of the representations and warranties of Seller made in this contract." 27. Furthermore, paragraph 16(e) of the Contract clearly represented to Mr. Stempeck that, "[a]ll plumbing (including water supply and septic systems, if any), heating and air conditioning, if any, electrical and mechanical systems, equipment and machinery .. . being in working order as of the date of the Closing." 28. Mr. Stempeck and his family took possession of the Property shortly after the closing in June, 2022. 29. Almost immediately, defects in the Property started to manifest. 30. The heating, ventilation, and cooling ("HVAC") system was defective and in severe disrepair, and unable to cool the Property. 31. This HVAC system was particularly important, because it is a single, integrated system that provides both cool air during the summer and heat during the winter. 32. The HVAC system is also a "ductless" system, which requires cleaning the air filters on a regular basis so that they do not become clogged with dust and dirt, which would render the system ineffective. 33. Astoundingly, Mr. Stempeck learned that the Defendants had covered up and "walled in" all of the access panels necessary to change or clean the air filters. Verified Complaint 7 7 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 34. Upon information and belief, after the HVAC system was installed, between at least 2015 and the summer of 2022, the air filters were literally never accessed, or cleaned, and could not have been accessed or cleaned, because Defendants literally built walls over all of the ducting where the filters would have been accessed. 35. Upon information and belief, the failure to maintain the HVAC system, or ever change the air filters, has also damaged the HVAC system by shortening its lifespan, and is evidence that no maintenance had ever taken place until the system had to be opened at Mr. Stempeck's request post-closing to ascertain the reason for the system's failure. 36. When access panels were finally cut into the Property's walls to remedy this problem, Mr. Stempeck learned that the HVAC ducting was not even properly connected in many places, resulting in air blowing uselessly into walls and other cavities rather than heating or cooling the Property. 37. This has likely resulted in significant energy inefficiencies and utility bills, all to Mr. Stempeck's detriment. 38. Other defects were quickly uncovered that all proved the HVAC system was not in the "good working order" condition required by the Contract: a. Defendants installed 14 separate thermostats that were not linked into a central heating or cooling control system; b. The HVAC roof components were improperly mounted, and lacked adequate clearance from walls and other components; c. The HVAC system failed to remove humidity from the Property as a result of its improper size relative to the Property; Verified Complaint 8 8 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 d. As a result of the improper HVAC size, condensation collected and pooled in various locations in the Property; e. Interior components of the HVAC were improperly mounted, resulting in excessive vibration and noise; and f. Testing revealed that the HVAC is incapable of properly heating the Property during colder winter temperatures. 39. Taken together, these defects constitute insurmountable evidence of the Defendants' misrepresentation that the HVAC was in "good working condition" at the time the Contract was signed in February, 2022, and again at the closing in May, 2022. 40. During this time period, Mr. Stempeck also learned from Defendants' former tenant, who lived in the Property during 2021 and 2022, that there had been repeated failures of the HVAC system during their occupancy, resulting in several maintenance visits to attempt to fix the HVAC, and extensive correspondence between Defendants and the tenant. 41. The tenant went so far as to describe the HVAC system as "constantly breaking down." 42. Additionally, Mr. Stempeck learned that there had been repeated issues with leaks into the Property along the entire rear façade, which resulted in warped, misaligned doors and windows from water damage, and defective seals, all of which were represented as being in good working order in the Contract. 43. The disconnected HVAC ducting inside walls, and deliberately covered up HVAC filter access panels are all crystal-clear examples of deceptive practices that could not have been discovered without extensive destructive testing to open the Property's walls and trace every vent and duct. Verified Complaint 9 9 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 44. Defendants also installed an improper temperature release valve on the hot water heater that initially raised concerns, which when replaced with a proper valve revealed that the heater was leaking between one (1) to two (2) gallons of water per day into the Property's basement. 45. Upon information and belief, the deception of plastering and painting over HVAC access panels and unconnected ductwork is a clear example of Defendants' intentional concealment of the Property's defecting, non-working HVAC, heating, cooling and other systems and equipment throughout the house. 46. Defendants behavior during the December, 2021 visual inspection was now revealed to be part of their strategy of concealing these issues. 47. Specifically, Mr. Ting repeatedly attempted to rush the visual inspection and conclude it prematurely. 48. Ms. Chiang also called Mr. Stempeck's agent, and began berating her verbally in front of Plaintiff's family member and the inspector, going so far as to scream at her concerning the inspection. 49. This behavior was clearly designed to minimize the chances that the visual inspection discovered Defendants' concealment of the Property's defective conditions. 50. Upon information and belief, Defendants concealed these issues, because no reasonable buyer would ever close at the agreed-upon purchase price when their seller was in breach of their contract's representations and the property was rife with defective systems and appliances. 51. Concealing the HVAC problems, hot water heater, leaks, and rear façade damage from Mr. Stempeck and his inspector was critical to Defendants "closing" on the sale and Verified Complaint 10 10 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 receiving both the purchase price, and, for Mr. Ting and Ms. Chiang, their portion of the sales commission paid to Corcoran. 52. Having now obtained possession of the Property in summer 2022, and continuing to uncovering Defendants' concealment of these issues, Mr. Stempeck has been left with a defective HVAC system that has already cost more than $20,000 in repairs, to date, and will require hundreds of thousands of dollars of additional repair and/or replacement costs, in addition to the cost of repairs for the rear façade, various other leaking windows, and other issues that were never properly disclosed or were concealed by the Defendants. 53. In fact, repair estimates for some (but not all) of the HVAC issues have ranged as high as $786,000.00, and estimates for the façade repair are approximately $432,000. 54. Taken together, it is likely that Mr. Stempeck may be forced to spend more than $1,000,000 to even begin to bring the Property, his family's home, into the condition that it should have been in from the start of the transaction, pursuant to the Contract's express terms. 55. It is unconscionable that Defendants, by way of misrepresentation, concealment, and other unethical and duplicitous practices, have harmed Mr. Stempeck in this manner. 56. Accordingly, Mr. Stempeck has been forced to bring this action to correct Defendants' wrongdoing. PARTIES 57. Plaintiff, trustee of The Stempeck-Miura Family Trust, dated April 3, 2019, is a natural person, residing in the State of New York, County of New York. 58. Upon information and belief, Townhouse is a New York limited liability company, having a principal place of business in the State of New York, County of New York. 59. Upon information and belief, Mr. Ting is a natural person, residing in the State of New York, County of New York. Verified Complaint 11 11 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 60. Upon information and belief, Ms. Chiang is a natural person, residing in the State of New York, County of New York. JURISDICTION AND VENUE 61. The Court has subject matter jurisdiction over this action. 62. Venue in this County is proper pursuant to CPLR 503 because Defendant's principal office is located in the county and pursuant to CPLR 507 because the real property in this action is situated in the county. FIRST CAUSE OF ACTION (Breach of Contract by Townhouse) 63. Plaintiff repeats the allegations above as if set forth here. 64. The Contract is a valid contract. 65. Plaintiff has performed all or substantially all of its obligations under the Contract. 66. Townhouse has breached the Contract by, inter alia, failing to deliver the Property and its systems and/or appliances in good working order at the closing, pursuant to paragraphs 16 and/or R2. 67. Among other things, Townhouse failed to deliver the Property's HVAC system in good working order at closing. 68. Plaintiff has been directly and proximately injured, and deprived of its specific, bargained-for rights and interests, pursuant to the Contract. 69. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount to be determined at trial, but not less than $2,000,000. SECOND CAUSE OF ACTION (Breach of Implied Covenant of Good Faith and Fair Dealing) Verified Complaint 12 12 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 70. Plaintiff repeats the allegations above as if set forth here. 71. Implied in the Contract is a duty that Townhouse act in good faith and deal fairly with Plaintiff. 72. Townhouse breached that implied covenant of good faith and fair dealing by, among other things, taking active measures to conceal the HVAC system's myriad defects, improper construction, and repeated failures, of which all Defendants were well aware. 73. Upon information and belief, Townhouse's breach of the implied covenant of good faith and fair dealing is a result of Defendants' desire to close on the sale that Defendants had sought since 2015, and finally reap the benefit of the sales proceeds and broker commissions for Mr. Ting and Ms. Chiang. 74. As a direct and proximate result of Townhouse's breach, Plaintiff has suffered damages in connection with the Property. 75. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount to be determined by the Court, together with an award of punitive and exemplary damages. THIRD CAUSE OF ACTION (Attorney's fees) 76. Plaintiff repeats the allegations above as if set forth here. 77. The Contract's Rider provides in paragraph 16 for the prevailing party to be awarded attorney's fees. 78. Plaintiff is therefore entitled to recover from Townhouse its reasonable attorneys' fees, in the event it is deemed the prevailing party in this action. 79. Based on the forgoing, Plaintiff is entitled to a declaratory judgment that he is the prevailing party in this action, and a monetary judgment in an amount of its reasonable attorneys' fees and costs, to be determined by the Court. Verified Complaint 13 13 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 FOURTH CAUSE OF ACTION (Fraudulent Misrepresentation - Townhouse) 80. Plaintiff repeats the allegations above as if set forth here. 81. Townhouse made multiple material misrepresentations and omissions of fact in the Contract. 82. Specifically, Townhouse misrepresented that the Property's HVAC system was in good working order, when Townhouse's manager Mr. Ting was well aware that there were grave defects with the HVAC system, and that it had repeatedly stopped working in the past year preceding entering into the Contract. 83. Additionally, Townhouse misrepresented that the plumbing, heating and air conditioning, electrical and mechanical systems, equipment and machinery were in working order. 84. Townhouse also failed to disclose the defects with the HVAC and other systems of which tenants had notified Townhouse. 85. Townhouse also omitted the material fact that the rear façade of the Property had suffered water leaks, resulting in damage on multiple prior occasions. 86. These material misrepresentations and omissions were made by Townhouse's manager with knowledge of their falsity. 87. Townhouse intended to defraud Plaintiff by closing on the sale of the Property when it knew or should have known that it had not complied with its own obligations. 88. Plaintiff reasonably relied on Townhouse's material misrepresentations. 89. Plaintiff has been directly and proximately injured, and deprived of its specific, bargained-for rights and interests, pursuant to the Contract. Verified Complaint 14 14 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 90. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount to be determined at trial, but not less than $5,000,000, together with an award of punitive and exemplary damages. FIFTH CAUSE OF ACTION (Fraudulent Inducement – Mr. Ting) 91. Plaintiff repeats the allegations above as if set forth here. 92. Mr. Ting acted during this sales transaction in multiple capacities, including as a real estate salesperson marketing the Property as a member of Ms. Chiang's team at Corcoran, as the manager of Townhouse, and, upon information and belief, as either as principal of Townhouse or as the agent for its principal, Ms. Chiang. 93. In these various capacities, Mr. Ting made multiple material misrepresentations and omissions of fact, in his interactions with Plaintiff and Plaintiff's agent and other representatives, including but not limited to Plaintiff's property inspector, and in the Contract. 94. Specifically, Mr. Ting repeatedly misrepresented that the Property's HVAC system was in good working order, when he had personal knowledge, having served as property manager since 2013, that the HVAC system, and likely other systems, were improperly installed and defective, that the HVAC system's air filters had never been cleaned or maintained, and that the HVAC system had repeatedly stopped working in the past year preceding entering into the Contract. 95. Additionally, Mr. Ting repeatedly misrepresented that the plumbing, heating and air conditioning, electrical and mechanical systems, equipment and machinery were in working order. 96. Mr. Ting also failed to disclose the defects with the HVAC and other portions of the Property which tenants had notified Townhouse were leaking and/or not working. Verified Complaint 15 15 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 97. Mr. Ting also omitted the material fact that the rear façade of the Property had suffered water leaks, resulting in damage on multiple prior occasions. 98. These material misrepresentations and omissions were made by Mr. Ting with knowledge of their falsity. 99. Mr. Ting made these material misstatements and omissions to Plaintiff, Plaintiff's real estate agent, and Plaintiff's property inspector with the intend to defraud Plaintiff into closing on the sale of the Property when he knew or should have known that Townhouse had not complied with its own obligations. 100. Mr. Ting, upon information and belief, intended to profit from the sale of the Property by receiving both a portion of the sales proceeds from Townhouse and/or Ms. Chiang, and a portion of the real estate broker's commission paid to Corcoran. 101. Plaintiff reasonably relied on Mr. Ting's material misrepresentations. 102. Plaintiff has been directly and proximately injured, and deprived of its specific, bargained-for rights and interests, pursuant to the Contract. 103. Based on the forgoing, Plaintiff is entitled to a monetary judgment in an amount to be determined at trial, but not less than $5,000,000, together with an award of punitive and exemplary damages. SIXTH CAUSE OF ACTION (Fraudulent Inducement – Ms. Chiang) 104. Plaintiff repeats the allegations above as if set forth here. 105. Ms. Chiang acted during this sales transaction in multiple capacities, including as one of Townhouse's principals and the company's members, and as the principal real estate broker marking the Property for sale using her team at Corcoran. Verified Complaint 16 16 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 10/25/2022 106. Upon information and belief, the strategy that resulted in the Property's serious defects was Ms. Chiang's idea – she acquired the Property in 2013, converted it from a two (2) family home to a (1) family home, "renovated" it with the defective HVAC system, leaking rear façade, and then has tried since 2015 to sell the Property for almost double what she paid in 2013. 107. Upon information and belief, Ms. Chiang was well aware, either directly or through Townhouse's manager, Mr. Ting (who acted as Ms. Chiang's agent to obtain financing for the Property, and also listed himself as the Property's owner in certain Department of Buildings filings), of the defects in the Property that had arisen over the years, and the fact that the HVAC system was a major problem. 108. In these various capacities, Ms. Chiang, either directly or through her agents and affiliates, made or caused others to make multiple material misrepresentations and omissions of fact, both in the Contract, and in her interactions with Plaintiff and Plaintiff's agent and other representatives, with the clear objective of finally selling the Property. 109. Specifically, Ms. Chiang repeatedly misrepresented that the Property's HVAC system was in good working order, when she had personal knowledge that the HVAC system, and likely other systems, were improperly installed and defective, that the HVAC system's air filters had never been cleaned or maintained, and that the HVAC system had repeatedly stopped working in the past year preceding entering into the Contract. 110. Additionally, Ms. Chiang repeatedly misrepresented that the plumbing, heating and air conditioning, electrical and mechanical systems, equipment and machinery were in working order, and caused Townhouse to make similar misrepresentations in the Contract. Verified Complaint 17 17 of 20 FILED: NEW YORK COUNTY CLERK 10/25/2022 10:07 AM INDEX NO. 159092/2022