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January 2014: Appellate Victory for UniCredit Preventing Fraud Claims

January 2014

Quinn Emanuel recently won an appeal for client UniCredit S.p.A. in the New York Supreme Court, Appellate Division, First Department, preventing the plaintiff in a real estate transaction from asserting fraud claims.

The dispute arose out of the failed purchase of a combined hotel and condominium development at 400 Fifth Avenue in New City. UniCredit was the primary lender to the developer of the property, 400 Fifth Realty LLC, which had planned to sell the hotel and residential units to Honua Fifth Avenue LLC. Honua backed out of the deal and, in December 2009, brought suit seeking to reclaim a $45 million deposit that it had made toward the purchase and other relief. Soon after filing the complaint, Honua obtained a notice of pendency that would effectively prevent 400 Fifth from selling the property to a willing buyer. The original complaint did not include UniCredit, and the first amended complaint named UniCredit as a party but did not assert any causes of action against UniCredit.

The litigation proceeded for almost two years until October 2012, when 400 Fifth announced that it had found a new buyer and sought to cancel the notice of pendency. Honua took action and sought leave to amend to add fraud claims against both 400 Fifth and UniCredit. UniCredit denied that it committed any fraud and vigorously opposed the proposed fraud claims. The trial court held that it would cancel the notice of pendency upon the posting of an undertaking, and it denied Honua leave to amend. In November 2013, the Appellate Division affirmed the trial court in full, holding that Honua could not proceed with its proposed fraud claims because it had failed to plead fraud with particularity or to allege a cognizable injury.