DOWNTOWN — The Brooklyn Tabernacle’s lawsuit against developer Thor 180 Livingston LLC will move forward after a state appeals court upheld the church’s claims that Thor breached a $51 million real estate contract and engaged in fraud during a long-delayed property transfer on Livingston Street in Downtown Brooklyn.
In a unanimous decision issued Oct. 8, the Appellate Division, Second Department, affirmed the 2021 ruling by Kings County Supreme Court Justice Loren Baily-Schiffman denying Thor’s motion to dismiss the case under CPLR 3211(a).
That rule lets a defendant ask the court to throw out a lawsuit early if the complaint doesn’t state a valid legal claim or if documents clearly prove the claims are false.
The decision means the church may proceed with its breach of contract, fraud and unjust enrichment claims against Thor 180 Livingston LLC and Thor Management Co. LLC.
The case stems from a March 2015 sale in which the Brooklyn Tabernacle agreed to sell its large condominium unit at 180 Livingston Street to Thor for $51 million.
Under the sale-purchase agreement, Thor was required to obtain government approval to create a separate condominium unit, called the “Church Unit,” consisting of the church’s sanctuary space in the basement and part of the first floor.
Thor also agreed to reconvey that new church unit back to the Tabernacle for no additional cost within one year of the closing.
The sale closed in October 2015, but according to the church, Thor failed to complete the subdivision or return title to the church unit within the required timeframe.
The complaint alleges that Thor instead withheld delivery of the deed until 2019, using the delay to demand concessions not contained in the original contract, including a separate “development agreement” defining Thor’s continuing rights in the building and a payment of $143,021 for Thor’s title insurance costs.
Thor denied any wrongdoing and asked the court to dismiss the case, arguing that the 2015 sale could no longer be challenged because of the merger doctrine.
Under that rule, once a property deed is delivered, the deed replaces the contract, and the buyer generally can’t bring claims based on the earlier agreement unless the contract specifically says those promises survive the closing.
The appellate court, however, found that the merger doctrine did not conclusively defeat the church’s claims because section 26 of the parties’ sale agreement explicitly stated that their obligations would survive closing.
The panel wrote that “at a minimum, the issue of whether, under the merger doctrine, the parties’ obligations survived the 2019 closing is ambiguous.” The court also held that the doctrine does not apply to claims based on fraud.
In the complaint, the church alleges that Thor misrepresented its intent to complete the subdivision and return the deed promptly and later falsely claimed to have waived construction rights in the basement to induce the church to perform costly renovations and sign the 2019 development agreement.
“The allegations in the amended complaint were sufficient to allege a material misrepresentation of fact,” the panel wrote, citing the church’s claims that Thor “falsely promised” to complete the subdivision and “coerced the church into entering” the later agreement.
The court further rejected Thor’s argument that the unjust enrichment claim should be dismissed under the voluntary payment doctrine, which bars recovery of payments made voluntarily with full knowledge of the facts.
The justices said the issue of whether the church’s payment of Thor’s title insurance costs was voluntary presented a question of fact that could not be resolved on a motion to dismiss.
With the appeal decided, the case returns to the Kings County Supreme Court for further proceedings.
The Brooklyn Tabernacle, known for its Grammy-winning choir and prominent location near Fulton Mall, has worshiped in the 180 Livingston Street space for more than two decades.
Thor 180 Livingston, LLC is an affiliate of Thor Equities, a Manhattan-based development firm led by Joseph Sitt with holdings throughout New York City.
