*1 Defendants PMG Sullivan Street LLC (PMG), KM Sullivan LLC (KMS), PMG Sullivan Construction LLC (Construction), and Kevin Maloney, along with nominal defendants PMG-Madison Sullivan Development LLC (Development), PMG-Madison Developer LLC (Developer), Sullivan Member LLC (Member), and Sullivan Condo LLC (Condo), move, pursuant to CPLR 3211, to dismiss the amended complaint (the AC). Plaintiff Madison Sullivan Partners LLC (Madison) opposes the motion. For the reasons that follow, defendants’ motion is granted.*2
I. Factual Background & Procedural HistoryAs this is a motion to dismiss, the facts recited are from the documentary evidence submitted by the parties and the AC (Dkt. 100).1This action concerns a joint venture between Madison and PMG to develop property located at 10 Sullivan Street in Manhattan (the Property). The joint venture was structured using the parties’ membership interests in various LLCs. That said, the undisputed economic reality of the parties’ investment is that Madison and PMG each had a 50 percent stake in the Project’s profits. In this action, Madison claims that PMG — who was responsible for the construction — did a shoddy job that caused delays and resulted in the Project generating $30 million less profit than expected (e.g., through added interest expenses owed to the lender due to the extra time needed to repay the Project’s debt).Madison’s claims are governed by the parties’ operating agreements, which contain classic exculpatory clauses for alleged malfeasance that amounts to mere negligence (as opposed, for instance, to gross negligence or intentional misconduct). These exculpatory clauses bar all of Madison’s claims for monetary damages. As discussed herein, Madison’s factual allegations and the documentary evidence refute Madison’s theory of the case — that PMG had an incentive to cause delay to generate more fees. No such excess fees were obtained. In fact, the scheme posited by Madison would reduce PMG’s own profit — the amount of which was identical to Madison’s share. The obvious alignment of the parties’ incentives, along with the clear documentary evidence, leaves Madison with nothing other than allegations of ordinary construction negligence. While such allegations might normally state a claim on which relief could be granted, the governing operating agreements’ exculpatory clause mandates dismissal.
