There’s some testy litigation going on between the developer of the Vue project and a group of buyers who put down deposits in the San Pedro condo turned hybrid condo/rental building on Sixth Street. The complaint, filed last November against developer Beverly Hills-based Galaxy Commercial Holding (also behind the Blu rental project on Wilshire), was brought forth by a group of buyers who are arguing that the contracts are essentially invalid. The backstory, according to a source familiar with the case, is that many of these buyers couldn't close on the units for financial reasons (in some cases, it was because of tighter lending standards.) But given that the contracts these buyers signed didn't have financial contingency clauses, which would have allowed them to get out of the contracts, the complaint argues on a number of factors. Let's skip to the best allegation: Fraudulent marketing of the Vue's views.
Here’s the excerpt from the fraud section. It’s a good read:
"The developer defendants’ sales agents, press release, and website marketed the view from the Vue as “unmatched,” “unrivaled” and “amazing even from the lower floor” to induce Plaintiffs and the Class to pay a premium for their units at the condominium.
The developers sales agents stressed the Vue's beautiful views to convince Plantiffs and the Class to purchase their condominium properties at above-market prices.
The developers’ aggressive marketing of the Vue’s views was directly responsible for the high market prices of the Condominium units."
Additionally, the fraud section notes that the developers omitted facts from the marketing materials that they planned to build a second tower--known as the Vue blocker--right in front of the Vue building. Essentially, the suit alleges fraud, noting that if the developers hadn't omitted information, "the market prices of all Vie properties would have been substantially lower than the amounts they actually paid."
Meanwhile, in trying to get the contracts invalidated, the suit also references the Federal Interstate Land Sales Full Disclosure Act (ILSA), a 1968 law that requires developers to provide property reports to buyers. As a Nashville Post story pointed out, this law is increasingly being used in by buyers in lawsuits against condo projects in Florida and Nevada. Lawyers for those Roosevelt buyers also referenced the Federal Interstate Sales Act in their suit.
Neither the lawyer representing the buyers, nor the lawyer representing Galaxy would speak to us regarding the case. You can download the first page and the fraud section of the complaint here.
· San Pedro: Spoiling the View for the VUE [Curbed LA]
· Move It, Move It: San Pedro's Vue Now A Rental/Sales Hybrid [Curbed LA]
· Antitrust Cases Have Expanded Venue Choices [Judicial View; legal journal with related story on this lawsuit]