An Eastchester developer claims that a construction manager billed it for insurance that actually covered 28 other projects and concealed the true costs for more than two years.
CR Myrtle Properties accused DCBE Contracting Inc., North White Plains, and Levitt-Fuirst Associates Ltd., a Tarrytown insurance broker, with fraud, in a May 3 complaint filed in Westchester Supreme Court.
DCBE and Levitt-Fuirst concealed the costs of insurance, the complaint states, to induce CR Myrtle into paying $736,388 for a general liability policy on a project in Brooklyn.
DCBE partners Thomas Morris and John Connelly, who are also named as defendants, and Levitt-Fuirst did not respond to emails asking for their versions of events.
CR Myrtle hired DCBE in 2020 to manage conversion of a building on Myrtle Avenue, Brooklyn, to a 4-story mixed-use condominium.
CR Myrtle is affiliated with Divlong Properties, Hackensack, New Jersey, and is headed by orthopedic surgeon Raphael Longobardi.
DCBE is a general contractor licensed by New York City to provide construction management service.
“Mr. Morris and Mr. Connelly have thrived in the rough and tumble proving ground of New York City,” the company websites states. “They believe sharing information with the customer is a true baseline for establishing confidence: problems are not concealed, they are addressed openly and input is sought from every team member.”
CR Myrtle claims that Morris and Connelly withheld crucial information.
DCBE told the developer that it needed site specific, general liability insurance, the complaint states, and it would cost $385,000 based on a $5 million project budget.
CR Myrtle agreed to pay in monthly installments. But it says DCBE would not provide a copy of the insurance policy or invoices from the insurer and warned that if insurance was not paid the project would lose its permits.
Then last October, CR Myrtle learned that the insurance had not been renewed. The developer discovered that it had been paying for a $25 million policy, the complaint states, five times more than they were told to get.
DCBE kept demanding monthly payments, and CR Myrtle says it paid so as not to delay the project.
On March 9, DCBE withdrew from the project. In April, Levitt-Fuirst provided copies of the insurance policy.
DCBE had collected about $737,000 for insurance it had said would cost $385,000.
CR Myrtle obtained records from the New York City building department that indicate that its policy from Southwest Marine and General Insurance Co. covered 28 work permits at 23 other locations.
Morris, Connelly and Ken Levitt of Levitt-Fuirst Associates denied that the policy insured other projects, the complaint states, but CR Myrtle calculated that during one 12-month period 97% of its insurance costs covered other projects.
The defendants “continually and deliberately withheld information regarding the site specific insurance policies,” the complaint states, “to have CR Myrtle reimburse DCBE for insurance expense it did not incur on the Myrtle Avenue development.”
The developer accused the construction manager and insurance broker of fraud, unjust enrichment and conversion. It is demanding $736,388 and additional, unspecified damages.
CR Myrtle is represented by Peekskill attorney Philip Hersh.
