A New York judge last week threw out most of the fraud and shoddy-construction claims that two condo owners brought against developer Michael Shvo in their dispute over the Mandarin Oriental Residences at 685 Fifth Avenue. The decision clears Shvo and most of his companies of the major fraud allegations and trims the case down to a smaller set of contract-focused issues. It arrives as the project is already grappling with slow sales and other ongoing legal battles.
According to The Real Deal, the court dismissed the overwhelming majority of the plaintiffs’ claims, including every claim brought against Shvo personally. "We are pleased that the Court dismissed the overwhelming majority of plaintiffs’ claims, including all claims against Michael Shvo personally," Shvo attorney Morris Missry said in a statement. The outlet reported that the ruling leaves a narrower set of disputes moving forward even as other litigation involving the developer continues.
Owners' claims
The buyers, John and Diane Goodman, alleged that their one-bedroom unit was plagued by construction problems and that the sponsor and building managers failed to deliver the level of finishes and operations they said had been promised. Their complaint blended punch-list issues, claimed defects in finishes and broader grievances about building management and disclosures. Those allegations, along with earlier motion practice, are laid out in court filings and in a decision posted by N.Y. State Courts.
Why the judge tossed the claims
The court found that marketing statements such as "turnkey luxury" and "finished to Mandarin standards" were nonactionable opinion or puffery, not the kind of concrete misrepresentation that can support a fraud claim. The opinion follows settled New York precedent that aspirational marketing language and promises about future performance do not, on their own, amount to actionable fraud. That approach tracks a recent commercial-division ruling posted on Justia, which the court cited in rejecting the broader fraud theories.
Sales slump clouds project
The project has had trouble moving units since its 2021 launch, prompting the sponsor to tweak its sales strategy. Earlier this year, a new Serhant sales team took over marketing the building and cut prices on remaining sponsor units as part of a relaunch and re-pricing effort. That change in sales leadership and pricing was reported by The Real Deal in February.
What’s next
With most of the fraud allegations now off the table, the case is expected to center on contract remedies, the buyers’ remaining claims and internal governance issues at the building. Separate lawsuits tied to Shvo’s Fifth Avenue holdings and related projects are still active, underscoring that the developer faces a broader web of litigation beyond this single buyer dispute. Reporting and court records indicate that the legal battles around the development are ongoing and will continue to influence how the project is marketed and managed. Bisnow and court filings provide additional context on those wider disputes.
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