CNYC president Marc J. Luxemburg, Esq. is an attorney specializing in cooperative and condominium law. Each year at CNYC’s annual Conference, he reviews recent court cases that have the potential to answer questions commonly faced by Boards as part of their responsibilities. This article features cases highlighted at CNYC’s 29th annual Housing Conference; to register for Current Significant Legal Issues at CNYC’s 30th Annual Housing Conference on Sunday, November 14, consult the Conference brochure.
F.T. Apartments Corp. v. Barbara L., 2009 WL 1886891 (Civ. Ct. NY Co, 6/17/2009) illustrates that trying to be nice can come back to bite you. To comply with due-process requirements for Pullman Case type termination of a proprietary lease for objectionable conduct, the Board must provide notice and an opportunity for the shareholder to be heard before instituting a termination. In this instance, the Board had received complaints about the erratic behavior of a shareholder for whom a guardian had been appointed due to mental incapacity. Only once did the Board write to the shareholder directly; their subsequent letters were sent to relatives of the shareholder asking them to intervene. When the erratic behavior continued for three years, the Board then initiated eviction proceedings. The Court held that letters to the shareholder’s relatives did not comply with the proprietary lease’s notice provisions and therefore did not constitute notice to the shareholder. To comply with Pullman due-process requirements, a Board must provide notice and an opportunity for the shareholder to be heard before terminating a proprietary lease for objectionable conduct.
CALLING ALL BOARDS: CELL TOWERS
Two very different results in cases involving cell-phone towers demonstrate that practicing law is an art rather than a science. In DiFabio v. Omnipoint Communications, Inc. [Enclave Condominium], 2009 WL 3210142 (2d Dept. 10/6/2009), the Court found that a unit owner was without standing in claiming damages to the common interest of the condominium due to a rooftop cellular antenna and found in favor of the condominium. However, the plaintiff in Kaung v. Board of Managers of the Biltmore Towers Condominium, 873 NYS2d 421 (Sup. Ct West. Co. 12/10/2008) charged that the Board had violated the bylaws, which expressly stated “the common elements shall only be used for the furnishing of services and facilities which are incidental to the use and occupancy of the units.” While the Board argued that the unit owners could all use the cell-tower signals, the Court held that the lease was commercial in nature and had therefore violated the bylaw restrictions. While the Business Judgment Rule grants Boards great latitude in decision-making, this case highlights the need to consider whether any action is prohibited by implied restrictions in the governing documents.
In an interesting older case, Branscombe Investments, Ltd v. Board of Managers of the Olympic Tower Condominium (Sup. Ct. NY Co., 2/1/2008), a unit owner claimed that his privacy was being unlawfully invaded by security cameras installed by another unit owner and asserted that the Board had violated bylaws by failing to cause removal of the cameras. The Board hired a security company to investigate what, exactly, these cameras could observe. Since they could only see six to seven feet in front of the unit owner’s door, the Board determined that the privacy of other inhabitants was not compromised. The critical factor here is the concept that Boards are wise to retain experts to conduct independent investigations and evaluations. The Court found that the Board had, in good faith, operated in the best interest of the condominium and granted summary judgment to dismiss the complaint. Note that, although the Court found that this Board’s failure to provide minutes of the meeting at which the cameras were approved did not necessarily compromise its ability to act, it is important to retain records of meeting minutes.
TERRACE: ACCESS DENIED
When unit owners deny access to their terraces for building repairs, they can be compelled to do so by a court order. In addition, the Court held in Residential Board of Managers of the Vanderbilt Condominium v. Goldberg, NYLJ 9/8/2009, p. 18, c. 1 (Sup. Ct. NY Co.) that Boards are entitled to reimbursement of attorneys’ fees in obtaining that order, even if not expressly stated in the condominium’s bylaws. Vanderbilt’s bylaws provided for reimbursement for “all sums of money expended in connection with the repair” and the unit owner was ordered to reimburse the condominium for legal costs in bringing the action. It is clear that the Board could have avoided litigation by drafting clearer language. The Court ultimately found that legal fees were an extra expense the condominium incurred in completing repairs. The Court scheduled a hearing on the amounts due.
PEST OF THE YEAR
And now the bedbug case crawls out of the woodwork. In Zayas v. Franklin Plaza, 2009 WL 909664 (Civ. Ct. NY Co. 4/6/2009), a shareholder whose home was invaded by bedbugs sued for the costs of remediation, along with damages for the loss of personal property and medical treatment. The infestation was not unique to the shareholder’s apartment; bedbugs were present in a number of apartments. While owners are responsible for unit interiors, they are not responsible for common elements. The Court couldn’t ignore the fact that there were bedbugs elsewhere within building, and, in balancing the two clauses of the lease, decided that while the shareholder was responsible for the cost of extermination within his own apartment, the cooperative was responsible for damages to personal property and medical expenses. The cooperative must keep the building in good condition and the Court noted that the Board took no steps to remedy the situation.
THE LEAKY TOILET
The case Parelman-Farber v. Shao, 2009 WL 1606417 (App. T. 2d, 11th and 13th Judicial Districts 6/8/2009) involved a leaky pipe connected to a toilet that flooded a downstairs apartment. The upstairs neighbor claimed the cooperative was responsible, but, as we know, pipes that emerge from the walls within an apartment are the shareholder’s responsibility. What’s noteworthy here is that victims think that when their apartment is flooded by a neighbor’s leak, they are entitled to a recovery because of either absolute or per se liability. However, negligence must be proven to establish responsibility. The Court denied the motion for summary judgment of liability because there was no evidence of actual or constructive notice of a defective condition on the part of the upstairs neighbor or the cooperative.
Discrimination suits are always important cases of which to be aware. In Kennedy Street Quad, Ltd v. Nathanson, 879 NYS2d 197 (2d Dept. 5/19/2009), the appellate Court annulled the New York State Division of Human Rights’ determination that a cooperative had discriminated against shareholders by refusing to allow them to keep a dog to accommodate disabilities. The Nathansons had adopted a dog in violation of the cooperative’s “no pets” policy and the Board filed eviction proceedings against them. The couple filed a complaint with New York’s DHCR who directed the cooperative to allow the dog and awarded the complainants $7,500 in compensatory damages. However, the appellate Court overturned the agency’s ruling, stating that while the Nathansons submitted evidence that the dog helped them with symptoms of depression, they “failed to present any medical or psychological evidence to demonstrate that the dog was actually necessary in order for them to enjoy the apartment.”
Workers Compensation Law asserts that an employee entitled to receive benefits for an injury may not sue his general or special employer. To protect “special” status, it is essential that management contracts include explicit language that the managing agent oversees building employees. In Akins v. D.K. Interiors, Ltd. [230 Tenants Corp.], 885 NYS2d 289 (1st Dept. 9/24/2009), an injured doorman, despite receiving compensation benefits, sued the managing agent. The doorman was supervised by the superintendent, who, as specified in the management contract, took his instructions directly from the property manager. Summary judgment was granted dismissing the complaint. However, in Soto v. Akam Associates [300 E 74th Owners Corp.], 877 NYS2d 358 (2d Dept. 4/7/2009) the management company’s motion for summary judgment was denied because it failed to adequately demonstrate the existence of a special employment relationship. Mr. Soto, a worker in the building, was injured and sued the management company. Mr. Soto was supervised by the superintendent, an employee of the cooperative which paid his wages and furnished his equipment and uniform. The management company did not show how it “directed the manner, details, and ultimate result of the employee’s work.”
What to do when an insurance policy contains exclusions for that which you seek to cover? Caveat Emptor. In 720-730 Fort Washington Avenue Owners Corp. v. Utica First Ins. Co., 2009 WL 3645656 (Sup. Ct. Bx. Co. 11/4/2009), the Court upheld the legality of an “inadequate” policy. The cooperative required the roofing subcontractor to provide commercial general liability coverage, but the policy obtained contained exclusions for injury to any employee of the contractor, any obligation to indemnify any other party, or any work arising out of roofing operations. An injured employee brought a personal injury suit against the cooperative. In this companion suit, the cooperative sued the provider, claiming that the insurer had a duty to both indemnify and defend the cooperative. The cooperative argued not that the exclusions were not applicable, but rather that they should be held to be against public policy. The Court dismissed the cooperative’s claim, finding that the issuance of an inadequate policy violated no public policy statute. Said the Court, “Since the Legislature has not yet chosen to further implement and fortify the Labor Law’s core objective by an amendment to the Insurance Law, this Court is powerless to do so.” Had the Board done their proper due diligence, they would have noticed the exclusions.
Here, labor law reigns. A worker injured when he fell off a makeshift scaffold was granted a summary judgment of liability against the cooperative in Collins v. West 13th Street Owners Corp., 882 NYS2d 85 (1st Dept. 6/30/2009). Employed to install ceiling tile in a theatre owned by the cooperative, Mr. Collins constructed a temporary structure with a ladder and plywood. He fell and sued the cooperative, claiming he wasn’t provided with an appropriate scaffold. The cooperative argued that Collins himself was the sole cause of his injuries; he hadn’t used materials on hand to construct a proper device. But the Court said expecting the employee to build his own safety apparatus “improperly shifted the responsibility” from the employer to the employee and, as such, violated labor law. The cooperative’s lack of notice or control was not a defense. u