First published: Jun 2022
A Dog Fight: Commercial Board vs Residential Board
Ouch, two big lessons. One, do not ignore a lawsuit. Your first call upon learning of a lawsuit must be to an attorney, there will be time to try to settle it later. Two, don’t present the court with a story that can be refuted by your own emails. The court’s decision bristles with umbrage at the demonstrably misleading statements of the defendant, and the individual is lucky the court was satisfied with denying the motion. The court might have issued sanctions.
The Sizzle “Condominium residences at Cassa begin on the 28th floor, and each encompasses a corner exposure flooding homes with light and iconic city views. Offered furnished or unfurnished as needed, these chic residences feature a palette of pale wood, limestone, and stainless steel and is the perfect entry point for an investor looking for an established yield or the world traveler in need of a pied-a-terre. Are you a discerning buyer? You’ll love that your residence can be personalized in the vein of the model home and delivered as a one-of-a-kind offering.” (Aaron Seawood, StreetEasy)
Behind the Sizzle The Cassa is a mixed-use condominium in the heart of the theater district with a seven seat board - four seats representing three non-residential units (Condominium Board) and three seats representing 53 residential units (Residential Board). The non-residential units include the Butter restaurant and two hotel units operating as the Cassa Hotel, and is owned by the Waterscape Resort (WR). The Condominium Board is the overall manager of both the commercial and residential units. The residential unit owners pay their common charges to the Residential Board, who then pays the attributable portion to the Condominium Board.
What Happened In July 2021, the Residential Board sued the Condominium Board, claiming that the commercial space had been abandoned due to Covid-19. The Residential Board asserted that it had to bear the costs of operating the whole property because of the abandonment, and because of this the Condominium Board forfeited the right to any common charges for the period of abandonment. Damages were asserted to be over one million dollars.
The complaint was served on the defendant via the secretary of state, but no answer was filed. After a default judgment was entered in January 2022 against the defendant, the defendant then filed a motion to set aside its default and vacate the judgment.
In the Court The court rejected the defendant’s motion, and the default judgment stands. To vacate a default judgment, a party must first show it has a reasonable excuse for the default. Here, the court was unimpressed with the defendant's excuse. Defendant claimed it never received copies of the complaint from the secretary of state, and that defendant did not know about the lawsuit until after the judgment was entered in January 2022. But the plaintiff submitted an affidavit in opposition to the motion with emails that the defendant sent in November and December 2021, proposing possible settlement. Defendant plainly had knowledge of the suit prior to entry of a default judgment but failed to act, so it had no reasonable excuse for its default. Because the defendant had no reasonable excuse for the default, the court found it unnecessary to address whether the defendant had meritorious defenses to the complaint. Motion to set aside default denied, the judgment stands. For Plaintiff Residential Board Robert M. Kaplan For Defendant Condominium Board Jonathan E. Temchin, Tarter Krinsky & Drogin
