First published: Jan 2009
Baker vs. 16 Sutton Place Apartment Corporation
This case reminds us that when a person buys a co-op or a condo apartment, he or she gives up certain rights, including the right to determine the way in which common areas of the building can be used. This is true even if use of those areas may negatively affect a specific shareholder. Levandusky and Pullman are the seminal cases in this area. Levandusky taught us, and Pullman reaffirmed, that “the very concept of cooperative living entails a voluntary, shared control over rules, maintenance and the composition of the community.” A shareholder “voluntarily agrees to submit to the authority of a cooperative board, and consequently the board may significantly restrict the bundle of rights a property owner normally enjoys.” Although the Pullman court cautioned that courts must exercise “heightened vigilance” in examining board’s actions, there can be no question that when one purchases a cooperative apartment, one agrees to submit to the decision making authority of the board and to cede certain of the privileges of single ownership to a governing body. In this case, the plaintiffs purchased at a time when the roof garden was not in place. However, the board had the right to create a garden even though plaintiffs might lose certain privacy rights. We note that had plaintiffs and the co-op entered into a contract prohibiting the board from installing a roof garden above plaintiffs’ apartment, the business judgment rule would likely not have been applicable and the parties would have been required to abide by the terms of the contract. It is apparent from the decision that no such contract existed here.
May a cooperative install a garden above the roof of another shareholder over the objection of that shareholder? That was the question in Baker vs. 16 Sutton Place Apartment Corporation. Plaintiffs Alixandra Baker and Stuart Baker sued 16 Sutton Place Apartment Corporation and moved for summary judgment on their claim for an order permanently enjoining the co-op from constructing or contracting to construct a garden on the roof of the 20-story building. The co-op also made a motion to dismiss the complaint.
The Bakers’ penthouse apartment was directly underneath the roof of the building. They claimed that construction of the roof garden would constitute a breach of the proprietary lease and violate their license to use, decorate, furnish and maintain the hallway outside of the apartment.
The court quoted from the proprietary lease: “Lessor shall have the right to erect equipment on the roof, including radio and television aerials and antennas, for its use and use of the lessees in the building and shall have the right of access thereto for such installations and for the maintenance and repair thereof.” The Bakers argued that this provision was specific and that it should therefore be interpreted as written. They asserted that it applied only to the erection of equipment and that it implicitly prohibited other uses. The co-op, however, argued that the plaintiffs’ interpretation was too narrow and did not take into consideration a house rule, which contemplated other permissive uses for the roof. The house rule provided: “No planting beds, shrubs, trees, boxes or planting containers of any kind, or statuary, shall be permitted on roof or penthouse terraces or balconies except where such units are installed in accordance with the terms of a special written agreement with the Lessor permitting such installation, in which the Lessor shall also specify the method of such installation.” The co-op also argued that while the lease explicitly granted it the right to erect equipment on the roof, it was never intended to prohibit the co-op from using the roof for other purposes.
The court reviewed the law and determined that, in another case decided years earlier, the appellate court reviewed a similar proprietary lease provision and found that the co-op in that case was permitted to use the roof for purposes other than installation of equipment. The court found that the lease in this case did not constitute a waiver of the co-op’s right to use the space as a roof garden. In addition, the lease provision could not be interpreted to constitute a restrictive covenant precluding the co-op from building a roof garden.
The Bakers claimed that, if there were a garden on the roof above their apartment, there would be frequent and considerable noise and activity directly over their heads. They also asserted that it was possible that persons would drop objects from the roof onto their private wrap around terrace. The Bakers further argued that construction of the roof garden should not be allowed because it would violate their right, which they deemed a license, to use, decorate, furnish, and maintain the hallway outside of their apartment. They claimed that they decorated the hall at a considerable expense. The co-op in fact encouraged shareholders to decorate, furnish, and maintain the hallways and contributed $1,000 to each shareholder every few years to offset their costs. The co-op also permitted each shareholder to decorate and furnish the hallway outside their apartment as they saw fit. In the Bakers’ case, they were the only shareholder on the penthouse floor and decorating the hallway was left entirely to their discretion. The Bakers claimed that the hallway outside their apartment was an integral part of their apartment and that allowing a roof garden would turn the hallway into a noisy and busy thoroughfare for all other residents and their guests.
The court considered these arguments and found that the Bakers did not cite to any provision in the proprietary lease that granted them the exclusive right to use the common hallway. Finally, the Bakers lived in the building before buying the penthouse apartment. Alixandra Baker claimed that when she and her husband were considering buying the apartment in 1997, she asked two board members about a dilapidated deck on the roof of the building that had once been used as a roof garden. Baker claimed that she was assured that it was not usable and that the co-op would not build a roof garden in the future because the board was aware of the problems the old roof garden caused. The board member had also explained that the prior roof garden had caused leaks into the apartment now owned by the Bakers and stated that this was another reason the board did not intend to install a roof garden.
The Bakers also claimed that, if there had been a roof garden in place at the time they purchased the apartment, they would not have bought. The co-op submitted an affidavit from the building superintendent, who stated that use of the roof garden was discontinued because of leaks, but that it was later determined that the leaks were unrelated to the garden. In addition, the co-op argued that the determination of whether a garden should be placed on the roof rests within the discretion of the board and that the Business Judgment Rule protects the board’s decision.
After reviewing all of the evidence submitted and hearing argument from the parties’ lawyers, the court determined that Bakers failed to establish that the construction of a garden on the roof would violate any of plaintiffs’ rights under the proprietary lease. The court denied the Bakers’ motion for an injunction and dismissed the action.
Counsel in the Case
For Plaintiffs:
Chadbourne & Parke
For Defendant:
Balber Pickard Battistoni
Maldonado & Van Der Tuin
