Case Notes
Case Notes provides insight on one particularly relevant co-op or condo case—clearly explaining what happened, why it’s important, and what lessons can be learned within.
Category
- Access
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- Appeals
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- Attorney Fees
- Attorney-Client
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First published: Oct 2011
61 West 62 Owners Corp. v. CGM LLC, CGM EMP RTP LLC, West 63 Empire Associates, LLC and The Chetrit Group, LLC.This is an important case because it addresses what happens when there is a claim that a party is in violation of a city noise ordinance, yet the agency charged with enforcing the ordinance does not issue a violation. The state’s highest court made very clear in its decision that an injunction may be issued to stop the noise, even if a violation was not issued. While the lower court appreciated the situation of the residents, the judge did not believe that the co-op demonstrated that it was likely to succeed on the merits, i.e., that it would be able to show that Empire’s actions constituted a private nuisance. The appeals court disagreed, in part because of its finding that it was immaterial that a violation of city law had not been issued – even though representatives of the police and fire departments had visited the bar. Finally, this case confirms the long-standing principle that a co-op corporation can pursue an action on behalf of its shareholders.
Read full articleFirst published: Oct 2011
61 West 62 Owners Corp. v. CGM LLC, CGM EMP RTP LLC, West 63 Empire Associates, LLC and The Chetrit Group, LLC.This is an important case because it addresses what happens when there is a claim that a party is in violation of a city noise ordinance, yet the agency charged with enforcing the ordinance does not issue a violation. The state’s highest court made very clear in its decision that an injunction may be issued to stop the noise, even if a violation was not issued. While the lower court appreciated the situation of the residents, the judge did not believe that the co-op demonstrated that it was likely to succeed on the merits, i.e., that it would be able to show that Empire’s actions constituted a private nuisance. The appeals court disagreed, in part because of its finding that it was immaterial that a violation of city law had not been issued – even though representatives of the police and fire departments had visited the bar. Finally, this case confirms the long-standing principle that a co-op corporation can pursue an action on behalf of its shareholders.
Read full articleFirst published: Sep 2011
Siegler v. 875 Tenant Corp. and Himmelberger v. 40-50 Brighton First Road Apartments Corp.There have been a number of cases that have addressed the parties’ entitlement to fees under co-op documents, including the proprietary lease and alteration agreements. Courts will interpret agreements as contracts, according to their terms. The court concluded that, as there was no default in Siegler, there was no basis upon which to award fees. Similarly, in Himmelberger, it appears as if the co-op was required to retain security to protect its residents, yet at the same time had no vehicle through which to charge the cost to the shareholder, Henderson. We believe that most proprietary leases are insufficient to cover the myriad circumstances we see time and again, where co-ops are called upon to perform services or address issues as a result of the action of a single shareholder. Unless the reimbursement or indemnification provisions of a lease are revised in accordance with current best practices, it is likely that all shareholders will be required to pay costs incurred by the co-op because of the acts of a single shareholder.
Read full articleFirst published: Sep 2011
Siegler v. 875 Tenant Corp. and Himmelberger v. 40-50 Brighton First Road Apartments Corp.There have been a number of cases that have addressed the parties’ entitlement to fees under co-op documents, including the proprietary lease and alteration agreements. Courts will interpret agreements as contracts, according to their terms. The court concluded that, as there was no default in Siegler, there was no basis upon which to award fees. Similarly, in Himmelberger, it appears as if the co-op was required to retain security to protect its residents, yet at the same time had no vehicle through which to charge the cost to the shareholder, Henderson. We believe that most proprietary leases are insufficient to cover the myriad circumstances we see time and again, where co-ops are called upon to perform services or address issues as a result of the action of a single shareholder. Unless the reimbursement or indemnification provisions of a lease are revised in accordance with current best practices, it is likely that all shareholders will be required to pay costs incurred by the co-op because of the acts of a single shareholder.
Read full articleFirst published: Jul 2011
Kikis v. 1045 Owners Corp.This case involved a situation where the board asserted that it had a policy in place concerning home equity loans, but the policy did not appear in the proprietary lease or bylaws. If a board resolution was passed, it was very recent. While it is difficult to determine from the decision, it appears as if the form purchase application distributed by the managing agent advised purchasers that HELOCs could not be secured by the shares. In any event, the case raises the question of whether a board can promulgate and enforce a policy even if it is not in the governing documents or house rules. Although the court did not cite or reference the proprietary lease or bylaws, we must presume that the policy did not violate any specific provisions of the documents. Accordingly, the court found that the policy – which was consistently applied to all shareholders – would be upheld in accordance with the Business Judgment Rule. This is consistent with a number of other post-Levandusky cases that have refused to interfere with decisions of boards provided the shareholder did not demonstrate that the board acted beyond its authority or in a way that did not further the co-op’s legitimate purpose or in bad faith. It is also consistent with a pre-Levandusky case reported in this column in the July/August 1985 edition of Habitat. There, we discussed Browne v. 930 Fifth Corporation, where a shareholder wanted to use his shares to secure a loan to purchase real estate in Westchester County. The board refused to sign a recognition agreement, and the shareholder sued. Consistent with the later decision in Kikis, the court dismissed Browne’s complaint as the co-op was not required to execute the recognition agreement. Kikis also reminds us that cases will not be sustained against individual board members absent a showing, with specific allegations, that they committed a tort separate and independent from any action they may have taken in their capacity as board members.
Read full articleFirst published: Jun 2011
Carpenter v. Churchville Greene Homeowners’ Association Inc.The court first made clear when discussing the concrete pad that, once an issue is resolved with no likelihood that it will recur, the matter is no longer actionable. We suspect that this is particularly the case in this instance as the matter was resolved within three weeks of plaintiffs’ request that they be permitted to install the concrete pad and that no ascertainable damages accrued during that period. With respect to the parking issue, the court noted in a footnote the plaintiffs’ burden – specifically that allowing disabled guests to park close to their home is “necessary for the equal use and enjoyment of their home in light of their own disabilities …” We question whether the plaintiffs will be able to meet this burden as it is their friends – and not the plaintiffs themselves – who apparently require a parking accommodation. Interestingly, although the HOA denied the request based on fire safety concerns, the decision does not indicate that the defendants presented any evidence that parking on the private road would constitute a violation of an applicable fire code. We question whether if this were the case, it would have affected the court’s determination. In sum, the court gave the plaintiffs an opportunity to prove their claims by allowing them to take the depositions of the individual board members and management company. The court also gave the defendants the right to make another motion for summary judgment at the conclusion of those depositions, i.e., after the plaintiffs had an opportunity to obtain the information they said they needed. Finally, while this case involved an HOA, the legal principles at issue here would apply if the property was either a co-op or a condominium.
Read full articleFirst published: Jun 2011
Carpenter v. Churchville Greene Homeowners’ Association Inc.The court first made clear when discussing the concrete pad that, once an issue is resolved with no likelihood that it will recur, the matter is no longer actionable. We suspect that this is particularly the case in this instance as the matter was resolved within three weeks of plaintiffs’ request that they be permitted to install the concrete pad and that no ascertainable damages accrued during that period. With respect to the parking issue, the court noted in a footnote the plaintiffs’ burden – specifically that allowing disabled guests to park close to their home is “necessary for the equal use and enjoyment of their home in light of their own disabilities …” We question whether the plaintiffs will be able to meet this burden as it is their friends – and not the plaintiffs themselves – who apparently require a parking accommodation. Interestingly, although the HOA denied the request based on fire safety concerns, the decision does not indicate that the defendants presented any evidence that parking on the private road would constitute a violation of an applicable fire code. We question whether if this were the case, it would have affected the court’s determination. In sum, the court gave the plaintiffs an opportunity to prove their claims by allowing them to take the depositions of the individual board members and management company. The court also gave the defendants the right to make another motion for summary judgment at the conclusion of those depositions, i.e., after the plaintiffs had an opportunity to obtain the information they said they needed. Finally, while this case involved an HOA, the legal principles at issue here would apply if the property was either a co-op or a condominium.
Read full articleFirst published: May 2011
Taylor v. Harbour Pointe Homeowners Association and Candace GraserWe frequently see situations where apartment owners or homeowners are unable to keep their premises in a clean and orderly condition. This is important – as it was in this case – for maintaining the community and allowing the entire development to be at its best when neighbors are attempting to sell their homes. It is also important in vertical communities where often clutter brings bugs, odors, vermin, and other conditions to the apartment and neighboring apartments. This case makes clear that a board is not required to make a reasonable accommodation to address a disability unless unit-owners advise that they have a disability and that an accommodation is necessary to allow them to enjoy their home. Here, while it appears that the plaintiff hinted at a disability, at no point did she specifically tell the board that she could not clean her patio because of depression or any other disability. Nor did she tell the board that her desire to clean the patio at her own pace and in her own time was a request for an accommodation that, if denied, would make her unable to use and enjoy her house. While we cannot comment on whether the individuals in the community properly conducted themselves when they cleaned the patio and removed some items, we believe that it is the better practice to obtain a court order or a unit-owner’s specific consent before cleaning or moving items from that person’s dwelling.
Read full articleFirst published: May 2011
Jason Roer v. 150 West End Avenue Owners Corp.A general waiver of liability for injuries that occur in the exercise room of a co-op may not be enforceable by law. Under New York statutory law, any contractual provision that exempts the owner or operator of an exercise room for liability for damages caused by its own negligence is unenforceable. Therefore, the contract that the co-op required its shareholders to sign as a prerequisite for using the exercise room may not be enforced under all circumstances. It is imperative that co-op (and condo) boards using these general waivers of liability consult with their legal advisers to ensure that the agreements give the board the greatest protection available, and to make sure boards understand that full and complete protection may not exist. Additionally, this case highlights that when the acts of a third person intervene, the connection between alleged wrongdoers is not automatically severed. In such a case, liability turns upon whether the intervening act is a normal or foreseeable consequence of the situation created by the alleged negligence of the co-op or condo. Thus, even if another resident (such as Sarnoff) or outside actor breaks the chain of causation, the issue will still be whether the exercise room was operated in a safe and reasonable manner. Finally, there is no indication in the decision about whether the co-op’s insurance carrier provided a defense or whether the actions described allowed the insurance carrier to disclaim liability or defend pursuant to a reservation of rights (we note that the court filings indicate that a carrier may have been involved). It is advisable that boards have their insurance professionals review their policies to ensure that there is coverage and that the board comply with all requirements of the carrier concerning operation of the exercise facility.
Read full articleFirst published: May 2011
Taylor v. Harbour Pointe Homeowners Association and Candace GraserWe frequently see situations where apartment owners or homeowners are unable to keep their premises in a clean and orderly condition. This is important – as it was in this case – for maintaining the community and allowing the entire development to be at its best when neighbors are attempting to sell their homes. It is also important in vertical communities where often clutter brings bugs, odors, vermin, and other conditions to the apartment and neighboring apartments. This case makes clear that a board is not required to make a reasonable accommodation to address a disability unless unit-owners advise that they have a disability and that an accommodation is necessary to allow them to enjoy their home. Here, while it appears that the plaintiff hinted at a disability, at no point did she specifically tell the board that she could not clean her patio because of depression or any other disability. Nor did she tell the board that her desire to clean the patio at her own pace and in her own time was a request for an accommodation that, if denied, would make her unable to use and enjoy her house. While we cannot comment on whether the individuals in the community properly conducted themselves when they cleaned the patio and removed some items, we believe that it is the better practice to obtain a court order or a unit-owner’s specific consent before cleaning or moving items from that person’s dwelling.
Read full article