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
- Alterations
- Appeals
- Arbitration
- Assessment
- Attorney Fees
- Attorney-Client
- Authority to Sue
- Balcony/Terrace Rights
- Bike Lane
- Board of Directors
- Books and Records
- Breach of Lease
- Business Judgment Rule
- Bylaws
- Bylaws/House Rules
- Certificate of Occupancy
- Charges/Fees
- Commercial Unit
- Common Element
- Common Elements
- Companion Animal
- Constitutionality
- Construction Defects
- Contracts
- Conversion
- Defamation
- Discovery
- Discrimination
- Due Diligence
- Easement
- Elections
- Estate
- Eviction
- Eviction/Termination
- Fiduciary Duty
- Fines
- Foreclosure
- Fraud
- Governance
- Gym
- House Rules
- Indemnification
- Indemnification/Subrogation
- Injunction
- Insurance
- Labor Law
- Liability of Directors
- Licenses
- Liens
- Maintenance
- Malpractice
- Management
- Mechanic's Lien
- Mediation
- Misrepresentations
- Motion Practice
- Motion Practive
- Negligence
- Notice of Pendency
- Nuisance
- Occupancy Agreement
- Ownership
- Parking
- Partnership
- Personal Injury
- Pets
- Property Damage
- Proprietary Lease
- Reasonableness
- Receivership
- Release
- Repairs
- Representations
- Sales
- Service of Process
- Sponsor
- Statute of Limitations
- Stock/Shares
- Stocks/Shares
- Sublets
- Succession Rights
- Tax
- Third-Party Liability
- Transfers
- Trespassing
- Trial Practice
- Violations
- Warranty of Habitability
- Yellowstone Injunction
- Zoning
First 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: Apr 2011
The Plaza PH2001 LLC v. Plaza Residential Owner LPThe lower courts have not always been consistent in their interpretation of no-representation clauses similar to the one at issue in this case. Here, plaintiff was shown a mock-up and a virtual computer rendering of the apartment. Yet, because this was done before plaintiff entered into its purchase agreements, and because the purchase agreements contained the “no representation” language, the court determined that plaintiff had no right to rely on the mock-up. Had the mock-up been made an exhibit to the contract, or had the terms of the contract included the specific representations plaintiff claimed the sponsor had made, we believe the decision might have been different. In addition, plaintiff failed to allege all potential causes of action in the 2008 action. Because of the legal principle of “res judicata,” plaintiff could not take a second bite of the apple and relitigate the same facts through different causes of action. Indeed, the claims plaintiff made in the second action included alleged violations of the Martin Act and the Interstate Land Sales Full Disclosure Act, neither of which had been argued in the 2008 action. However, because the factual basis of these claims had been litigated and fully and finally decided, the court refused to consider them in the 2010 action. We do not know how the court would have considered these specific claims had they been brought in the 2008 action. We understand that the decision from the 2008 action has been appealed to the appellate division. We will wait to see whether that court agrees with the lower court that the no-representation language in the purchase agreements precludes plaintiff from maintaining an action for a return of the down payments. Further, if the 2010 decision is similarly appealed, we await the appellate court’s advice on whether any of the new claim can survive notwithstanding the decision in the 2008 case. This case cautions buyers. If purchasing an apartment that is not yet built, and if you are purchasing because of representations made concerning the layout, size, number of windows, number of skylights, etc. – make sure it is in writing and is attached and incorporated into the purchase agreement. It is also a caution to all litigants that all claims be asserted at the time of the initial action so that they are not precluded by the doctrine of res judicata.
Read full articleFirst published: Apr 2011
LI Equity Network LLC v. Village in the Woods Owners Corp.The case is consistent with other cases that have held that, provided the terms of sale contain a provision making the sale subject to the rules of a co-op, a successful bidder should not expect to be able to immediately move in to the apartment. To the contrary, the bidder must be prepared to comply with the rules, regulations, and policies established by the co-op. This may result in the co-op refusing to issue the shares and lease to the successful bidder. Based on the court’s analysis of who is bound by the terms of sale, we do not know how the court would have decided the case if the terms of sale had not included language making the auction subject to the terms and conditions of the co-op’s governing documents. As there may be more nonjudicial foreclosure sales given the recent economic climate, we caution boards to be proactive and make certain that the terms of any sale include provisions making it clear that the sale is subject to the co-op’s governing documents.
Read full articleFirst published: Apr 2011
The Plaza PH2001 LLC v. Plaza Residential Owner LPThe lower courts have not always been consistent in their interpretation of no-representation clauses similar to the one at issue in this case. Here, plaintiff was shown a mock-up and a virtual computer rendering of the apartment. Yet, because this was done before plaintiff entered into its purchase agreements, and because the purchase agreements contained the “no representation” language, the court determined that plaintiff had no right to rely on the mock-up. Had the mock-up been made an exhibit to the contract, or had the terms of the contract included the specific representations plaintiff claimed the sponsor had made, we believe the decision might have been different. In addition, plaintiff failed to allege all potential causes of action in the 2008 action. Because of the legal principle of “res judicata,” plaintiff could not take a second bite of the apple and relitigate the same facts through different causes of action. Indeed, the claims plaintiff made in the second action included alleged violations of the Martin Act and the Interstate Land Sales Full Disclosure Act, neither of which had been argued in the 2008 action. However, because the factual basis of these claims had been litigated and fully and finally decided, the court refused to consider them in the 2010 action. We do not know how the court would have considered these specific claims had they been brought in the 2008 action. We understand that the decision from the 2008 action has been appealed to the appellate division. We will wait to see whether that court agrees with the lower court that the no-representation language in the purchase agreements precludes plaintiff from maintaining an action for a return of the down payments. Further, if the 2010 decision is similarly appealed, we await the appellate court’s advice on whether any of the new claim can survive notwithstanding the decision in the 2008 case. This case cautions buyers. If purchasing an apartment that is not yet built, and if you are purchasing because of representations made concerning the layout, size, number of windows, number of skylights, etc. – make sure it is in writing and is attached and incorporated into the purchase agreement. It is also a caution to all litigants that all claims be asserted at the time of the initial action so that they are not precluded by the doctrine of res judicata.
Read full articleFirst published: Apr 2011
LI Equity Network LLC v. Village in the Woods Owners Corp.The case is consistent with other cases that have held that, provided the terms of sale contain a provision making the sale subject to the rules of a co-op, a successful bidder should not expect to be able to immediately move in to the apartment. To the contrary, the bidder must be prepared to comply with the rules, regulations, and policies established by the co-op. This may result in the co-op refusing to issue the shares and lease to the successful bidder. Based on the court’s analysis of who is bound by the terms of sale, we do not know how the court would have decided the case if the terms of sale had not included language making the auction subject to the terms and conditions of the co-op’s governing documents. As there may be more nonjudicial foreclosure sales given the recent economic climate, we caution boards to be proactive and make certain that the terms of any sale include provisions making it clear that the sale is subject to the co-op’s governing documents.
Read full articleFirst published: Mar 2011
Oxman v. 1100 Park Avenue Cooperative Corp.In this case, the court reviewed the causes of action claimed by Oxman and determined that they could not be sustained against her fellow shareholder, who complained about excessive noise coming from Oxman’s apartment. The court did not discuss whether the claims made by Ogden were true or whether the co-op board determined that Oxman was in fact making excessive noise. We suspect the court did not have to consider these issues in order to decide this motion. This case demonstrates that a shareholder will be protected if they complain about the actions of another shareholder, absent specific allegations of outrageous or extreme conduct. We found interesting, however, that Oxman apparently did not sue Ogden for defamation, i.e. for knowingly making an untrue statement which caused injury to Ogden. We do not know if such a claim would have been sustained, at least at the very early stages of the litigation. In addition, because the co-op and the managing agent did not move to dismiss, the case will continue to be prosecuted against them, although we cannot determine from this decision what “damages” Oxman claims she suffered as a result of their actions.
Read full articleFirst published: Jan 2011
Weich v. 308 West 104, LLC.Although this case concerns a rental landlord and tenant, it discusses principles which are equally applicable to cooperatives, keeping in mind that a cooperative corporation and shareholder are in a landlord/tenant relationship. While not directly applicable, the decision is also instructive with respect to condominiums. First, the court allowed the defendant/landlords to make a motion to dismiss certain elements of their tenants’ claimed damages, parsing the complaint so that the issues at trial would be limited to those which the tenants could, if successful, actually recover. While each case is different, whether to limit the type of damages a plaintiff can seek at trial is often a consideration for a defendant. The court here found that there were certain items for which damages were unavailable based upon applicable legal principles. For example, the unlawful eviction statute the tenants relied on to claim the right to treble damages will not be invoked when an apartment is rendered uninhabitable; it requires a forcible ouster. Moreover, although the tenants expended attorneys’ fees in other proceedings, the court found that they could not be recovered in this action. Further, there was no basis upon which the tenants could claim they were entitled to recover the cost of their experts. On the other hand, the court did not dismiss – at this stage – the tenants’ claims for personal property damage, the cost of movers, and the cost of living in another apartment. As to those, the tenants would be allowed to present their proof and have a jury or judge decide.
Read full articleFirst published: Dec 2010
Gotham Partners, LP v. High River Limited PartnershipIn this case, and in the Batsidis case, the appellate court for Bronx and New York Counties prescribed the circumstances under which parties to a contract (including, we believe, proprietary leases, alteration agreements and bylaws) can obtain an award of attorneys’ fees. Batsidis specifically addressed the circumstance where there was no litigation, yet fees were expended as a result of a particular shareholder’s alteration. Given the clear language in an attorneys’ fees provision in the alteration agreement at issue in that case, attorneys’ fees were awarded. Gotham addressed what happens when there is no applicable attorneys’ fees clause but a party attempts to obtain an award of such fees relying on an indemnification provision in the contract. What we take from these cases is that if the language in an attorneys’ fees section in the agreement is clear and unequivocal, it will be interpreted according to its meaning. If, however, a party seeks attorneys’ fees based upon a contract’s indemnification provision (rather than a section addressing legal fees specifically), the language of the indemnification provision must be specific and explicit that it was intended to apply where one party to a contract prevails in a lawsuit and seeks attorneys’ fees from the other. Given the recent case law concerning attorneys’ fees and the interpretation of different contractual provisions, we suggest that boards ask their counsel to review the provisions in their governing documents and alteration agreements in order to make sure the documents are in line with the most recent rulings.
Read full articleFirst published: Nov 2010
Fair Hous. Justice Ctr., Inc. v. Silver Beach Gardens Corp.This case discusses two forms of discrimination and raises the question of whether facially neutral policies and procedures of a co-op or condo could be considered discriminatory. Although in the context of a motion to dismiss, the court concluded that a policy requiring prospective purchasers to obtain references from three current owners in co-op communities constitutes a sufficient basis to allow a complaint based on “disparate impact discrimination,” i.e., where a policy does not discriminate on its face but, when implemented, has the effect of discriminating. The court made note of the fact that residents of the co-ops are predominantly white in an area where homeowners are 35 percent black. It is unclear whether the court would have permitted the claim to go forward if the co-ops were racially mixed. The court also considered statements made by a real estate agent and employees of one of the cooperatives in order to determine that plaintiff had the right to attempt to prove “intentional discrimination” by virtue of a claimed selective enforcement of the three-reference policy. Even though the real estate agent was not an “agent” of either co-op, and her comments could not be directly attributable to them, the court clearly took the statements into consideration when determining that the plaintiff should have the right to prove intentional discrimination. Finally, we note that, although not part of the motion, the black testers were also plaintiffs, having sued the real estate agent. It is important for all co-ops and condos to review their policies and procedures to insure that they comply with all discrimination laws and do not – even unintentionally – create a situation where members of a protected class are treated differently from others.
Read full articleFirst published: Oct 2010
Lombard v. Station Square Inn Apartments Corp.The co-op tried to limit the amount that the plaintiff could recover by asserting that the plaintiff had to have started the action within three years of when the conditions began. While the court limited some of the damages plaintiff could recover, it also explained that a six-year period was applicable in most instances. In passing, the court discussed an important rule which was been well established by the courts - that a tenant or shareholder cannot recover damages for breach of the warranty of habitability unless they live in the apartment. Further, the court explained one of the exceptions to the Business Judgment Rule. If a co-op has a contractual obligation, it cannot avoid it by claiming that it is in the best interest of the co-op to not perform. Thus, if a proprietary lease requires a co-op to act (or bylaws require a condominium to act), the entity cannot ignore its obligations by reliance on the Business Judgment Rule. Finally, the court discussed the qualified privilege or common interest exception to claims of defamation. This privilege – which protects speech where all parties have an interest in the subject matter – is important because it allows a free flow of communication about co-op or condo matters so long as statements are not made with malice.
Read full article