Case Notes by
Richard Siegler & Dale Degenshein, Stroock & Stroock & Lavan
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
- 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
- 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: 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 articleFirst published: Sep 2010
Baker v. Bay Terrace Co-op Section XIIAs we have previously discussed, specific contract language is important and must be reviewed when determining the rights of a co-op and its shareholders. The occupancy agreement required the co-op to maintain the premises in good repair, except under certain circumstances. Those exceptions did not include the situation here – where the co-op required access in order to perform exploratory work to locate a building wide leak. The court did not directly address that portion of the memo attached to the co-op’s rules and regulations which stated that painting was decorative and the responsibility of the shareholder. Because the court awarded Baker the full $850 he spent to paint and wallpaper, it is implicit that the co-op was responsible for the cost of restoring what Baker had in place prior to the exploratory work. This is an important consideration where a shareholder installs expensive finishings. Accordingly, we recommend that boards review all their governing documents concerning responsibility for repairs and decorations if repairs need to be made through no fault of the apartment owner. If it is the building’s responsibility, it is important that the board understands the cost of restoring the decorations.
Read full articleFirst published: Jul 2010
Ismael-Aguirre v. Wharton and Hiralion Real Estate Inc v. 225 5th LLCThese cases address when and if a prospective purchaser is entitled to a refund of the down payment. In Ismael-Aguirre, it determined that the terms of the contract were unambiguous and that, based on the board’s failure to act, the contract was terminated. As to Hiralion, the court was faced with a different issue: whether the sponsor of the conversion misrepresented that the 12th-floor terrace would have views, as opposed to an eight-foot wall which enclosed the space. Based on the ambiguity between the written words of the offering plan and the floor plans, the court was willing to consider oral representations made by the sponsor, even though they would not normally be used when interpreting a contract.
Read full articleFirst published: Jun 2010
2229-13 Apt. Corp. v. PortnovThis case reminds us that the pet law, which is applicable to cooperatives (and to condominiums under certain circumstances), must be strictly followed so that any action to evict the owner of a pet that is being harbored without permission, has to be started within 90 days of the date on which the co-op, its employees, or agents first knew about the pet. In a co-op, it is imperative that the co-op act very quickly and give the shareholder no respite. This is because, before starting an action to evict a shareholder for a violation of the proprietary lease, most leases require that the co-op first serve a 30-day notice to cure and a 5-day notice of termination. When one adds in time allowances for service, correspondence, discussions, negotiations, and the like, the 90-day deadline is a very short time period. We recommend that, even where a shareholder claims the pet is temporary, these notices be promptly served. The co-op can always decide to withdraw them at a later date. We note that the court provided another alternative to immediate service of notices and the start of an action: entry into an agreement with a date by which the pet must be removed from the premises. While we are in favor of settlement agreements, again, a co-op must watch its time periods so that, if no agreement is signed despite a shareholder’s promises, the co-op has enough time to serve a notice to cure, notice of termination, and notice of petition and petition (or summons and complaint) to meet the stringent requirements of the pet law. As to attorneys’ fees, the court decided not to reward the shareholders for misleading the co-op. While the court believed it was constrained under the pet law to allow the dog to remain in the apartment, it concluded that there was no determination “on the merits” so that there was no “prevailing party.” In this way, it was able to decline to award legal fees to the shareholders.
Read full articleFirst published: May 2010
Beudert-Richard v. RichardThis case presents an excellent example of what may happen when there is a change in the law not addressed by property owners. The majority decided to allow the case to proceed, taking into consideration the apparent intent of Adam and Pamela, even though neither ever formally altered the way in which they held title to the co-op shares. The dissenting judge would have adhered strictly to the long-standing rules concerning ownership of shares and would have dismissed the complaint, as the lower court did. While we question whether there are many apartments that were purchased by couples as joint tenants prior to 1996 who have since divorced, we offer this case as a cautionary tale and a reminder that it is important that you communicate with your attorney about any changes in the law or your marital status which may affect ownership of property.
Read full article