Case Notes in


First published: Dec 2017
Matter of Steinberg-Fisher v North Shore Towers Apts., Inc.

Alteration work that drags on with no end in sight is a problem in all buildings. Neighbors are disturbed by noise, odors, and workers, and building systems (especially elevators) often endure additional strain. On the other hand, if a shareholder is physically or psychologically incapable of complying with policies, the policies must be reasonably modified. It seems this case is one where the courts would have liked to see the parties engage in an “interactive process.” It is a construct often used in employment cases, where the parties collaborate to arrive at a solution acceptable to all. It has been applied in the housing context for the last several years, and it appears that the court here was indeed bothered that the parties went, almost immediately, into “litigation mode.” It seems Steinberg-Fisher wanted unlimited time, and the board was unwilling to budge from the 90-day limit. When a reasonable accommodation is requested – especially one, as here, in which the need for some accommodation appears to be unchallenged – it is important that the parties speak with one another in an attempt to find a solution acceptable to all. That approach can often obviate the need to involve the DHR or the courts altogether, which is always preferable.

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First published: Sep 2017
Moltisanti v. East Riv. Hous. Corp.

An important issue in this case was whether either party was likely to succeed on the merits – a necessary element for the granting of a preliminary injunction. The lower court determined that Moltisanti would probably prevail because of the actions taken by the board. The appellate court, however, demurred, finding instead that the board’s actions created issues of fact, meaning that the case had to go to trial for resolution. Although Moltisanti v. East River Housing Corporation will not be the final word on this subject, we remind boards that they may not be able to rely on a proprietary lease clause if the cooperative, through its board or agent, violates that provision. We cannot stress often enough the need to comply with governing documents and procedures.

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First published: Jul 2017
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.

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First published: Jul 2017
Coliseum Tenants Corp. v. Benmark

This case is an important reminder to purchasers: always do your due diligence. Purchasers may want to review DOB records and have their lawyer get as much information as possible from the managing agent – not just what can be gleaned from board minutes. If a purchaser suspects an alteration may have been performed without appropriate permits and sign-offs, it would be prudent to obtain from the cooperative written confirmation that the alteration work was done with consent, or an indemnity from the seller, should an issue involving a previous alteration arise. Further, this case highlights the importance of properly maintaining records. We believe this problem will be minimized given the data programs available and the current practice of scanning most documents electronically. Finally, although it is not discussed in depth in the decision, Benmark was using the apartment for short-term rentals, in violation of the law and therefore the lease and building rules. There is no discussion as to whether Benmark has ceased that practice.

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First published: Jun 2017
Domaszowec v Residential Mgt. Group LLC

A contractor dies on the job. Who’s liable?

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First published: May 2017
Cohen v. CASSM Realty Corp.

There is apparently bad blood between these parties; they have been in litigation for years. This particular decision is important largely because the parties’ claims and defenses cover a lot of legal ground. One issue that also came up in the case was whether Cohen – because of the board’s failure to maintain and repair the building’s roof and roof beams, making it impossible to live in her top-floor apartment – was entitled to an abatement of maintenance and the reasonable cost of working/living elsewhere. She had sued O’Neill and another board member, Thanos Vassilakis, and the court said she was not entitled to the abatement and reimbursement. It said that individual board members would not be liable, as individuals, for claims concerning actions taken in their capacities as members of the board. Although the court did not order injunctive relief at this interim stage in the litigation, the court left the issue open for trial, so that the shareholder who is not an artist may indeed be required to sell his apartment.

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First published: Apr 2017
Bluff Point Townhouse Owners Assn., Inc. v Kapsokefalos

It appears from the decision reported here, and from other cases concerning these parties both at the lower court and the appellate level, that the two sides continue to litigate in part because of a personal incident. Where there are personal disputes in an association setting, it is important that the parties try to keep them in perspective. Homeowners should not take action merely to flout the rules, nor should a board implement rules solely directed at an owner as a result of a personal animus. Condominiums, cooperatives, and homeowners associations require people to live together and comply with the rules, which are presumably implemented for the benefit of all owners. While the motion discussed here was a “preliminary injunction,” we suspect that, if the matter proceeds to conclusion, Bluff Point would probably receive the injunctive relief it seeks, assuming the rules were promulgated in accordance with Bluff Point’s governing documents. This is because it has long been the law that when one buys into a community such as a cooperative, condominium, or homeowners association, one submits to the governance of that community.

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First published: Feb 2017
Matter of Delkap Management v. NYS Division of Human Rights; Temple v. Hudson View Owners Corp.

Courts must balance the rights of apartment owners against the rights of a board to enforce its rules (and the rights of other apartment owners to expect even-handed enforcement of those rules). Perhaps the court in Hudson View explained the balance best, noting that the disability statutes are “not intended to elevate plaintiffs above their fellow residents. The law requires only equality, not that a ‘superior advantage’ be given.” Thus, both apartment owners and boards must think about accommodations in this context: will the accommodation allow the apartment owner to enjoy the apartment as any other resident would?

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First published: Jan 2017
11 Wooleys Lane Housing Corp. v. Smith; 50 Sutton Place South Owners Inc. v. Fried

When a co-op is trying to determine whether family members can live in an apartment without the shareholder also being present, a necessary first step is to analyze the terms of the lease itself. Although not discussed in either of the cases, we also believe that the cooperative’s course of conduct is an important factor to be considered. Course of conduct will rarely, if ever, trump a contract; yet, if the clause is ambiguous, the way in which it has been enforced may properly be used to consider how the parties interpreted the provision. Moreover, co-op boards must treat their shareholders equally, so that allowing one shareholder to have family members as the sole residents, while disallowing the same arrangement in another apartment, may give rise to a charge that the two shareholders are being treated differently, which is a breach of the board’s fiduciary duty. In a perfect world, use clauses would be unambiguous. To the extent possible, boards should propose and encourage shareholders to vote in favor of an amendment to the proprietary lease so that the use clause actually requires the kind of occupancy the shareholders intend and expect to have the board enforce.

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