Category Archives: Co-Ops

This was originally published on the SGR Blog.

Was There Liability for Almost $1M Façade Repair?

The owner of an apartment in a residential co-op has every right to sue the board and managing agent for a perceived breach of the proprietary lease or for breach of fiduciary duty. But sustaining a claim may be easier said than done. And, as recent case illustrates, a shareholder’s claim arising out of an almost one-million-dollar façade repair was tested at the outset by several threshold legal defenses.

Bernard Weinstein, a resident in a cooperative apartment building owned by 12282 Owners’ Corp., asserted claims against the Co-Op’s Board of Directors and against the Co-Op’s managing agent, AKAM Associates, Inc., for failure properly to maintain the exterior of the building. The Co-Op and AKAM moved to dismiss the complaint.

This was originally posted on the SGR Blog.

Who Was Liable for Damage to Eighth Floor Unit?

High-rise commercial co-ops necessarily house utilities, pipes, and connections behind closed walls. As a recent case illustrates, where an enclosed pipe in one unit burst and damaged another unit, the Court may be required to navigate a web or relationships and agreements to determine who may be liable for the damage.

Metropolitan Productions, Inc. and Daylight Studio LLC sued Good Light Studio, Inc. and Good Light Studio 2, LLC and sought six million dollars for property damage and loss of income. The claim was the result of a frozen pipe that burst on February 1, 2015 and caused damages to a space occupied by Metro/Daylight on the 8th floor of 450 West 31st Street. Good Light moved for dismissal and/or summary judgment.

This was originally published on the SGR Blog.

Court Adjudicates Panoply of Claims, Counterclaims, and Defenses

Martha Schwartz alleged that 170 West End Owners Corp illegally installed and/or manipulated industrial fans on the roof of the building directly above her apartment. Schwartz was a tenant in apartment 30E at the building, a cooperative governed by Owners Corp.

Schwartz alleged that in 2009 Owners Corp. relocated a certain number of industrial fans directly above and/or near her top-floor apartment, in an attempt to force her out of the building. She alleged that in 2012 Owners Corp. manipulated the fans to direct polluted and freezing air into her apartment, and testified that she witnessed the fans in different locations by visiting the roof on various occasions both before and after 2009. Schwartz alleged that the relocation and manipulation of the fans caused excessive noise, vibrations, and odors in her apartment which continued and that her health declined as a result of these conditions.

This was originally published on the SGR Blog.

Did Coop’s Course of Conduct Effectively Grant Such Exclusivity?

Sara Baer asserted causes of action for a declaratory judgment, breach of contract, and trespass to chattel, and sought a permanent injunction against 825 Ocean Corp. She alleged in her complaint that she was the proprietary lessee and holder of cooperative shares for unit 2D at 930 East 7th Street in Brooklyn. In 2004, when she purchased those shares, she was told that a parking space was provided, which was ancillary to the premises. She further alleged that the parking space was provided for in the proprietary lease and that her decision to purchase shares within the building was based upon her right of continuing use of the parking space. She contended that, on or around February 2011, Ocean Corp. sought to allow another person to use, and sought to keep her, from continuing to use the parking space.

Ocean Corp. moved for an order granting summary judgment and dismissing the complaint, and contended that the complaint should be dismissed as Baer’s causes of action were all premised on the claim that she had possessory right and interest in the parking space because, as a non-resident shareholder, pursuant to the Ocean Corp.’s policy regarding the use and distribution of parking spaces, Baer was not entitled to utilize a parking space. Since Baer did not reside in the apartment, she was not entitled to use of the parking space.

This was originally published on the SGR Blog.

Court Decides If Board Had Grounds to Rescind Sale for Fraud?

Trump Village, Section 4 Inc., a private cooperative residential apartment complex, sued Gene Vilensky to rescind the sale of the shares appurtenant to the cooperative apartment he purchased in 2014. The first cause of action in the complaint sought damages for fraud, alleging that Vilensky intentionally misrepresented in his purchase application for the apartment that he would be the sole occupant and use it as his private residence. Trump Village alleged that instead he sublet the apartment on a short-term basis as part of a “real estate business.”  And asserted that Vilensky’s misrepresentations in the purchase application regarding his intent to use the apartment as a private residence induced the Village to approve his purchase—in connection with which the parties entered into an “occupancy agreement” that prohibited its use “for any purpose other than a private dwelling apartment for the [Vilensky] and his family.” Vilensky moved to dismiss the first cause of action on the grounds that it sounded in breach of contract and was insufficiently pleaded.  Supreme Court denied the motion. Vilensky appealed.

This was originally published on the SGR Blog.

Board Members Challenge Termination in Court

Did the Board of Directors of a residential coop have the right to terminate two directors? Were the dismissals subject to Court review under the business judgment rule?

Esplanade Gardens, Inc. is a six- building 1,872-apartment Mitchell-Lama coop on West 145th St. in Harlem (est.1967).

Robyn Tolliver and William Ross alleged that they were wrongfully removed from their positions as members on the Board of Esplanade.

This was originally posted on the SGR Blog.

Did the Board Have Authority to Impose Sanctions?

We often see decisions invoking and applying the “business judgment rule” to the Board of Directors of a residential cooperative or the Board of Managers of a residential condominium. But, as a recent case illustrates, that rule also applies to the BOD of a homeowner’s association.

Alan Ives and his wife are homeowners and members of Fieldpoint Community Association, Inc.  Fieldpoint is a master homeowners’ association that manages and controls the members’ use of common areas, as well as the exteriors of the members’ units and lots. In 2014, the Ives installed a six-foot-high aluminum fence in the backyard of their home. They then applied to the Fieldpoint Architectural Review Committee, seeking approval for the fence. The ARC denied the application, stating that “iron fences” are “considered inconsistent with the overall character and appearance of the Fieldpoint development.” The Ives appealed to Fieldpoint’s BOD, confirming the decision and directing them to remove the fence. The Ives did not remove the fence, and Fieldpoint imposed a one-time fine for $1,000, followed by fines of $20 for each day the fence remained in place.