Legal “Venting” on Avenue A

This was originally published on the SGR Blog.

The rights and privileges of owner of units in residential condominiums and cooperatives in New York are complicated enough, standing alone. But even more complex is a two unit condominium consisting of a street level commercial unit upon which sits a residential unit (the latter of which is a multi-apartment coop).

The various organizational documents in a so-called “cond-op” present challenging factual questions and legal issues when disputes arise. A recent case addressed the question of whether the owner of the commercial unit had the right to install a vent exhaust on the exterior wall of the residential unit.

The Hearth House Condominium, at 50 Avenue A, consists of a commercial unit, owned by Avenue A Associates LP, and a residential unit, owned by Hearth House Owners Corporation. Pursuant to a long-term commercial lease, Avenue A  leased the commercial premises to non-party Milk Money Kitchens, which is in the business of renting out commercial grade kitchens and equipment.

In order to operate its business, Milk Money needed to install a vent exhaust on the building’s exterior walls. The building’s management would not permit access to install the vent. So Avenue A sued the condominium’s board of managers and the owner and residents of the residential unit seeking both equitable and monetary relief.

Avenue A immediately moved, by order to show cause, for a preliminary injunction enjoining defendants from interfering with its alleged rights to install the vent stack and directing defendants to provide access to Avenue A and Milk Money to any part of the building so that the work can be completed. The court denied Avenue A’s request for a temporary restraining order, which sought the same relief as the underlying motion. Defendants opposed the motion and cross-moved to dismiss the complaint, arguing that, according to the clear language of the condominium’s declaration, Avenue A and Milk Money did not have a right to install the vent stack.

A preliminary injunction will only be issued if plaintiff demonstrates, with convincing evidentiary support, a likelihood of success on the merits, irreparable injury absent granting of a preliminary injunction, and that a balancing of equities favors its position. The Court found that Avenue A had not met any of those elements.

First, Avenue A did not show that the condominium’s declaration permitted it or Milk Money to perform the work. Avenue A argued that Article 11 of the condominium’s declaration, which is entitled “Easements”, allowed it to install the vent on the building’s exterior wall. In particular, Avenue A relied on paragraph 11.1 of the declaration, which provides in relevant part, that both Avenue A, as the commercial unit owner, and the co-op, “shall have an easement in common with each other to inspect, maintain, repair, alter and replace all Common Elements or Commercial Limited Common Elements (if any) where on the Property they may be located.”

Avenue A  also relied on paragraph 11.4, which provides that both the commercial and residential unit owners “shall have easements over the Common Elements and the Commercial Limited Common Elements (if any), reasonably necessary to allow function of said Units for purposes set forth herein.” According to Avenue A, those provisions gave it and Milk Money an absolute right to install the vent stack along the exterior wall of the building above the first floor.

The Court found that, contrary to Avenue A’s contention, the area where the vent stack was to be installed was not a “Common Element” of the building as defined by the declaration but was a part of the “Residential Unit.” The Common Elements are defined in Article 6 of the declaration,  as consisting  of common areas that are (1) “below the second floor” of the building and are (2) “not incorporated in either the Residential or Commercial Unit(s).”

Article 5, in turn, defines the Residential Unit, which is measured, above the second floor, “from the exterior face of each exterior wall to the opposite exterior wall” and includes, above the second floor, “all exterior walls which exclusively support or benefit the Residential Unit.”

Thus, the exterior walls of the building above the second floor were part of the Residential Unit and not part of the Common Elements of the building. This was further supported by the declaration’s definition of the Commercial Unit, which “consists of the commercial space on the first floor … [including] windows, doors and other installations in the exterior walls of the Building which are primarily used for the benefit of the Commercial Unit.”  Those provisions established that the exterior walls located above the Commercial Unit were primarily used for the benefit of the Residential Unit, not the Commercial Unit.

In addition to the easement under Article 11, Avenue A also relied on Article 8 of the declaration to support its argument that it or Milk Money had the a right to install the vent stack without obtaining the permission of the board of the Residential Unit. Article 8 provides that each Unit owner shall have the right, with respect to their Unit, “to install any ducts, stacks, chutes, or chases reasonably required in connection with the renovation of either Unit, provided that the nature and location of such installation thereof does not interfere materially with the use of the other Unit….” Although that section states that the consent of the other Unit is not required to perform this work, the section only applies to the work performed in each respective Unit. (“both Unit owners shall have the right with respect to their Unit….”). Thus, although Avenue A and Milk Money arguably had the right to install the vent stack on the exterior wall of the first floor where the Commercial Unit is located, such rights did not apply to the portion of the exterior wall on the second floor and above, which was part of the Residential Unit. Accordingly, the Court found that Avenue A failed to show that it was likely to succeed on the merits of its claims as the declaration did not give it the right to install the vent stack on the exterior wall of the Residential Unit.

With respect to the element of irreparable harm, Avenue A asserted how important the vent stack was to the business of  Milk Money, and that it would devastate the tenant’s business if it was not permitted to install the vent stack as planned. However, Avenue A was the unit owner, not the tenant or business owner, who was not a party to this action. The loss incurred by Avenue A if the vent stack was not installed would be lost rent under the commercial lease, which consisted of monetary damages and was not considered irreparable harm.

Avenue A also failed to show that a balancing of the equities favored its position. Although the denial of the motion might be detrimental to Milk Money’s business, the harm incurred by Avenue A, as the unit owner, primarily consisted of lost rental income, which was caused by its own decision to lease the space to Milk Money.  On the other hand, installation of the vent stack in order to ventilate nine commercial kitchens, would significantly impact the residents of the Residential Unit as it appeared that the vent stack would be installed on the exterior wall by the windows of the apartments of the Residential Unit, with the exhaust portion terminating near the terrace of a fourth floor apartment in the 6-story building. Finally, the circumstances presented were not of such an extraordinary nature so as to warrant mandatory injunctive relief, which, in effect, would grant the Avenue A the ultimate relief requested. Accordingly, Avenue A’s motion for a preliminary injunction was denied.

The Court also dismissed all of the claims in  the complaint, based as they were on the premise that Avenue A had the right to install the exhaust.

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