Real Estate

In a recent decision, the New York Appellate Division, First Department, overturned a lower court’s dismissal of a defamation lawsuit brought by former tenants against their condominium, its managing agent, a board member, and an employee of the managing agent. The case, Dolcimascolo v. Board of Managers of Dorchester Towers Condominium, centered on allegations that the defendants made false statements to the police, leading to the arrest of one of the plaintiffs.

Lower Court Dismissal

The Supreme Court of New York initially dismissed the lawsuit, including the defamation claim, on the grounds that statements made in good faith to the police are privileged, even if false. The court found that the plaintiffs had not sufficiently alleged malice to overcome this qualified privilege.

Appellate Court Reversal

The Appellate Division disagreed, ruling that the plaintiffs had met the heightened pleading standard for defamation by detailing the substance, place, and manner of the alleged defamatory statements. The court also found that the plaintiffs had sufficiently pleaded the malice requirement necessary to survive dismissal.

Malice and Qualified Privilege

In defamation cases, qualified privilege protects statements made in good faith, such as reporting suspected criminal activity to the police. However, this privilege can be overcome if the plaintiff proves that the statements were made with actual malice – meaning with knowledge of their falsity or reckless disregard for the truth.

The Appellate Division determined that the plaintiffs’ allegations, combined with the evidence presented, raised a sufficient question of malice. The court highlighted the strained relationship between the parties, the defendants’ potential motive to stop the plaintiffs’ protests, and the possibility that the statements to the police were untrue or embellished.

In their complaint, the plaintiffs alleged a history of escalating tensions with the condominium board and its agents, including numerous unwarranted police calls and unjustified arrests. They claimed that after they vacated the condominium and began protesting their treatment, the defendants retaliated by falsely accusing one of the plaintiffs of making death threats to the police, leading to his arrest. The alleged defamatory statements were made by an employee of the managing agent and included in a charging document and affidavit filed with the police.

Implications for Condominium Disputes

This decision serves as a reminder that even statements made to law enforcement can be subject to scrutiny in defamation lawsuits. It underscores the importance of acting in good faith and avoiding malicious intent when reporting suspected criminal activity, especially in contentious situations like disputes between condominium boards and residents.

Read the lower court’s decision and then the First Department’s decision here.

In the case of 360 E. 72nd St. Owners Inc. v. Wolkoff, a New York State Court in Manhattan handed down a decision regarding pets in cooperative buildings that co-op boards and property managers should beware. The outcome underscores the importance for co-ops to take prompt legal actions when dealing with residents who violate pet-related house rules and the risks of delaying enforcement. Time is of the essence.

The defendant, a co-op resident, owned a mixed-breed dog that included American Staffordshire Terrier, a breed prohibited by the building’s House Rules. The co-op board was aware of the dog but failed to start a legal action seeking the dog’s removal within three months, as required under New York City Administrative Code §27-2009.1.

Because the co-op didn’t act quick enough, its only hope was to prove in a full-blown hearing with witnesses and other evidence that “the harboring of a household pet causes damage to the subject premise, creates a nuisance or interferes substantially with the health, safety or welfare of other tenants or occupants of the same or adjacent building or structure” (NY Code § 27-2009.1 (d)). The court held for the pet owner, upholding a strict application of the Pet Law.

Key Takeaways for Coop Boards and Their Property Managers

• Time is of the Essence: If a resident violates pet-related house rules, co-op boards need to take immediate legal action. The three-month window specified in the New York City Administrative Code is absolute. Failing to act promptly waives the co-op’s right to enforce those rules, even against prohibited breeds.
• Breed Doesn’t Matter: The court decision emphasized that the particular breed of the animal is irrelevant. The focus is on whether the animal’s presence was known and if the required legal action was taken within the specified timeframe.
• Waiver Exception: There is a narrow exception to the law. If a pet causes property damage, creates a nuisance, or substantially interferes with other residents’ health, safety, or welfare, the three-month rule doesn’t apply. However, co-op boards bear the burden of proving that the animal fits this exception, based on its specific behavior, not just breed generalizations. Collecting evidence quickly and having experienced counsel prepare to present a case for waiver is critical or you’ll be stuck with the pet in the building.

This court decision highlights the challenges faced by co-op boards when enforcing pet policies. It reinforces the importance of proactive measures, clear communication, and timely legal action to protect the interests of their co-op community.

Read the decision here.

Condominium boards embroiled in construction defect lawsuits against developers (sponsors) often see a further complication arise: the sponsor bringing in the project architects as third-party defendants. Sometimes the condo can sue the project architect directly but many times the focus is on the developer and its members and they point the finger at the architect. This tactic can introduce additional complexities into the condo board’s case against the sponsor. A recent New York case sheds light on this dynamic.

In the case of Board of Managers of the 15 Union Square West Condominium v. BCRE 15 Union Square West LLC, the condo board sued the building’s sponsor. The sponsor, in turn, filed claims against various third-party defendants, including the project architects, Perkins Eastman Architects P.C. Perkins Eastman argued that the sponsor’s claims against them were time-barred under their contract and that certain claims were duplicative and should be dismissed.

Key Points for Condo Boards

• Shifting Focus: When the sponsor brings the architects into the lawsuit, it can divert attention from their own potential liability for construction defects. Condo boards need to maintain a strong focus on the primary case against the sponsor. If there are additional pockets to pay for damages sought by the condo, great. But, stay focused on moving the condo’s case against the sponsor and its members forward.
• Statutes of Limitations: There is a limited window of opportunity to file claims against architects based on design flaws or oversight errors. Expired statutes of limitations can protect architects and prohibit claims against the if too much time goes by.
• Breach of Contract vs. Professional Negligence: Sponsors may attempt to pursue architects on both breach of contract and professional negligence grounds. However, demonstrating professional negligence requires proving a violation of broader industry standards that goes beyond the contract itself.
• Contractual Indemnification: Contractual indemnification clauses, by which sponsors might seek to shift liability to architects, often have time limits that diminish their usefulness.

In view of this, condo boards should be aware that sponsors may try to deflect blame and responsibility by bringing architects into the lawsuit. This additional layer of complexity can delay the condo’s suit and make it more complicated because of the additional parties and issues involved, but in the end, if there are more parties available to pay for the damages sought. However, it could end up being a good thing provided experienced counsel is leading the charge and stays focused on pushing the condo’s claims full speed ahead.

Here’s the case.

Property managers, take heed! A recent court case highlights the power you have to protect your associations when a neighboring building owner does not cooperate in giving a license for protection on their property so that the association can perform its work . In this case, the court awarded a license fee and mandated typical insurance, but did not reimburse the unneighborly neighbor for any additional professional fees or costs and did not grant any other consideration for the license.

The Case of the Unneighborly Neighbor

The specifics of the case may vary, but the core situation is this: Building A requires repairs to its facade, and in order to do so, Building A has to install protection on Building B’s property to protect Building B. Here’s where the trouble begins.

Building A ideally seeks a license agreement with Building B, allowing the repairs to proceed with clear terms for access and consideration if the access is really intrusive. However, if Building B proves uncooperative and refuses such an agreement, Building A is forced to go to court to obtain a court-ordered license.

The Burden of Proof Lies with the Repairing Building A

It’s crucial to understand that the burden of proof lies with Building A, the entity seeking the license. In order to obtain the court-ordered license, Building A must demonstrate:

• Necessity of the Repairs: The court needs to be convinced that the repairs are essential and cannot be performed without protecting Building B’s property.
• Minimal Encroachment: Building A must show they have minimized the intrusion onto Building B’s property as much as possible.
• Security Measures: A plan outlining how Building B’s property will be protected during the repairs needs to be presented.

The Unforeseen Costs of Uncooperativeness

Building B’s refusal to cooperate may backfire. While they avoid granting explicit permission for the protection, they also forfeit the opportunity to negotiate a potentially favorable consideration package. It’s generally better for the parties to negotiate an out-of-court license than to leave it to a Judge to make a decision on the license terms and consideration. The court, in its decision, may not consider reimbursing Building B for its signifiant attorneys fees incurred regarding the matter. In the case, Building B was looking for up to a $10,000 reimbursement during negotiations which was dwarfed once litigation started. Building B walked away with no reimbursement by the Court.

The Takeaway: Cooperation is Key

This case serves as a cautionary tale for both parties involved. For property managers, it underscores the importance of pursuing clear agreements with neighboring property owners before embarking on facade repairs. For uncooperative neighbors, it demonstrates the potential financial burden of refusing a reasonable license agreement.

By fostering open communication and seeking mutually beneficial solutions, property managers can avoid the hassle and expense of litigation, ensuring a smoother and more cost-effective repair process for everyone involved. It is critical to bring in experienced counsel early on in the license process in order to facilitate negotiations and if necessary, bring the neighbor to Court. The Matter of Board of Managers of Ariel Condominium v. Broadway Metro Association, L.P. case gives, associations that require a license from their uncooperative neighbors, another tool in their arsenal for compelling the neighbor to be neighborly. Read the decision here.

Condominiums have a contractual duty to maintain common elements. While the business judgment rule normally protects condo board members from personal liability if their choices seem unwise, it won’t shield the condo if the board breaches its contractual obligations to owners. Boards who neglect these responsibilities could open the condominium up to significant liability.

The Case: 580 Llorrac St. Corp. v. Board of Managers of 580 Carroll Condo.

In this case, a condo unit owner suffered water damage to its unit for several years due to the board’s failure to promptly repair a common element – the building’s facade. The owner repeatedly alerted the board to the ongoing water infiltration. Expert reports confirmed that the damage was directly caused by the degraded facade.

Despite this, the board took over a year to even investigate the source of the leaks and delayed repairs for yet another seven months. The court ultimately ruled this was a breach of the condo’s bylaws, which contractually obligated the board to maintain common elements.

Key Takeaways for Property Managers & Boards

• Common Element Maintenance is Crucial: Condo boards can’t avoid their responsibility to repair and maintain common areas. Ignoring issues will likely lead to greater damage and potentially, lawsuits.
• Promptness Matters: Contractual language often calls for “prompt” or timely action. Boards may be liable if they delay repairs without a reasonable justification.
• The Business Judgement Rule Has Limits: Boards usually enjoy protection under the business judgment rule, meaning courts won’t second-guess their decisions. However, this rule does not always apply.
• Mitigation of Damages: Unit owners have a duty to mitigate (minimize) damages to the extent possible, but failure to do so won’t completely bar them from suing the condo over breach of contract.

How to Protect Yourself as a Board or Property Manager

• Know Your Bylaws: Thoroughly understand your condo’s bylaws and governing documents, outlining your specific obligations regarding common areas.
• Act Reasonably Prompt on Reports: Don’t drag your feet when unit owners report leaks or other damage that might relate to common elements. Investigate promptly.
• Document Your Process: Keep meticulous records of all reported issues, investigations, the decision-making process, and contractor bids. This can help if a disagreement arises.
• Consult Experts: If in doubt about the technical aspect of a problem, get advice from professionals like engineers and building inspectors.

Here is the 580 Carroll Condo Court decision by the Supreme Court in Brooklyn, New York.