Board of Mgrs. of Essex House Condominium v Manhattan L.B. Living Trust
Annotate this CaseDecided on November 17, 2009
Supreme Court, New York County
Board of Managers of Essex House Condominium, Plaintiff,
against
The Manhattan L.b. Living Trust, BROOKE L. MILSTEIN, as Trustee and THE SANDRA M. MILSTEIN FAMILY TRUST, SANDRA M. MILSTEIN, as Trustee, Defendants.
114290/08
Appearances:
Attorney for Plaintiff:Dale J. Degenshein, Esq.
Stroock, Stroock & Lavan, LLP
180 Maiden Lane
New York, NY 10038
Tele. No. (212) 806-5400
Attorney for Defendants:Baker & Hostetler, LLP
45 Rockerfeller Plaza
New York, NY 10111
By: John Siegal, Esq.
Melissa M. Carvalho, Esq.
Tele. No. (212) 589-4200
Louis B. York, J.
This suit was instituted by the Essex House condominium which seeks damages and injunctive relief because of the defendants' refusal to grant access in order that plaintiff may make an inspection and remove a severe mold condition and make repairs.
Plaintiff moves for a preliminary injunction to compel defendants to allow it access to inspect, conduct tests and remediate the severe mold condition. Defendants cross-move for a preliminary injunction enjoining the plaintiff from entering the premises and engaging in remediation of a mold, asbestos, lead and bacteria contamination until it complies with defendant's remediation plan and also pays the full costs of the remediation and adds defendants to the plaintiff's insurance policy as additional insureds.
The defendants purchased the condominium in 2007 for $5 million dollars. Their submissions indicate that they have continued to pay for the maintenance charges even [*2]though they have never moved in because of the mold condition. Eventually, the mold problem expanded to bacteria infestation, lead and asbestos contamination.
In response to defendants' complaints, the plaintiff performed several tests by experts it retained. The defendants did the same. There is no dispute that there is mold contamination which must be remediated. Both sides agree that the HVAC unit is a prime cause of the mold. There also seems to be water damage to the wood floors and other parts of the unit. Defendants also claim that the exterior shell of the building has to be tested and possibly reinforced against water damage. Defendants belatedly raised the question of water seepage in the windows as a further source of mold infestation. This became a basis of contention between the parties. Defendants have refused the plaintiff entry into the apartment, thereby preventing them from making inspections of the windows for water damage.
Defendants contend that plaintiff's time to make inspections is over. They have already been granted access and have made a number of inspections and tests. Plaintiff counters that it has not been given an adequate chance to inspect the windows. Defendants claim that their plan is the most reasonable one. It applies to all of the conditions while plaintiff's plan is too narrowly devised. Defendants demand that plaintiff assume the cost of the remediation while plaintiff states that who pays should be left in abeyance while plaintiff deals with the adverse conditions.
In essence, the Court is being asked at least by the defendants, to examine the experts' reports and protocols for remediation and decide which is the most reasonable.
What the Court's approach should be was determined in Levandusky v one Fifth
Avenue Apartment Corp., 75 NY2d 530, 554 NYS2d 807 [1990]. There, the Court held
that in a dispute between the landlord and the shareholder of a cooperative apartment, the
business judgment rule applied in corporate law should be applied to a dispute between the coop
board and the shareholder. The Court refused to pick and choose between the board and the
shareholder to find the most reasonable plan. The decision of the board must prevail, even if it is
not necessarily a the wisest one, as long as there is no breach of fiduciary responsibilities, such
as a fraud or bad-faith and it is within the scope of its authority. Konrad v 136 East 64th
Street Corp., 254 AD2d 110 [1st Dept 1998] reiterated the standard stated in
Levandusky:
Defendants' decisions concerning the manner and extent of repairs and
renovations to the building were within the scope of their authority under the by-laws and
proprietary lease of the cooperative, and were , therefore, shielded from judicial review by the
business judgment rule ...
The business judgment rule continues to have viability in disputes between boards of
directors and shareholders (Parker v Marglin, 56 AD3d 374, 869 NYS2d 21
[1st Dept 2008]):
[*3]Plaintiffs disagree with the board's decisions
as to costs, means, allocation and methods employed in making repairs to the building, but fail to
adduce evidence of self dealing, fraud or other acts constituting a breach of fiduciary duty
sufficient to overcome the business judgment rule.
There is no dispute that the by-laws and lease place the responsibility for the common areas
such as the hallways within the condominium corporation as well as conditioning and
ventilation units. The board has the right of entry into a unit to remedy conditions
"contrary to the intent and meaning of the provisions hereof" (By-laws, Article 5, Section 19).
Who has the responsibility for the unit windows need not be decided at this time because the plaintiffs have voluntarily agreed to test and repair. Responsibility for the payment of the various parts of the remediation process is not something that needs to be decided at this juncture. It is appropriately decided by the decision and judgment in this action.
From the foregoing discussion, it appears that the plaintiff will ultimately prevail on the issue of whose plan for remedying the current situation in defendant's apartment unit will be adopted. It is apparent that unless plaintiff is allowed to institute its plan, both sides will suffer irreparable harm, the board of directors representing the shareholders because of the deterioration in building conditions and defendants each day they are unable to move into their unit. The balance of equities tips in favor of plaintiff who appears to be willing to make repairs, but is being prevented from doing so. Accordingly, a preliminary injunction substantially in accordance with plaintiff's plan shall issue.
By reason of the foregoing, it is
ORDERED that a preliminary injunction shall issue as follows:
1.Plaintiffs are permitted entry into defendants' unit for the purpose of examination and testing.
2.To do so, plaintiff shall give defendants at least 24 hours notice of the day and time it will enter the unit.
3.Such entry shall be between the hours of 10:00 a.m. and 4:00 p.m., if those hours are inconvenient, either party may apply to the Court for a change in hours.
4.Defendants may be present during the above times, but in no way shall they unreasonably obstruct or interfere with the plaintiffs' and its employees' and contractors' activities.
5.The plaintiff shall perform its activities expeditiously with a view toward the defendants moving into the unit as quickly as is reasonably possible.
6.The issue of who is to pay for the various remediation and renovation expenses may be
determined at the conclusion of this action.
[*4]
Dated: _November 17, 2009
_______________________
Louis B. York, J.S.C.
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