Board of Mgrs. of the Heywood v Wozencraft

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Board of Mgrs. of the Heywood v Wozencraft 2012 NY Slip Op 32323(U) September 10, 2012 Supreme Court, New York County Docket Number: 100359/11 Judge: Donna M. Mills Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] f I I PRESENT : 130NNA M. MILLS PART , 58 Justice INEX No. H0AHI.I 0 ; 1 MANAGERS Ob / HE HKYWOOII, ON BEHALF OF AI .I, ITS UNIT OWNERS, 100359/11 I PI aintill; MOTION I A T E ~ I , ,7-- -v- STEVEN WOLKNCRAFT, Defendanl. _. + _ ., Answering Aflidavits Exhibits_ _ Reply i ng A ffldav its C 110S S-MOTION .- __ - .~ , JYES -- I- ; , I.) y, I Upon the foregoing papers, it is (qigred thqt this motion is: 3 DECIDE11 IN ACCORDANCE WI 1 1I 1 1 It: ATTACHED OK\)* 13ated: FILE &@ 2u12 10 r GLER* O W E ( GQUN NEVJyORK [* 2] Plaintiff, Index No. f t -against- STEVEN WOZENCIMFT, I WuNIY CLERKS OFFICE i : N W YORK E b - Plaintiff moves for summary judgment; for an order striking dcfendant's affirmative L defenses and counterclaims; for an ordcr appointing a referee to assess charges; and for an order granting attorney's fees. Defendant crossmoves for partial suinmary judgment. Plaintiff, the board of-maiiagcrs of a condominium located at 263 Ninth Avenue, New York, New York, brings this action against d e h d a n t , the owner of. Apartment 9A (the 1.Jnit). In tlic complaint, plaintiff alleges that defendant has failed to pay coinnion charges on the IJiiit for several years. Plaintiff alleges that defendant has not resided in the Unit on a regular basis. In February 2007, Wells Fargo Bank, N.A., the holder of thc first mortgage on the IJnit, commenccd an action to foreclose its morlgage, claiming that dcfendmt had iailed to make payments due July 1,2006 and thereafter. Plaintiff believes that this foreclosure action is still pending. Also, on Jiily 3 1,2009, def'endant filed a petition for bankruptcy relid, under Chapter 7 o l the Bankruptcy Code, in the United States Bailkruptcy Court for the Central District of California. According to court records, this proceeding was dismissed on November 15, 2010, based 011 dekndant's hilure to appear at a creditor's iiiecting. Following the dismissal, plaintiff coriunenced this suit. IJpon receipt of the suIninons and complaint, defendant responded with a pre-answer [* 3] motion to dismiss. Plaintiff cross-inoved for denial of the motion and for summary judgncnt. On October 24,20 1 1, this court, by decision and order, grantcd defendant s motion only to the cxtent that it addrcssed claims for rent and the appointment of a receiver in plaintiffs complaint, and denied the cross motion for summary judgment as premature. Thereafter, defendant interposed an answer, which included ten affirmative deknses and six counterclaims. Plaintiff moves for summary judgment again, on the ground that defcndant is obligatcd to pay the common charges to plaintiff, that defendant does not deny iionpayinent, and that he only disputes thc amount of the unpaid charges. PlaintifT also moves to dismiss all the affirmative defenses and counterclaims in the answer on the ground that they are lacking in merit. The first affirmative defense alleges that dekndant has not received accurate monthly bills arid was not sent monthly bills for the period i n question. Dehda11t allegedly spends most of his tiine in California. Plaintiff states that it has sent said bills to dcfciidant s reprcscntativc i n Irvinc, California, and also states that thcsc bills are accurate. The second affirmative dcfcnse is hascd on lachcs, whcre defendant claims that plaintifr s alleged delay in comnicnciiig this action has prejudiced defendant. Plaintiff asserts that a delay was ncccssary due to the loreclosure action, where the mortgagee would have been given legal priority over plaintiff s lien for unpaid charges, and the bankruptcy proceeding, which would legally precludc this suit. Plaintiff contends that, since dekndant allegedly owes five years of unpaid charges, there is no cause lor prejudice. I hc third affirmative defense and first counterclaim alleges thal plaintiff is suing for fraudulent and inflated charges, as well as fees for which defendant is not liable. Plaintiff 2 [* 4] contends that all the charges arc proper, and that fees incurred in coiineclion with the collection of chargc arrears are authoriLed pursuant to the condominium by-laws (By-Laws). The fourth affirmative defense alleges that plaintiff has breached its fiduciary duty to defendant. Thc fifth affiriiiative d e i n s e alleges that plaintiff breached its duty of fair dealing to him. The sixth affirrmativc defense alleges that lie has been treated in a discriminatory way by plaintiff. Plaintiff argucs that all of these delenses lack merit and have been raised bccause of dcfcndant s refusal to pay thc charges, a i d plainti1r s complaints of defendant s allegedly improper USC of tlic Unit. Plaintiff denies that it has deprived defendant of certain services and amenities. The seventh affirmative defense alleges unclean hands. Plaintif1 denies any wrongdoing on its part, and claims only to be enforcing its rights under tlic By-Laws. The eighth affirmative de ¬ense alleges that the late fees charged to defendant are usurious. Plaintiff argues that the dcfcnsc of usury has 110 application here because this is not a inatter of interest charged on a loan or similar transaction, but one involving the agreed-upon payment of it penalty lor noiipaymenl of charges. The ninth affirmative deknse alleges that plaintiff has wrongfully deprived defendant of services and amenities. The tenth affiriiiative defense allegcs that plaintiff has created a nuisance in iiitcrfcring with dcfcndant s iisc and cnjoyineiit of the IJnit. Plaintitt denies the allcgations and refers to dcfcndant s impropcr use of thc Unit, and his violations oPthe By-Laws. As for the remaining counterclaims, which include an entitlement to attorney s fees h r deceptive practices, and conipcnsatory and punitive damages for discriminatory treatment and harassment, plaintiff secks dismissal o r sevcrance. Noting the probable need of discovery to 3 [* 5] rcsolve the matters raised by defendant, plaintiff clainis that these mattcrs could take years to adjudicate. Plaintiff avers that the main action is ripe for summary judgment and that thc recovery for the charges should be treated separately from defendant s other claims. PlaiiitilT seeks a referee to ascertain the proper amount of charges owed to plaintiff. Plaintiff argucs that dcfcndant s primary dispute is with the amount of the charges. Plainti11also seeks attorney s k e s , which are obtainable since thc Hy-Laws provide for the granting of such relief for expenses incurred through litigation. Dcfcndant opposcs tliis motion, claiming that he docs dispute his liability, and contending that he should not be required to pay the charges. He argues that plaintiff has breached its obligations to liini in failing to provide proper services to him, in violation of the charter and ByI.aws. Sonic of thc services that allegedly were denied to defendant were dooriiinn services, service calls to his Unit, air conditioning, and receipt of packages and deliveries. Alternatively, defendant seeks a structural adjustmetit to the unpaid charges to compensate liini for h e alleged reduction of services over the years. Defcndant also claims that he has been subject to steady harassmcnt by members of plaintiffs board. Defendant asserts that plaiiitifT fided to include a complete copy of the By-Laws, Icaving out provisions which he claims favor his position. According to defendant, this failurc is sufficiciit to deny the motion ibr sutnrnary judgment. Defendant states that plaintiff was obligated, pursuant to the By-Laws, to act promptly to collect unpaid charges, 30 days after tlic duc date of payment. He claims that plaititiff waited for years before taking appropriate action, and should bc precluded from suing him on the grounds of lachcs. Ilcfendant contends that plaintiff s records of tlic unpaid charges are derived from a sclf- 4 [* 6] serving worksheet prepared solely for this litigation, and not a contemporaneous business record. It is defendant s position that the charges on record are inaccurate and excessive. He also contends that he had not received the monthly bills from plaintiff in violation of the By-Laws. Ilcfcndant asscits that all tlic claims hc has assertcd in response to the complaint raise issucs of Fact, precluding judgment. He states that there is a need lor discovcry to uncover the truth of this matter. Dcfcndant also statcs that plaintiff brought the earlier motion for summary judgment only a year ago, which was denied. Defendant claims that the prcsent motion is not bascd on any new evidence and is in violation o l the court s preliminary conferencc ordcr. Llcfcndant requests that this court dciiy plaintiffs motion to sever the claims in this action on the ground that thcrc slnould bc one trial herein in the interest ofjudicial efficiency. He also request that plaintiffs motion for a rcfcrec s inqucst bc denied because he demands a trial by jury on all issucs. Defendant s cross motion is apparently based on his sixth and ninth affirmative defcnses, and his fourth and Glth counterclaims, alleging failure of services and discrimination. In thcse counterclaims, he is seeking a reduction o l the damages claimed by plaintiff with respect to the failure of scrvices, and compensatory and punitive damages with rcspect to discrimination. However, he seeks summary judgment in the form of a declaratory judgment, declaring Rule 32 of plaintiffs house rules to bc invalid. This rule allows plaintiff to deprive unit owners of certain nonessential services if thcy fail to pay their current charges. Ikfendant argues that this rulc has been used uniairly against him and that h i s court shouId annu1 it. Plaintiff, in reply and in opposition to the cross motion, states that defendant s affidavit is defectivc, in that it was notarized outside of New York, and lacks a certificate of authenticity 5 [* 7] as mandated by CPLR 2309 (c). Plaintiff states that it is standard policy to deny certain nonessential services to IJnit owIiers who ¬ail to pay their charges. WhiIc defendant complains o f a lack of scrvices, plaintiff states that his dissatisfaction docs not diminish the fact that he has not performed his obligation to pay. Plaintill states that the cross motion is seeking a declaratory judgnient that is not pleaded in the answer. Plaintiff considcrs this attempt to invalidate an allegedly lcgitiniate policy lrivolous and improper. Plaintillattests to the validity of its summary judgnicnt motion, holding that thcre is no dispute that defendant lailed to pay the charges. Plaintiff dismisses most 01-the issues raised by delendarit, including the failure to submit a full copy of the By-Laws, the claim of laches, tllc absence of discovery, except with respect to the counterclaims, the accuracy of the records, the failurc to scnd monthly bills, t1ic demand for a jury trial, and the fact that this is thc sccond siich motion. Plaintifi also claims that defendant Lils to substantiate the allcgations of discrimination and harassment, that defcndant canriot cxpcct an entitlement to all services and amenitics, and that he lacks a ground to challcnge plaintiffs actions pursuant io the business judgment rule. T reply, defendant submits a certificate of authenticity of thc Florida notary public who n notarized his affidavit. Hc contends that he expressly seeks declaratory relief in his answer, relating to the denial of scrvices hc was meant to receive. lle states that plaintiff s summary judgment motion must bc dcnied because plaintiff failed to provide a complete copy of the ByLaws, and allegcdly submitted an inadequate copy of the charges records. Defendant claims that his situation is sufficicnt to challcrige plaiiitifl s reliance on the business judgment rulc. I Ie also asserts his right to havc discovery completed arid deleiids his right to a jury trial. Dcfcndant 6 [* 8] .. states that he did not receive the monthly charge bills allegedly sent to his representative and that he did not tell plaintiff to scrid thc bills to that person. The proponent of a motion for summary judgment must deinoiistrate that there arc no material issues of fact in dispute, and that it is entitled to judgment as a matter of law. Dnllns- Stephenson 17 Wuismun, 39 AD3d 303, 306 (1 Dcpt 2007), citing Winegrudv New York [Jniv. Med. C lr., 64 NY2d 8 5 I , 853 ( I 985). IJpon profI er of evidence establishing a prima facie casc by the movant, the party opposing a motion for summa~judgincnt bears the burden of produc [ing] evidentiary proof in admissible form sufficient to requirc a trial of material questions o f I act. Peop/e v Grusso, 50 AD3d 535, 545 (1 Dept 2008), quoting 2uckc.rmun v City of New York, 49 NY2d 557, 562 (1 9SO). IP there is any doubt as to the existencc of a triable issue of fact, sumnary judgment must be denied. Rotuha Extruders v C eppos, 46 NY2d 223 (1 978); Gross 17 Amalpmated Hous Ik~rp., AD2d 224 (1 Dcpt 2002). 298 The court shall dccide the cross motion lbr partial suillnlaryjudgnicnt first. In the ninth affirmative defense and fifth counterclaim of the answcr, defendant refers to plaintiffs alleged policy of denying certain services to unit owners, without specifically referring to Rule 32. Defendant requests that the court declare said policy null and void. Defendant claims that plaintiff cannot apply the business judgnicnt rule here, because, througli its policy, plaintilf has acted unfairly and not in the interest of unit owners. The busincss judgmcnt rule is applicablc to the board of directors of cooperatives and condominiiims corporations. I erlbinder v Board of Mgrs o f 41 1 E. 53rd St Condominium, 65 AD3d 985, 989 (1 Dept 2009). [TI he business judgment rule does not apply [to decisions by a condominium board of managers] where the board fails to act within the scope of its authority 7 [* 9] and in good faith. BonrdofMgrs. of 22Y Condominium v J.P.S. Reulty C h , 308 AD2d 314, 3 16 (1 Dept 2003), citing Matter of Levandu,rky v One Fifih Ave. Apt. Chrp., 75 NY2d 530 (1 990). So long as the board acts for the purposes of [thc homeowners association), within the scopc of its authority and in good faith, courts will not substitute their judgment for the board s. L 3rulhmoreRidge Ilonzeowncrs Assoc., Innc. v Mendicino, 63 AD3d 1038, 1039 (2d Dcpt ZOOS), quoting l,evanu zc,skyat 538. Ilerc, plaintiff has applied Rulc 32 to those unit owners who havc not paid their coninion charges. They are obviously being distinguished from those owiicrs who are current in their payment of charges. However, since unit owners arc obligated to pay their charges, their failurc to do so constitutc a violation of condominium policy. The court finds that Rule 32, if applied rcasonably, should not be . sub.ject to annulment. Plaintiff clearly refers to nonessential services, and defines them in the rule. Once the owner pays his or Iicr outstanding chargcs, these services are promptly resumed. The court does not find this policy, by nature, unfair or discriminatory, since it only applies to nonpaying unit owners. The court finds that the aforesaid nile is not in violation ofthe business judgment rulc, and that, if applied reasonably, is not unfair. The court shall deny the cross motion. Plaintiff s motion for summary judgment appears to be partial, since plaintifi is willing to move on the issue of liability and accept a hearing to determine damages. Its position is straightforward, in that defendant is delinquent in paying charges, and there is no disputc as to the failure to pay. Defendant has raised a number oi issues, though he does not actually claim to havc paid any charges. He argues, on one hand, that he has not received the regular bills fi-om plaintiff, or that he did not authoriLe the representative who allegedly received the bills, or that 8 [* 10] the bills in question are highly inaccurate or excessivc. On the othcr hand, he argues that he should only pay a reduccd amount o l the unpaid charges because he has been pcrsonally harassed by plaintiff s representatives and denied essential serviccs and, therefore, his right io use and enjoyment as a unit owner, for no other reason than that hc is the victim of pcrsonal discrimination. Section 40-c (2) ofthe Civil Rights Law provides gencrally that all persoiis within the jurisdiction of this state are entitlcd to the equal protection of the laws of this state, and that no person can, bccausc of race, creed, color, national origin, sex, martial status, sexual orientation, or disability, as such tcrni is dciined in the Executive Law, bc sub-jectedio any discrimination in his or her civil rights. Here, defendant does iiot definc or explain the basis of his claim of discrimination, making his allegations vague, He fails to identily the particular protected category to which he belongs. Defendant fails to statc a claim lor discrimination, and the sixth affirmative dcfcnsc and fourth countcrclaini shall be dismissed. Ihe aforcsaid Rule 32 providcs for plaintiff s denial of iioiiessential services to those unit owners who are not current on tlicir payments of charges. This is apparently the case with dcfcndant. T-lowever, defendant has raised an issue as to whether plaintiff has overreacted to delendant s hilure in making payments. Dei endant allcgcs that services, such as acccss to delivcries, scrvices and repairs to air conditioners, and concierge services, have becn denied to him. He alleges that plaintiff hailed to deliver important mortgage notices to him. Defcndanl also allegcs that plaintiff s agents liavc accuscd him of unauthorized subletting and made physical thrcats to him. This is the basis for counterclaims based on breach oi fiduciary duty, breach of fair dealing, unfair debt collecting practices, denial of services and nuisance. 9 [* 11] The board 01- rnanagcrs of a condominium has a fiduciary relationship with unit owners il and a duty to act in good faith, See Board ofMgrs. of Fairways at N Hls Condominium v Fairway ut N. Hill,s,193 AD2d 322, 327 (2d Dept 1993). Defendant raises issues offact concerning plaintiffs conduct toward defendant as a unit owner that are not altogetlicr conclusory, and this therefore precludes judgnieiit at this tinic. l heremainder of plaintiffs motion concerns dismissal of tlie counterclaim and affiriiiativc dcfcnses. The court has alrcady dismissed thc sixth dcfense and I ourth countcrclaini sounding in discrimination. Thc first countcrclaini allcgcs inflated charges and unfair debt collection. Dcfciidant claims that plaintiff has iiot been fair in its efforts to collect outstanding chargcs on thc Unit. J his is also thc cnix of thc third affirmative defense. The failure to send accurate bills, goes to tlie issue of the accuracy of the dcbt. Siiicc there is a dispute as to aiiiouiit of the charges owcd, this counterclaim has nicrit and shall not be dismissed. The third afiirmative deknse shall also not be dismissed. The second counterclaim alleges a breach of fiduciary duty. Ihe fourth affirmative defense also alleges a breach of iiduciary duty. As stated earlier, plaintiff maintains a fiduciary relationship with dcfendant, in his capacity as a unit owncr. Onc of defendant s conteiitioiis is that plaintifl s conduct constitutes a violation or misapplication of the terms of Rule 32. This supports his position that plaintii rs activities could represent a breach of iiduciary duty. The sccond counterclaim and the fourth affirmative defense shall not he dismissed. The third counterclaim rtlleges a breach of the implied covenant of good faith and fair dealing. This is also the basis of the fifth affrniativc dcfcnsc. l liis covenant is implied in all contracts. This covenant embraces a pledge that neither party shall do anything which will 10 [* 12] have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. 5Il W 232 Owners Gorp. v.Ienn@r Realty 98 NY2d 144, 153 (ZOOZ),quoting Dulton v Educational Testing Serv., 87 NY2d 384, 389 ( I 995). Defendant alleges that plaintiffs conduct had injured his contractual rights, including the iinplied right of fair dealing. fhe failure to provide serviccs is related to a breach of contract claim. As defendant has already alleged brcach of contract in his fifth counterclaim, a claim based on the brcach of good faith and fair dealing is duplicative, ilbased on the sanic allegations. This is the case hew. See AJW Partners I,/,( v I f ~ o n i ch c . , 68 AD3d 567, 568-9 ( IYtDept 2009). The third counterclaim is duplicativc s of the fifth counterclaim, and shall be dismissed. The fifth affirmative defense is duplicative of the ninth affirmative defense and shall also be dismissed.. The fXth countcrclaim alleges lack of services. The ninth affirmative defense also alleges lack ofservices. Defcndant has made out a claim based on a failure to provide essential services, which is, essentially, a breach of contract claim. The ninth affirmative dcfcnse is bascd on a similar theory. The counterclaim and allirmativc dcfense shall not be dismissed. The last counterclaim is bascd on a theory of nuisance. [A] claim for nuisance requires an intentional interference with the right to use and cnjoy property. C ungregatiun B nai.khmu u v Hiyee Really C orp , 35 AD3d 3 11, 3 12 (1 Dcpt 2006). Nuisance can constitute the conduct of acting or failing to act. See 61 W 62 Owners Curp. v CGMEMP L K , 77 AD3d 330, 334 (1 I k p t 201 0) uffd us mod. I6 NY3d 822 (201 1). Defendant alleges that the hilure to provide services, the failure to act, resulted in an interlerence of his right and enjoyment of his unit. I he court Gnds that this in itself is insufficient l o constitute nuisancc. Defendant would have to allege that plaintin s conduct had undcrniincd physical access to his property. The court shall 11 [* 13] dismiss the sixth countcrclaiiii. The tenth affirmative defense, which also alleges nuisancc, shall be dismissed. The remainder oi the answer consists of a number of affirmative defenses. The first affirniativc defense alleges plaintiffs failure to send accuratc bills. This goes to the accuracy of the outstanding chargcs. Defendant has alrcady raised an issue as to amount of the debt owed to plaintiff: The first affirmative defense shall not be dismissed. The second affirinative defense, Iachcs, is due to defendant s claim that plaintiff failed to seek paynieiit in a timely fashion, pursuant to tlic By-Laws. Section 5.6 of the By-Laws provides that plaintiff shall take prompt action to collcct any Common Charge and/or other assessment previously imposed by the Board which remains unpaid for more 30 days from the due date for payineiit thereof: Apparently, plaintiff has not acted pursuant to the By-Laws. PlaintiIr stated that a nuniber of proceedings, particularly the mortgage foreclosure proceeding and the bankruptcy proceeding, had delayed this suit. A claiin of laches requires a showing of. unreasonable and incxcusable delay by plaintiff, resulting in prejudice to dcfcndant. Dclay alonc, without prejudice, will not suffice [citations omitted]. Macon 17 Arnlie Realty I h , 207 AD2d 268, 271 (1 Ilcpt 1994). The court does not find a sufficient showing of prejudice despite an obvious delay in commencing this case. Tlic court shall disniiss this defense. I hc scvcnth affirmative defknse alleges unclean hands. The doctrine of unclean hands is only available where plaintiff is guilty of immoral or unconscionable conduct directly related to the subject matter, and the party seeking to invoke the doctrine is in.jured by such conduct. Fryrner v Bell, 99 AD2d 91, 96 ( lstDept 1984). Here, the court finds that plaintiff s conduct as 12 [* 14] alleged by defendant is not so extreme as to reach the level of unconscionable conduct. The court shall dismiss this dcfcnsc. The eighth affirmativc defense alleges usury. This defense is not appropriatc in this situation. [Wlhere therc is no loan, there can be no usury [internal quotation marks and citation v oiiiitted]. ~~linbcrgOld Vesld Rd. Assoc., 157 AD2d 1002, 1003 (3d Dept 1990). Since dei endant fails to allege any loan transaction, the eighth affmnativc defense shall be dismissed. Accordingly, it is ORDERED that the part of plaintiffs motion seeking summary judgmcnt is denied; and il is further ORDERED that the part of plaintiff s motion to dismiss the affirmative defenscs and countcrclairns is granted to thc extent that the second, fifth, sixth, seventh, eighth and tenth affirmalive defenses and the third, fourth and sixth coiinterclaims in thc answer are dismissed, and the remaining affirmative defenses and counterclaims are not; and it is further ORDERED that tlic part of plaintiff s motion seeking the appointment of a referee, and the granting of attorney s fees, is denied; and it is further ORnERJ3.D that d.ekndant s cross motion for partial summary judgment is denied. DA l ED: yk /I% FILED w 1 0 2012 J.S.C.

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