Board of Mgrs. of the Park Ave. v Sandler

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[*1] Board of Mgrs. of the Park Ave. v Sandler 2015 NY Slip Op 51316(U) Decided on September 11, 2015 Supreme Court, New York County Braun, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on September 11, 2015
Supreme Court, New York County

The Board of Managers of the Park Avenue, COURT CONDOMINIUM, suing on behalf of the unit owners, Plaintiff,


Olga Sandler, CITIBANK, N.A., JOHN DOE AND/OR JANE DOE inclusive the last two names being either tenants or occupants of the liened premises or persons or parties having or claiming a right, title interest in the liened premises herein being sued fictitiously because their representative names are presently unknown to the plaintiff, Defendants.


Plaintiff's attorneys: Wolf Haldenstein Adler Freeman & Herz LLP, by Mitchell Flachner, Esq., 270 Madison Avenue, New York, New York (212) 545-4600; and on the counterclaim Gallo Vitucci Klar LLP, by Chad E. Sjoquist, Esq., 90 Broad Street, Third Floor, New York, New York (212) 683-7100.

Defendant Olga Sandler's attorneys: Gallet Dreyer & Berkey, LLP, by Morrell I. Berkowitz, Esq. and Edward M. Cuddy, III, Esq., 845 Third Avenue, 8th Floor, New York, New York (212) 935-3131.

Defendant Citibank's attorneys: Sweeney Gallo Reich & Bolz, LLP, 95-25 Queens Boulevard, 11th Floor, Rego Park, New York (718) 459-9000.
Richard F. Braun, J.

This is an action to foreclose a lien due to unpaid condominium common charges, assessments, electric charges, late fees, and attorney's fees. Defendant Olga Sandler (Sandler) counterclaimed for repairs because of ceiling leaks. Plaintiff moved to strike the defenses of defendants Sandler and Citibank, N.A. (Citibank), and for summary judgment, including dismissal of defendant Sandler's counterclaim, and an order of reference. [FN1] Defendant Sandler cross-moved [*2]for summary judgment dismissing the action and striking the lien against her condominium unit; striking all late charges and attorney's fees from her account; and vacating the lien; or alternatively compelling discovery and denying plaintiff's motion.[FN2]

A party moving for summary judgment must demonstrate that there are no disputed issues of fact and that he, she, or it is entitled to judgment as a matter of law, pursuant to CPLR 3212 (b) (Smalls v AJI Indus., Inc., 10 NY3d 733, 735 [2008]; Pokoik v Pokoik, 115 AD3d 428 [1st Dept 2014]; see Gammons v City of New York, 24 NY3d 562, 569 [2014]). To defeat summary judgment, the party opposing the motion has to show that there is a material question(s) of fact that requires a trial (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; CitiFinancial Co. (DE) v McKinney, 27 AD3d 224, 226 [1st Dept 2006]; see Hoover v New Holland N. Am., Inc., 23 NY3d 41, 56 [2014]).

Defendant Sandler's affirmative defenses are mostly conclusory and boilerplate, and to that extent inadequately pled (see Kronish Lieb Weiner & Hellman LLP v Tahari, Ltd., 35 AD3d 317, 319 [1st Dept 2006]). As to her first affirmative defense of failure to state a cause of action, the complaint clearly pleads a cause of action to foreclose a lien, and thus the affirmative defense should be dismissed (see Raine v Allied Artists Productions, Inc., 63 AD2d 914, 915 [1st Dept 1978] ["such a defense may be dismissed only if all the other affirmative defenses are found to be legally insufficient"]). Regarding her second affirmative defense, there is no support for a contention of unclean hands (see National Distillers & Chem. Corp. v Seyopp Corp., 17 NY2d 12, 15-16 [1966] [the doctrine of unclean hands "is never used unless the plaintiff is guilty of immoral, unconscionable conduct and even then only when the conduct relied on is directly related to the subject matter in litigation and the party seeking to invoke the doctrine was injured by such conduct" (internal quotation marks omitted)]). The third affirmative defense is that the late charges are unauthorized, unreasonable, and unjustified. They are authorized and justified by the by-laws for the building. What is the reasonable amount due will be a subject of the reference. As to the fourth affirmative defense of election of remedies, neither section 6.7 of the by-laws nor the applicable law (Real Property Law § 339-aa) requires plaintiff to elect a remedy between seeking a money judgment or foreclosure of the lien. The fifth affirmative defense is that defendant Sandler offered to pay all outstanding common charges, assessments, and electric charges. The fact that she ultimately offered to pay her common charges does not forestall plaintiff's claim for late fees, interest, and attorney's fees pursuant to section 6.6 of the by-laws, due to her default in paying the fees and interest in a timely fashion (see Board of Managers of First Ave. Condominium v Shandel, 143 Misc 2d 1084, 1087-1088 [Civ Ct, NY County 1989]). Her sixth affirmative defense is breach of fiduciary duty. Plaintiff did not breach its fiduciary duty to defendant Sandler in seeking to collect monies due to the condominium or in allegedly being unwilling to settle its claims against her (see Pokoik v Pokoik, 115 AD3d at 429 ["To establish a breach of fiduciary duty, the movant must prove the existence of a fiduciary relationship, misconduct by the other party, and damages directly caused by that party's misconduct"]). Unjust enrichment is defendant Sandler's seventh affirmative defense. Plaintiff was [*3]not unjustly enriched (cf. Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421 [1972] ["(t)he essential inquiry in any action for unjust enrichment or restitution is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered"]). Defendant Sandler fails to indicate how the lien is defective, her eighth affirmative defense; how a notice to cure or a demand was required (her ninth affirmative defense); or how damages could have been mitigated by plaintiff, her tenth affirmative defense. Her eleventh purported affirmative defense (really a denial) is that she denies the amounts sought by plaintiff. Any dispute as to the amount of the lien will be determined by the reference and does not preclude summary judgment (see Orchard Hotel, LLC v D.A.B. Group, LLC, 106 AD3d 628, 630 [1st Dept 2013]). All of defendant Sandler's affirmative defenses must be dismissed.

Plaintiff has made a prima facie showing of entitlement to summary judgment as to liability on the merits of the foreclosure claim and for the appointment of a referee to compute the amount owed, as defendant Sandler acknowledges that she was late in paying her common charges and the affidavit of Timothy O"Keefe, the senior account executive of plaintiff's managing agent, sets forth her defaults (see Real Property Law § 339-aa; Board of Mgrs. of Brightwater Towers Condominium v Cheskiy, 109 AD3d 944, 945 [2nd Dept 2013]). In addition, plaintiff is entitled to attorney's fees paid or incurred in this foreclosure action, pursuant to the by-laws section 6.6, the reasonable amount of which shall be assessed at the reference (see Board of Mgrs. of Cent. Park Place Condominium v Potoschnig, 111 AD3d 586 [1st Dept 2013]).

Defendant Sandler seeks denial of summary judgment based upon outstanding discovery. She has not shown that there are any facts in existence essential to justify her opposition to the branch of plaintiff's motion seeking summary judgment but that she could not then state (CPLR 3212 [f]; Green v Metropolitan Transp. Auth. Bus Co., 127 AD3d 421, 422-423 [1st Dept 2015]).

As to the cross motion, Sandler concedes that under the by-laws section 6.6 plaintiff is entitled to late fees of "$0.04 for each dollar of such amounts which remain unpaid for more than ten days from their due date...." The by-laws authorize the board to set alternative late fees, with no need to amend the by-laws. By board resolution, a late fee of up to $800 per month was authorized, commencing in July 2012. Defendant Sandler's monthly common charges were $1175.85 per month until January 2012 when they went up to $1217.20 per month, and then to $1266.87 per month as of May 2014. Though for some months a lesser amount was charged, for various months late fees of $200, $300, $400, or $800 per month were imposed against her.

Defendant Sandler contends that the late fees imposed were unreasonable and confiscatory, and thus unenforceable. A usury defense would not apply to these late fees, which are not connected to a loan, but which rather are based upon a default under the by-laws (see 90 E. End Ave. Condominium v Becker (2010 NY Slip Op 31660[U], *11 [Sup Ct, NY County 2010] ["the defense of usury is inapplicable since this case does not concern the borrowing and lending of money, and involves defaulted obligations"] [citations omitted]). However, the 25% rate set forth as criminal usury in Penal Law § 190.40 provides a guide to what constitutes excessive fees (see Sandra's Jewel Box v 401 Hotel, 273 AD2d 1, 3 [1st Dept 2000] ["The charge, while not technically interest, is unreasonable and confiscatory in nature and therefore unenforceable when examined in the light of the public policy expressed in Penal Law § 190.40, which makes an interest charge of more than 25% per annum a criminal offense"]; 943 Lexington Ave. v Niarchos, 83 Misc 2d 803, 803-804 [App Term, First Dept 1975] ["a rent surcharge of 5% per month, commencing with the third month of [*4]default in the payment of rent ... while not technically interest, is at the rate of 60% a year. Examined in the light of the public policy expressed in section 190.40 of the Penal Law, which makes an interest charge of more than 25% a criminal offense, we find the charge unreasonable and confiscatory in nature and therefore unenforceable"]; see also Gabriel v Board of Managers of Gallery House Condominium, 130 AD3d 482, 483 [1st Dept 2015] ["the imposition of fines in the amount of $500 per day for violations of the guest policy is confiscatory in nature"]: Bd. of Managers of the Westbury Terrace Condominium v Roberts, 2013 WL 4717929 [Sup Ct., Nassau County 2013] ["late fees of $100.00 per month, in addition to 9% interest and attorneys' fees, seem excessive"]). Given that some of the late fees significantly exceeded the usury rate, they are unreasonable and confiscatory in nature, and cannot be enforced. Consequently, in calculating the amount due, the referee should limit any late fees to $0.04 per dollar owed, conceded by defendant Sandler to be authorized under the by-laws.

Defendant Sandler has not shown that this court has any statutory or common law authority to strike or vacate the lien, or strike late charges or attorney's fees from her account. Unlike the Lien Law as to mechanic's liens (see Lien Law §§ 19 [3], 21-a, 59), there is no statutory provision for vacatur or striking of a lien for condominium common charges and other charges.

Accordingly, by separate decision and order of this court, the motion was granted awarding summary judgment to plaintiff against defendants Sandler and Citibank, their defenses were stricken, and a referee would be appointed upon an order to be settled, who will to determine the amount due to plaintiff on the lien, including the amount of late fees, interest, and reasonable attorney's fees, and whether the subject premises could be sold in one parcel. The cross motion was denied. This constitutes the opinion of the court.

Dated: New York, New York

September 11, 2015Richard F. Braun, J.S.C.


Footnote 1:Citibank, whose second mortgage is subordinate to plaintiff's (see Real Property Law § 339-z) and is a subject of the foreclosure claim, did not put in opposition papers. Citibank also holds a first mortgage that is superior to the plaintiff's lien, which will not be subject to foreclosure. The branch of the motion that sought to dismiss Sandler's counterclaim was withdrawn, as the counterclaim was discontinued, by June 18, 2015 stipulation.

Footnote 2:The branches of the cross motion to compel discovery and deny the motion were denied by this court on June 18, 2015 because discovery was stayed by the summary judgment branches of the motions (CPLR 3214 [b]), and a cross motion to deny a motion is unnecessary (Sullivan v 40 West 53rd Partnership, NYLJ, Oct. 16, 2000, at 27, col 2 [Sup Ct, NY County]).