de Socio v 136 E. 56th St. Owners, Inc.

[*1] de Socio v 136 E. 56th St. Owners, Inc. 2018 NY Slip Op 51623(U) Decided on October 5, 2018 Civil Court Of The City Of New York, New York County Ramseur, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 5, 2018
Civil Court of the City of New York, New York County

Bridget de Socio, Plaintiff,

against

136 East 56th Street Owners, Inc. and BOARD OF DIRECTORS OF 136 EAST 56TH STREET OWNERS, INC., Defendants.



136 EAST 56TH STREET OWNERS, INC., Counterclaim Plaintiff,

against

ARI GROUP INC., MARINO GERAZOUNIS & JAFFE ASSOCIATES INC. and CORNERSTONE ARCHITECTS, Additional Counterclaim Defendants.



TS-300481-09



Plaintiff

Gallet Dryer & Berkey LLP

Morrell I. Berkowitz, Esq.

Pamela M. Gallagher, Esq.

Alyssa C. Goodrich, Esq.

Defendants

Schwartz Sladkus Reich Greenberg Atlas LLP

Jared E. Paioff, Esq.

Kristen Pendergrass, Esq. Steven D. Sladkus, Esq.

Counterclaim Defendant Ari Group, Inc.

Nicoletti Gonson Spinner & Owen, LLP

Laura M. Mattera, Esq.

Counterclaim Defendant Cornerstone Architects

Byrne & O'Neill, LLP

Elaine C. Gangel, Esq.

Counterclaim Defendants Marino Gerazounis & Jaffe Associates Inc.

Zetlin & De Chiarra, LLP

Raymond T. Mellon, Esq.
Dakota D. Ramseur, J.

Plaintiff/cooperative shareholder Bridget de Socio commenced this action in Supreme Court [FN1] against Defendant/cooperative 136 East 56th Street Owners, Inc. (the "Corporation") and its Board of Directors (the "Board") for mold and water damage to Plaintiff's apartment, Unit PHD of 136 East 56th Street, New York, New York (the "Apartment"). Specifically, Plaintiff asserted eight causes of action: (1) injunctive and declaratory relief directing Defendants to make the Apartment habitable; (2) breach of warranty of habitability; (3) breach of quiet enjoyment; (4) actual and/or constructive eviction; (5) diminution of value of Plaintiff's shares in the cooperative; (6) disparate treatment of Plaintiff in relation to other cooperative shareholders; (7) negligence; and (8) attorneys' fees and costs. In sum and substance, Plaintiff sought a full abatement from August 2007, when she stopped paying maintenance fees, to the present, as well as additional damages. The Cooperative counterclaimed for: (1) a permanent injunction enjoining Plaintiff from denying access to the Apartment; (2) unpaid maintenance, assessment, and utilities; and (3) attorneys' fees.[FN2]

On September 17, 2013, the Honorable Lynn R. Kotler issued a decision and order dismissing all of Plaintiff's claims except the second, third, and fifth causes of action against the Cooperative for breach of warranty of habitability, breach of quiet enjoyment, and diminution of value, the seventh cause of action for negligence against the Board, and the eighth cause of [*2]action for fees and costs against both Defendants. Judge Kotler also dismissed Defendants' first claim for injunctive relief, finding that Civil Court lacked the appropriate jurisdiction.

This Court conducted a trial between April 18 and May 18, 2018, [FN3] during which the following witnesses testified: Plaintiff for her own case, and for Defendants Board President Gregory Angrist, Managing Agent Douglas Elliman's representative/agent James Flaherty, resident manager/superintendent Martin Dowd, and former defense counsel Ingrid Manevitz. During trial, on May 8, 2018, this Court dismissed Plaintiff's claims for negligence and attorneys' fees against the Board, thereby dismissing all remaining claims against the Board. Accordingly, the only causes of action which remained after trial, and which are addressed here, were Plaintiff's claims against the Cooperative for breach of warranty of habitability, breach of quiet enjoyment, diminution of value, and attorneys' fees, and the Corporation's claims for unpaid maintenance and attorneys' fees.

Having had the opportunity to observe the witnesses and consider the credible testimony and evidence at trial, as well as the parties' written post-trial summations, the Court: (1) dismisses Plaintiff's third and fifth causes of action against the Cooperative for breach of quiet enjoyment and diminution of value; (2) finds in favor of Plaintiff in part on Plaintiff's second cause of action for breach of warranty of habitability and the Corporation in part on its second counterclaim for maintenance fees, which together comprise the bulk of the claims and testimony at trial; and (3) dismisses Plaintiff's eighth cause of action and the Corporation's third counterclaim for attorneys' fees.

FINDINGS OF FACT AFTER TRIAL These are the Court's findings of fact after trial, based on the credible evidence presented. Transcripts are cited by date. Defendants' witnesses were generally more credible than Plaintiff, who often had difficulty with specific or independent recollection of timelines and was frequently evasive, argumentative, or disassembling (see e.g. 5/7 907:16, 936:7-13, 944:18, 955:2-3). This conclusion is not related to Plaintiff's hearing difficulties, which were addressed with the use of a hearing/transcription aid. To the extent that Plaintiff also missed multiple trial appearances based on claimed medical necessity, Plaintiff never credibly corroborated these claims, or any other incapacity which might have affected her testimony.

Plaintiff owns 1,550 shares of stock in the Corporation, which owns the subject building located at 136 East 56th Street (the "Building"; Defs Exhs 15-18; 5/18 1656-1665). Pursuant to a proprietary lease executed in 1999 and amended in April 2010 (Defs Exhs 4, 12 [the "Lease" and "Amended Lease,"], 5/18 1664:5-18),[FN5] Plaintiff leased the Apartment, a one-bedroom unit with a [*3]terrace.

The Lease and Amended Lease required the Corporation to maintain the Building and associated "equipment and apparatus," other than what was Plaintiff's responsibility within the interior of the Apartment: as relevant here, "interior walls, floors and ceilings, plumbing, gas and heating fixtures and equipment [including] exposed gas, steam and water pipes attached to fixtures, appliances and equipment and the fixtures, appliances and equipment to which they are attached, and any special pipes or equipment which the Lessee may install within the wall or ceiling, or under the floor, but [not including] gas, steam, water or other pipes or conduits within the walls, ceilings or floors or air conditioning or heating equipment which is part of the standard building equipment" (Lease/Amended Lease ¶ 18[a]). In short, as Dowd explained: "The building is responsible for anything inside the walls. Basically the shareholder, if you can see it, you own it" (5/17 1608:1-8).

Plaintiff was responsible for monthly maintenance charges and a pro rata share of any assessments or special maintenance charges levied by the Corporation, "without any deduction on account of any set-off or claim which the Lessee may have against the Lessor" (Lease/Amended Lease ¶¶ 1[a], 12). The Lease authorized a penalty for late payments: interest at the maximum legal rate ." The Amended Lease authorized the Corporation to impose a late charge if Plaintiff fails to pay her maintenance when due, and to charge interest at a rate of 1.5% per month or the maximum rate allowed by law, whichever is lower (Lease/Amended Lease ¶ 12).

Water began infiltrating the Apartment in late 2005 and continued until approximately 2016, from various sources (Ct Exh 4A ¶ 6, 4/20 31:2-18, 5/7 954:19, et seq.).[FN6] Plaintiff complained promptly about the leaks, though the parties disagreed as to which party bore responsibility for repairs.

Plaintiff vacated the Apartment in 2006, spending 2006 through 2007 mostly in Shanghai, China partly for work as a brand director and partly "because — what was happening in my apartment, I thought maybe this is a good opportunity to get out of the way of the problem, report it and let them take care of it" (Ct Exh 4A ¶ 21[b][1], 4/20 32:21-23, 38:1-3).[FN7] Upon Plaintiff's return from China in 2008, she resided either with her mother in Watertown, [*4]Connecticut or apartment PHC, next to the subject Apartment (5/7 906:5-8, 907:9-16, 950:2-4, 951:12-22)[FN8] . In 2014, Plaintiff lived in Stratford, Connecticut (5/7 991:18-20). In 2015, Plaintiff lived at a different Stratford address (5/7 974:2-14, 991:14-17). Even during her time not residing full-time in the Apartment, and particularly during her time in PHC, Plaintiff monitored the Apartment's condition, appliances, and fixtures (5/7 950:2-4, 951:12-22, 990:18-991:14, 992:25-993:19).

Though Plaintiff did not personally witness every instance of infiltration, she deduced their origins, in part, from the observable aftermath: for example, rust in the ceiling fixtures, water-damaged books and lights, stains, swollen walls and floors, and mold (4/20 36:20-37:6, 74:9-15, 5/7 958:20-962:18, 969:17-24). From these observations, she determined—credibly— that the water originated from several locations outside of the Apartment: the ceiling, the terrace, and the HVAC system (4/20 36:14-37:6, 74:6-76:8, Pl Exhs 5, 5A).[FN9] The water damaged the Apartment's wood floors, appliances, furniture, and many of Plaintiff's personal items (4/20 40, et seq.; see e.g. Pl Exh 30).

Work on repairing the HVAC unit, performed by the dismissed Third-Party Defendants, began in the fall of 2007 and spanned to 2009 (4/20 80:14, 81:1-12, 87:13-15, 31:3-132:20). Though the leaks lessened in frequency, the HVAC repairs did not resolve them all. For example, an HVAC leak occurred in 2016 (5/7 969:25-970:8, 5/16 1434:16-1437:4). However, the Corporation remedied those leaks, cleaned the water, and replaced the floor within approximately one week of Plaintiff's complaint (5/7 972:6-973:3, 973:22-974:1; 5/16 1434:16-1437:4).

Plaintiff began, in late 2007, to see mold, "thick" and "fur"-like, present in various areas of the apartment (4/20 37:1-6, 74:12-15). In October 2008, Plaintiff commissioned environmental testing by Olmstead Environmental Services, Inc. ("Olmstead") and Microecologies, Inc. ("Microecologies"), which reported toxic mold growth (4/20 142:10-13, 154:12-18, Pl Exhs 8-9, Defs Exh 5 ¶ 6).

The Corporation hired American Fire Restoration, Inc. ("American Fire"), who successfully remediated the mold condition (5/16 1396:23-1401:2 [Angrist]; Defs Exh 5 ¶¶ 6-7).[FN10] After remediation, the Corporation hired Olmstead (who had conducted Plaintiff's initial tests) to do additional testing on December 22, 2018 and, in response to Plaintiff's additional [*5]complaints of mold, on June 16, 2009 (Pl Exh 10). Both reports indicated that remediation had been successful but nevertheless recommended that the Apartment be rebuilt (Defs Exh 5 ¶¶ 6-7, 5/7 930:16-20, Pl Exh 10).[FN11]

Upon receipt of the June 2009 report, and in light of the extensive issues with the Apartment, the Corporation solicited proposals for reconstruction (5/16 1402:23-1403:3). On July 27, 2009, the Corporation's counsel emailed Plaintiff's counsel,[FN12] attaching a July 7, 2009 proposal from contractor Allcon, to request access to the Apartment to begin work "immediately" (Defs Exhs 6,7; Pl Exh 15, 5/7 931:9-934:17, 943:13-946:16).[FN13] The proposal included new sheetrock and flooring, terrace door step and closet door replacement, molding installation, and painting (Defs Exh 6; 5/17 1552:6-14). Plaintiff acknowledged, both at trial and in a previous deposition, that she had no specific knowledge of her attorney having provided explicit consent to access at that time (5/7 933:13-936:11, 946:10-16).

In the intervening period, Plaintiff continued to observe numerous leaks and refused to permit repairs to occur until the leaks were resolved to her satisfaction (Pl Exh 12). Plaintiff also requested changes to the scope of work and provided access to Allcon only for the purpose of creating an amended proposal (5/16 1406:6-1407:6, 1456:13-22). Though substantially similar, a revised proposal sent to Plaintiff's counsel (again, the same attorney appearing at trial) on July 23, 2010 added four additional items, including additional insulation, at a total additional cost of $27,500.00, or $1,000.00 more than the original proposal (5/16 1410:9-1413:1; compare Defs Exhs 6 and 7). The letter accompanying the proposal again requested immediate access (Defs Exh 7). Despite multiple follow-ups, there is no record of Plaintiff providing access for repairs until 2016 (5/17 1549, et seq.; 1579:24-1580:1-4).[FN14]

The Corporation did not enter the Apartment before then because it did not believe that the circumstances constituted an emergency permitting entry to the Apartment under the By-Laws, particularly because Plaintiff had already commenced litigation (5/16 1419:3-8; 5/17 1550:20-1551:13). After Plaintiff consented to access, work began in February 2016 and ended shortly thereafter, in April 2016 (5/16 1421:14). The scope of the work was, "for the most part," [*6]the same as the first Allcon proposal (5/16 1421:3-6).

Plaintiff ceased all maintenance payments in August 2007, with the exception of three maintenance payments in October and November 2016 and June 2017 (5/7 Tr 908:13-909:23; Defs Exh 20 at 17). Plaintiff seeks a full abatement from the time that she ceased payments, August 2007 to December 2017 (5/7 910:4-911-15). Since the work was completed, Plaintiff listed the Apartment for sale on September 5, 2017 (5/7 915:23-919:10).

DISCUSSION

A cooperative is a stock corporation formed pursuant to the Business Corporation Law (Chem. Bank v 635 Park Ave. Corp., 155 Misc 2d 433, 435 [Sup Ct NY County 1992]). The corporation is the owner or long term lessee of the building and related property (id.). Owners of shares in the corporation, through a proprietary lease which defines the relationship between the corporation and the shareholder-tenant, receive the right to occupy space in the premises to which their shares are allocated (id.). The relationship between a shareholder-tenant and the cooperative is akin to that of landlord and tenant (111 Tenants Corp. v Stromberg, 168 Misc 2d 1014, 1017-18 [Civ Ct NY County 1996]). The nature of the tenancy is a leasehold coupled with forfeiture provisions, usually in the nature of a right of re-entry by the cooperative corporation (Susskind v 1136 Tenants Corp., 43 Misc 2d 588, 590 [Civ Ct NY County 1964]).

I. Plaintiff's Claims

A. Breach of the warranty of habitability (Plaintiff's second cause of action)

1. The condition of the Apartment

In every lease for residential property, the warranty of habitability implies a covenant that the premises rented and all common areas are fit for human habitation and for the uses reasonably intended by the parties, and free from conditions dangerous to life, health, or safety (Scherer/Fisher, Residential Landlord Tenant L. in NY, § 12:65). Breach of this warranty can be the basis of a defense to a nonpayment proceeding or support a separate affirmative claim (id.).

As an initial matter, the Court notes that Plaintiff may not recover damages for loss or diminution in value of personal property, personal injury, or pain and suffering on a claim for breach of the implied warranty of habitability (Elkman v Southgate Owners Corp., 233 AD2d 104, 105 [1st Dept 1996] ["Loss or diminution in value of personal property as well as personal injuries and pain and suffering are not recoverable under Real Property Law [RPL] § 235-b."]). Accordingly, any claim to that effect must be denied.

The proper measure of damages for a breach of the warranty of habitability is the difference between the fair market value of the premises in fully habitable condition, as measured by the rent reserved under the lease, and the value of the premises during the period of the breach (Park W. Mgt. Corp. v Mitchell, 47 NY2d 316, 329 [1979]). The award may take the form of a sum of money awarded the tenant in a plenary action or a percentage reduction of the contracted-for rent as a setoff in summary nonpayment proceeding in which the tenant counterclaims, or pleads as a defense, breach by the landlord of his duty to maintain the premises in habitable condition (id.).

Complete vacatur is not necessary to receive an abatement; it is sufficient to have been [*7]constructively evicted from a portion of the premises (Minjak Co. v Randolph, 140 AD2d 245, 248 [1st Dept 1988]). The finder of fact must weigh the severity and duration of the breach, as well as the effectiveness of steps taken by the landlord to abate those conditions (id.). In determining the amount of damages sustained by a tenant as a result of a breach of the warranty set forth in the section, the court "need not require any expert testimony" (RPL § 235-b; see also Park W. Mgt. Corp., 47 NY2d at 329-30).

Given the fact-specific nature of each inquiry, courts have awarded a broad spectrum of abatements, up to and including a full abatement, for water leaks, nonfunctioning appliances, and mold conditions (Solow Management Corp. v Reinicke, NYLJ, 1/29/01, p 26, col 1 [App Term 1st Dept] [15% rent abatement for "sporadic leaks from a living room skylight and ceiling" and a loss of air conditioning]; Collins Estate Corp. v Beader, NYLJ, 4/9/87, p 14, col 1 [App Term 1st Dept] [abatement reduced to 25% when tenant's unit was "impaired primarily as a result of a leak originating above tenant's bedroom ceiling from an upstairs apartment"]; W.S.L.S.J. & I Weinrib, A & M Reiss v Fuchs, NYLJ, 3/5/99, p 26, col 2 [App Term 1st Dept] [court affirmed 25% abatement covering 18-month period]; Koch v McQueen, NYLJ, 3/4/96, p 31, col 1 [App Term, 9th and 10th Jud Dists] [50% abatement for a two-month period upheld for defective repair of a deteriorated bathtub, dislocation of tiles caused by leakage in bathroom ceiling and water infiltration of common hallway ceiling]; Pamela Equities v McSween, NYLJ, 8/18/95, p 24, col 4 [App Term, 1st Dept] [tenant awarded 25% abatement for 20-month period of "recurring water leaks"]; Gottesman v Graham Apartments, Inc., 47 Misc 3d 1213(A), 2015 WL 1839746 [Civ Ct Kings County] [100% abatement awarded when landlord was found liable for a flood that resulted in water damage to tenant's apartment]; 157 East 57th Street LLC v. Birrenbach, NYLJ, 5/15/03, p 22, col 6, [Civ Ct NY County] [full abatement warranted where mold's size and spread necessitated abandonment of the apartment for remediation], aff'd, 8 Misc 3d 127(A) [App Term 1st Dept 2005]; Pallotta v Perry, 2002 NY Slip Op 40328(U) [App Term 9th & 10th Jud Dists] [25% abatement warranted by roof leak resulting in mold and mildew, a defective freezer door gasket, and oven problems]).

The credible evidence at trial demonstrates profound damage to the Apartment rendering it materially uninhabitable from the time that the leaks began in 2005 to April 2016, when the Corporation completed the necessary repairs. The evidence shows, during that time period, numerous leaks, damage to walls, fixtures, the terrace, and personal items, and the accompanying complaints. The evidence shows the existence of mold which, while remediated, nevertheless required a significant overhaul of the Apartment. Accordingly, Plaintiff is entitled to a full abatement. That does not, however, conclude the analysis.

2. Plaintiff's failure to mitigate her damages

The Corporation argues that its good faith attempts to inspect and repair Plaintiff's apartment were impeded by Plaintiff's denial of access. Plaintiff argues that the Lease permitted the Corporation's re-entry and that the Corporation had access to her key, which Plaintiff left with the front desk. While Plaintiff is correct regarding the Corporation's right of entry under the Lease and obligation to exercise that right, the Court nevertheless finds in favor of the Corporation based on a finding that Plaintiff actively impeded the exercise of the right to re-entry.

a. The Corporation's obligation to enter the Apartment for repairs

Both Leases contain an identical provision governing the Corporation's right of entry into the Apartment, permitting

the [Corporation] and its agents and their authorized workmen to visit, examine, or enter at any reasonable hour of the day upon notice, or at any time and without notice in case of emergency, to make or facilitate repairs in any part of the Building or to cure any default by the Lessee and to remove such portions of the walls, floors and ceilings of the Apartment and storage space as may be required for any such purpose (Lease/Amended Lease ¶ 25).

To facilitate such access, Plaintiff was required to "provide the Lessor with a key to each lock providing access to the Apartment or the storage rooms " (id.). The same provision provided, however, that "[t]he right and authority hereby reserved do not impose, nor does the Lessor assume by reason thereof, any responsibility or liability for the care or supervision of the apartment, or any of the pipes, fixtures, appliances or appurtenances therein contained, except as herein specifically provided." These provisions, read together, preserve the right of the Corporation to enter upon notice, and require tenants to provide keys enabling the Corporation to do so, but impose no obligation upon the Corporation to exercise the right of entry.

The question, then, is whether the Corporation had an obligation to exercise its right of entry here to make repairs. The Court finds in the affirmative.

Bearing in mind that the relationship between a cooperative and tenant is akin to any other landlord-tenant relationship, where a landlord retains the right of re-entry, the landlord is liable for conditions within the apartment (Chapman v Silber, 97 NY2d 9, 22 [2001] ["the landlord having contractually retained a right of entry and having assumed a duty to make repairs may not use the invisibility of lead contained in paint to avoid liability"], citing Queeney v Willi, 225 NY 374 [although the frozen pipe which injured the tenant was concealed from view, the tenant advised the landlord that the walls and ceiling of the bedroom were exceedingly damp, and therefore the court found that "[t]he landlord may not sit helplessly by and say that he cannot see what produces such conditions"]; see also Zwerin v Geiss, 38 Misc 2d 306, 310 [Civ Ct 1963] ["Unless such right to re-entry is reserved, the landlord has no general right at common law to enter on the premises, even to make repairs. However, if the re-entry is required by public authorities, or to cure and repair a dangerous condition, and the duty is cast upon the landlord to do so, he is not liable to the tenant for such disturbance or interference" [emphasis added]], citing Harperly Hall Co. v Joseph [App Term 1st Dept 1921]).

In the analogous context of negligence claims and, more specifically, whether a landlord can be deemed to have constructive notice of a defective condition, "when a landlord who is out of possession retains a right under the lease of re-entry to the premises, liability may be imposed, and it may be imposed irrespective of notice, since constructive notice is charged in such circumstances" (Armand v Leemilt's Petroleum, Inc., 172 AD2d 459, 460 [1st Dept 1991]; Tkach v Montefiore Hosp. for Chronic Diseases, 289 NY 387, 390 [1943] [charging the landlord with "constructive notice of defects in all those parts of the building into which, by authority of the written lease, he may enter."]). That is, a landlord's choice to preserve its right of access, which by definition diminishes a tenant's exclusivity, brings attendant consequences for the landlord.

Here, the Corporation preserved its right of access and specified (and secured) Plaintiff's keys as the means to facilitate access, and thus must bear the burden of its choice: the attendant duty to utilize its access when the circumstances so require (cf Sanders v Patrick, 94 AD3d 1514, [*8]1515 [4th Dept 2012] [in the absence of a written agreement, consistent testimony of multiple parties led to a finding that the landlord, despite possessing the tenant's keys, could only enter with tenant's permission]).

To the extent that the Corporation argues that the right of re-entry in Paragraph 25 of the Lease and Amended Lease "do[es] not impose any responsibility or liability for the care or supervision of the apartment, or any of the pipes, fixtures, appliances or appurtenances therein contained ," this Court interprets the provision to mean that the right of re-entry alone does not impute liability for the Apartment's interior to the Corporation. The Court holds, however, that the right of re-entry, coupled with the Corporation's knowledge of the Apartment's condition and obligation to repair it, creates liability. As the Corporation argues, however, when it attempted to exercise its right of re-entry by providing notice to Plaintiff, their access was actively impeded by Plaintiff's denial of access.

b. Plaintiff's denial of access

The warranty of habitability applies only to areas that are "within the landlord's control" (12-14 E. 64th Owners Corp. v Hixon, 130 AD3d 425, 426 [1st Dept 2015], citing Park W. Mgt. Corp., 47 NY2d 316, 327 [1979] [affirming appellate term's denial of rent abatement for period where, after a flood, cooperative unit owner advised the cooperative that she intended to make leak repairs herself and where "[t]he cooperative credibly submit[ted] that, absent respondent's delays and misconduct, it would have restored [the unit owner's] apartment to a habitable condition]).

Consequently, a tenant cannot recover under the warranty of habitability, or any abatement will be reduced, when access to the landlord to inspect or remedy the alleged defective condition is refused or thwarted (NY Real Prop. Law § 235-b; Finkelstein & Ferrara, Landlord and Tenant Practice in New York § 9:79; Scherer/Fisher, Residential Landlord Tenant L. in NY § 12:115 [collecting cases]; Brookwood Mgt. Co. v Melius, 14 Misc 3d 137(A) [App Term 9th & 10th Jud Dists 2007] [tenant not entitled to an abatement because he denied access to landlord's agents to remedy the condition and, once access was granted, the agents corrected the condition]; W. 122nd St. Assoc., L.P. v Gibson, 5 Misc 3d 137(A) [App Term 1st Dept 2004] [affirming trial court's determination in favor of landlord based on finding that tenant impeded landlord's ability to complete the stipulated painting work]; 930 Fifth Corp. v Shearman, 23 Misc 3d 133(A) [App Term 1st Dept 2009] [affirming trial court's judgment in favor of landlord where "any roach or mice infestation in tenant's apartment resulted largely from her failure to grant reasonable access to landlord"]; Ansonia Assoc. v Moan, NYLJ 7/13/95, p 25, col 2 (App Term 1st Dept] [tenants refused access to landlord for asbestos abatement work]; see also N.Y.C. Administrative Code § 27-2008).

The record supports Plaintiff's argument and testimony that some access was permitted for limited purposes, including inspection and some repairs to the terrace, between 2007 and 2013 (see e.g. Pl Exhs 24, 40, 42B, 48B, 49, 54, 54B, 56, 65A-C). However, it is equally clear that the Corporation, in an abundance of caution given the acrimony and pending litigation between the parties, requested access to the interior of the Apartment for the express purpose of making delineated repairs contained within the Allcon proposals (see 12-14 E. 64th Owners Corp. v Hixon, 130 AD3d 425, 426 [1st Dept 2015] ["Once respondent advised the cooperative that she intended to make the repairs herself, in May 2004, the cooperative could not have overridden her instructions by making its own repairs."]). Indeed, Defendants asserted as a [*9]counterclaim a request for injunctive relief for access to the Apartment to which, at that juncture, Plaintiff could have easily consented.

In response to the Corporation's efforts, Plaintiff either refused or demurred until 2016, when the work was ultimately completed. Significantly, the repairs which Plaintiff ultimately allowed were nearly identical to those which she would not allow for several years, thus diminishing the weight of Plaintiff's argument that the Corporation's proposal was somehow deficient. Even if the completed repairs had been deficient — a conclusion with no support in the record — Plaintiff could have sought recovery for the result of any deficiencies.

Accordingly, the Court finds that the failure to correct the conditions in the Apartment were attributable to Plaintiff, and therefore the abatement which would otherwise have been justified must be denied for the period after the Corporation first sent the Allcon proposal to Plaintiff. Though the parties were evidently engaged in negotiations regarding the scope of the Allcon work, culminating in the second Allcon proposal one year after the first, Plaintiff failed to demonstrate at trial that the additions to the scope of the work were necessary to make the Apartment habitable; in other words, Plaintiff's failure to adequately justify her denial of access shifts the blame for the delay to her. Thus, Plaintiff is entitled to a full abatement from the time maintenance payments ceased in 2007, until July of 2009.[FN15]

The liability shifts, however, upon Judge Kotler's September 2013 order. Until Judge Kotler denied Defendants' request for injunctive relief to force Plaintiff to grant access to the Apartment, fault could be ascribed solely to Plaintiff. After that point, however, Defendants' reasonable justification for declining to enter the Apartment without Plaintiff's consent dissipated when Judge Kotler's order informed the parties that Civil Court did not have the jurisdiction to grant the relief Defendants sought (Topaz Realty Corp. v Morales, 9 Misc 3d 27, 28 [App Term, 2d & 11th Jud Dists 2005], quoting Broome Realty Assoc. v Sek Wing Eng, 182 Misc 2d 917, 918 [App Term 1st Dept 1999] ["[e]xcept for proceedings for the enforcement of housing standards and applications for certain provisional remedies (CCA 209[b]), the New York City Civil Court may not grant injunctive relief"]).

The Court believes it to be sound public policy to seek redress promptly rather than allow the condition to worsen. When the Corporation failed to proceed further, either by appeal of Judge Kotler's order or in Supreme Court, where the case originated and where equitable relief would be available, the parties became equally responsible for the stalemate (see Hixon, 130 AD3d at 426 ["misconduct" which precludes a finding of a breach of warranty of habitability found to include a tenant's failure to comply with a stipulation by tendering an escrow amount, thus delaying repairs for nine months], citing RPL § 235-b[1]; see also Van Syckle v C.L. King & Assoc., Inc., 822 F Supp 98, 102 [NDNY 1993] ["A party cannot recover the part of their loss caused by their own failure to take reasonable steps to avoid further harm once they had reason to know of the wrongdoing"]; Korea Life Ins. Co., Ltd. v Morgan Guar. Tr. Co. of New York, 99 CIV. 12175 (AKH), 2004 WL 1858314, at *8 [SDNY Aug. 20, 2004] [where it was "at least as reasonable" for breaching defendant to incur expenses to reduce its damages, defendant could not impose exclusive mitigation burden on the plaintiff]; see also In re Lori, 241 BR 353, 357 [*10][Bankr MD Pa 1999] [debtor's award for violation of an automatic bankruptcy stay reduced for debtor's failure to mitigate his damages by promptly seeking legal redress for the violation]).

Once it became clear (or should have become clear) to the Corporation that the access required for repair was not forthcoming from Plaintiff, and once Judge Kotler issued her order informing the parties that Civil Court could not grant injunctive relief, the Corporation's failure to further pursue their legal remedies in the proper forum was as unreasonable as Plaintiff's failure to affirmatively grant access to the Corporation to make the necessary repairs. Accordingly, Plaintiff is entitled to a 50% abatement from October of 2013 until Plaintiff granted access and repairs began in February of 2016.

From February to April 2016, after Plaintiff had granted access but before the Apartment was rendered habitable, Plaintiff is again entitled to a full abatement because she allowed access and therefore mitigated damages while the Apartment remained uninhabitable. After April 2016, when the Corporation completed the repairs, the Apartment was again habitable and the abatement ceases. Though at least one leak occurred after those repairs, it was quickly remedied upon notice.

B. Punitive damages

"A demand or request for punitive damages is parasitic and possesses no viability absent its attachment to a substantive cause of action" (Entler v Koch, 85 AD3d 1098, 1102 [2d Dept 2011]). In a breach of the warranty of habitability case, punitive damages may be awarded only "where the landlord's actions or inactions were intentional or malicious" (Minjak Co. v Randolph, 140 AD2d 245, 249-50 [1st Dept 1988] [" this record supports the jury's finding of morally culpable conduct in light of the dangerous and offensive manner in which the landlord permitted the construction work to be performed, the landlord's indifference to the health and safety of others, and its disregard for the rights of others, so as to imply even a criminal indifference to civil obligations."]).

Thus, Plaintiff's contention of intentional or malicious conduct is belied by the evidence discussed above; specifically, that Plaintiff was substantially responsible for the lengthy delay (cf Kipsborough Realty Corp. v Goldbetter, 81 Misc 2d 1054, 1059 [Civ Ct NY County 1975] ["deliberate and persistent refusal for three years after notice "]; Century Apartments, Inc. v Yalkowsky, 106 Misc 2d 762, 766 [Civ Ct NY County 1980] [Awarding punitive damages of $1,000.00 "based upon the clear evidence that the delayed correction of the leaking terrace was a deliberate decision of the petitioner which was a "management decision"]).

C. Quiet Enjoyment (Plaintiff's third cause of action)

As Defendants argue, Plaintiff cannot prevail on the third cause of action for breach of the covenant of quiet enjoyment because the Lease makes payment of rent a condition precedent to the covenant and Plaintiff withheld nearly all payments dating from 2007 to the present (Lease/Amended Lease ¶ 10; Dance Magic, Inc. v Pike Realty, Inc., 85 AD3d 1083, 1088 [2d Dept 2011]; Parker v Marglin, 56 AD3d 374, 374 [1st Dept 2008]). Accordingly, Plaintiff's third cause of action against the Cooperative for breach of the covenant of quiet enjoyment is dismissed.

C. Diminution of value (Plaintiff's fifth cause of action)

As discussed above, diminution of value is not recoverable upon claims for breach of [*11]warranty of habitability (Elkman, 233 AD2d at 105). Additionally, that claim duplicates claims for breach of the covenant of quiet enjoyment and constructive eviction and, on that basis alone, should be dismissed (Mariaux v Turtle Bay Towers Corp., 2002 NY Slip Op 50518(U) [Sup Ct NY County], affd as mod on other grounds, 301 AD2d 460 [1st Dept 2003]). Substantively, however, Plaintiff has also failed to adduce any credible evidence at trial of diminution; to the contrary, she has placed the Apartment on the market for a substantial sum. Accordingly, this cause of action is also dismissed.

E. Attorneys' fees (Plaintiff's eighth cause of action)

Both parties seek attorneys' fees—the Corporation under the Lease and Plaintiff pursuant to RPL § 234. Whether to award fees requires consideration of "the true scope of the dispute litigated, followed by comparison of the amount actually sought by the tenant, as determined by the pleadings, offers of proof, or other means with the actual recovery, bearing in mind that the statutory reciprocal provision for attorney's fees was not intended to confer a windfall (Solow v Wellner, 205 AD2d 339, 340 [1st Dept 1994], affd, 86 NY2d 582 [1995] [providing standard for attorneys' fees in summary proceedings]).

To be considered a "prevailing party," one must simply prevail on the central claims advanced, and receive substantial relief in consequence thereof (Sykes v RFD Third Ave. I Assoc., LLC, 39 AD3d 279, 279 [1st Dept 2007]; see D.A.S. Contr. Corp. v Nova Cas. Co., 14 Misc 3d 1213(A) [Sup Ct Nassau County 2007] ["One who recovers less than 50% of the amount sought cannot reasonably be found to have obtained substantial relief."], citing Excelsior 57th Corp. v Winters, 227 AD2d 146, 147 [1st Dept 1996] [granting fees to landlord as "prevailing party" where landlord sought 54 months' rent and tenants received 4.5 months' abatement out of a total 24 months sought]; Peachy v Rosenzweig, 215 AD2d 301, 302 [1st Dept 1995] [landlord entitled to fees as the prevailing party based on winning a money judgment and judgment of possession, whereas the tenants were successful only on their affirmative defense of breach of warranty, and were unsuccessful as to their twelve other affirmative defenses]).

Where there is a mixed outcome, that is not "substantially favorable" to either side, and therefore neither should be accorded the status of a prevailing party (339-347 E. 12th St. LLC v Ling, 31 Misc 3d 48, 49 [App Term 1st Dept 2011] [tenant awarded an 11% reduction in rent for an 18-month period, but did not recover on claims for punitive and treble damages]; see also 157 E. 57th St. LLC v Birrenbach, 8 Misc 3d 127(A) [App Term 1st Dept 2005] ["Considering the tenant's failure to establish that the mold condition remained unremedied — an allegation which, in the words of the Trial Judge, framed the "central factual dispute" litigated below — we agree that the outcome of the case was not substantially favorable to the tenant and that tenant did not achieve prevailing party status "]).

Here, the "true scope" of the litigation centered on the Apartment's habitability and which party bore responsibility for the length of time that the Apartment remained unrepaired. As discussed above, each party bore responsibility in roughly equal measure. Though Plaintiff recovered roughly half of the abatement sought, the net recovery represents a relatively small portion of the seven-figure damages sought in Plaintiff's complaint, to say nothing of the dismissals of its other causes of action, including every claim against the Board and Plaintiff's negligence and punitive damages against the Corporation. Accordingly, Plaintiff's claim for attorneys' fees is denied.

[*12]II. The Corporation's counterclaims

A. Breach of contract (maintenance, utilities, fees, interest)

To prevail on a claim for breach of contract, a plaintiff must establish: (1) the existence of a contract; (2) plaintiff's compliance with the contract; (3) the defendant's breach; and (4) damages (VisionChina Media Inc. v Shareholder Representative Servs., LLC, 109 AD3d 49, 58 [1st Dept 2013]; Harris v Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dept 2010]).

The Lease and Amended Lease require payment of rent/maintenance and utilities monthly, and special maintenance charges/capital assessments as needed (¶¶ 1[a], 47]).[FN16] As discussed above, the Corporation undertook efforts to comply with its own obligations under the Lease and Amended Lease. There is no dispute that, with the exception of a few months, Plaintiff has not made any payments to the Corporation since 2007. The Corporation, through Plaintiff's non-payment, sustained a budgetary shortfall. Accordingly, the Corporation has demonstrated entitlement to maintenance and utilities, subject to payments already made by Plaintiff and the abatement discussed above. Accordingly, the only issue is the measure of damages.

As discussed above, this Court finds the Amended Lease effective as of May 2010 (supra at fn 5). However, even if this Court had held otherwise, there would be no material difference in the calculation of damages. That is, with respect to nonpayment, paragraph 12 of the Lease provided that

The Lessee will pay the rent to the Lessor upon the terms and at the times herein provided, without any deduction on account of any set-off or claim which the Lessee may have against the Lessor, and if the Lessee shall fail to pay any installment of rent promptly, the Lessee shall pay interest thereon at the maximum legal rate from the date when such installment shall have become due to the date of the payment thereof, and such interest shall be deemed additional rent hereunder (emphasis added).

Paragraph 12 of the Amended Lease provides that

The Lessee will pay the rent to the Lessor without any deduction on account of any set-off or claim which the Lessee may have against the Lessor, within the time specified by Lessor's Board of Directors. If Lessee shall fail to pay the rent when due, Lessee shall pay a late charge determined by the Board of Directors of Lessor. If the Lessee defaults in paying rent, assessments, additional rent or other charges, the Lessee shall also pay interest on the unpaid amount at the lesser of (i) 1-1/2% per month or (ii) the maximum rate permissible by law, from the date when such installment shall have become due to the date of payment thereof. The late charge imposed by Lessor's Board of Directors and such interest shall also be deemed additional rent hereunder (emphases added).

The only material differences between the two provisions are the addition of a 1.5% [*13]monthly interest rate and $50.00 monthly late charge as of May 2010 (5/16 1393:13-1394:8).[FN17] With respect to the interest rate, the first interest charge appears in the ledger only in May of 2011, meaning that any difference between permissible interest charges in the Lease and Amended Lease is irrelevant.

As to the charges imposed, even factoring in the late fees, the amounts assessed are below the maximum rate of interest permitted by law, and are therefore permissible (Tsabbar v 17 E. 89th St. Tenants, Inc., 17 Misc 3d 1113(A) [Sup Ct NY County 2007], citing 815 Park Avenue Owners Corp. v Lapidus, 227 AD2d 353 [1st Dept 1996] [permitting the imposition of interest at the rate of 1.5% monthly]; cf Bonham Strand, LLC v Paredes, 57 Misc 3d 1217(A) [Just Ct Westchester County 2017] [finding 5% late fee unconscionable], citing Raanana Realty Corp. v Louis Rotondi Rest. Corp., 1991 NY Misc. LEXIS 886, at *5 [Civ Ct NY County] [finding a 4% monthly interest rate "confiscatory in nature, unreasonable, unconscionable and unenforceable"]). For example, by this Court's calculations, the total penalties, including interest rates and late fees, in 2012 amount to $16,025.00, or 11.27% of the $147,487.15 owed by the end of 2012.[FN18]

The only consequential difference between the Lease and Amended Lease is the authorization of late fees in April 2010 and therefore effective May 2010. To the extent that such fees appear earlier than May 2010 in the ledger (Defs Exh 20), any late fees prior to May 2010 are stricken.

Finally, the Court agrees with Plaintiff that several fees on the ledger appear to be anomalous. For example, on January 15, 2017 and March 16, 2017, the ledger lists charges for $3,234.66 and $2,522.16, respectively, labeled as "interest late fee," whereas prior charges were more clearly labeled as "1.5% interest late fee." Another entry on November 17, 2016 lists a "late fee" of $2,397.10. Neither is adequately explained, and thus these charges, as well as any charge that is not a permissible charge (maintenance, capital assessments, utilities, a $50.00 late fee, or 1.5% monthly interest) must be stricken or, in the process of settling the judgment, demonstrated to be a permissible charge.

B. The Corporation's counterclaim for attorneys' fees

As discussed in section (I)(D) above, the Corporation, like Plaintiff, also received approximately half of the net recovery sought. In addition, its counterclaim for injunctive relief was denied. Accordingly, the counterclaim for attorneys' fees is denied.

CONCLUSION

This Court's net findings are as follows, to be settled in a judgment by the parties (22 [*14]NYCRR 208.33).[FN19] On Plaintiff's cause of action for breach of warranty of habitability, Plaintiff is entitled to a 100% abatement from August 2007 to July 2009,[FN20] a 0% abatement from August 2009 to September 2013, a 50% abatement from October 2013 to January 2016, a 100% abatement from February 2016 to April 2016, and a 0% abatement from May 2016 onwards. Conversely, on the Corporation's counterclaim for breach of Contract, the Corporation is entitled to all maintenance fees, assessments, and utilities charges as currently set forth in the Ledger (Defs Exh 20), subject to the abatements above and any amounts paid by Plaintiff during the subject period. The Corporation is also entitled to any $50.00 late fees and 1.5% monthly interest, as currently set forth in the Ledger, (id.), from May 2010 onwards, subject to the abatements above. All other items are disallowed.

Neither party is entitled to attorneys' fees. It is therefore

ORDERED that Plaintiff and the Corporation shall, by December 28, 2018, settle an order consistent with this decision, returnable directly to the undersigned at the email address previously utilized for submission of motions in limine; and it is further

ORDERED that the Corporation shall, within 10 days of receipt of this order, serve a copy of this order with notice of entry upon all parties.

This constitutes the decision and order of the Court.

Dated: October 5, 2018

New York, NY

______________________________

Dakota D. Ramseur, J.C.C. Footnotes

Footnote 1:Supreme Court transferred the action to Civil Court pursuant to CPLR § 325(d).

Footnote 2:Defendants also impleaded Ari Group Inc., Marino Gerzounis & Jaffe Associates Inc., and Cornerstone Architects, entities associated with the installation of an HVAC unit alleged to have contributed to the conditions in Plaintiff's apartment. All three entities were dismissed on motion for the reasons set forth on the record.

Footnote 3:For the reasons set forth on the record, this Court awarded fees to Defendants based on Plaintiff's failure to appear for trial on multiple occasions without a corroborated, justifiable excuse.

Footnote 5:The Court admitted the Amended Lease over Plaintiff's objection at trial. To the extent that Plaintiff later reiterated that the Amended Lease is inoperative because the Board did not follow proper amendment protocols, (Pl Post-Trial Memo of Law 22-24), the Court adheres to its original determination of admissibility. Both the Lease and Amended Lease contained a provision permitting amendment upon approval of Lessees owning at least 75% of shares, with such changes to be binding on all lessees absent certain exceptions not relevant (or argued) here (Lease, Amended Lease ¶ 6). Angrist credibly testified that multiple shareholder meetings were held, eventually culminating in adoption of the Amended Lease in April 2010 (5/16 1369-1379, Defs Exh 12). Plaintiff failed to rebut Defendants' evidence on this point. Plaintiff did not, either during or after trial, point to any provision of the Lease or By-Laws which contained specific recordkeeping provisions or anything else which might invalidate the Amended Lease. Indeed, the By-Laws section pertaining to proprietary leases contains no formal procedure for amendment, (By-Laws Art V), and the Lease provided only that "the provisions cannot be changed orally" (Lease ¶ 50). As to the latter, the changes were made in writing: the Amended Lease.

Footnote 6:To the extent that Defendant challenges Plaintiff's timeframe based on an earlier affidavit stating that the leaks began in "approximately January 2006," the affidavit's timeframe is neither exact nor materially different from late 2005 (see 5/7 888, et seq.). Moreover, Plaintiff's Bill of Particulars clarifies that evidence of wall infiltration — for example, "wall swelling and bursting" — predated visible water infiltration.

Footnote 7:Plaintiff previously stayed at hotels in China before moving to a more permanent residence (5/7 885:22-886:7).

Footnote 8:Defendants challenged Plaintiff's testimony based on the Bill of Particulars, which indicated stays of varying lengths and at various locations (Ct Exh 4A ¶ 21[b]). Based on the phrasing of Defendants' Demand for a Bill of Particulars, however, the Court is satisfied with Plaintiff's explanation that she interpreted the question to mean paid accommodations (see Defs Motion in Limine, Exh 8 ¶ 21[a]-[d]). This would exclude a prolonged stay with family.

Footnote 9:There was at least one violation issued by the New York City Department of Buildings on May 16, 2013 for "excessive water leakage through terrace door."

Footnote 10:Plaintiff's contention that "no proof was ever supplied that the Apartment had been properly remediated from mold conditions," (Pl post-trial memo at 3), is refuted by the overwhelming weight of the credible evidence, including Plaintiff's own submissions at trial and prior sworn statements made in 2013 (Pl Exh 10 at 3, Defs Exh 5 ¶¶ 6-7).

Footnote 11:This inconsistency was not explained at trial. Nevertheless, Defendants did not seem to dispute the necessity of rebuilding.

Footnote 12:Though Plaintiff switched attorneys several times, the attorney to whom the email was sent was the same attorney who represented Plaintiff at trial.

Footnote 13:Though the email is marked "for settlement purposes only," Plaintiff consented to its admission (5/7 933:9).

Footnote 14:There is, however, an email from Plaintiff on December 13, 2010 asking to inform her when access was needed, but that is sent in response to a request to examine the terrace for leaks (Pl Exh 12). A subsequent email on December 30, 2010 reiterates that she is not pleased with the status of waterproofing "before good money is put into the restoration of the home property" (id.). Plaintiff did not provide adequate support for this opinion. Angrist credibly surmised that the delay may have been due, at least in part, to Plaintiff having changed attorneys several times (5/16 1420:8-17).

Footnote 15:For this reason, Plaintiff's objection to the June 1, 2009 "prior arrears" entry of $35,348.62, (Defs Exh 20), is moot. The charges are approximately equal to two prior years of maintenance charges — in other words, the period which would be covered by the abatement.

Footnote 16:Paragraph 47 of the Lease is cut off in the version submitted as an exhibit. Nevertheless, the parties do not dispute that the provisions are materially identical.

Footnote 17:Though Plaintiff objects to this amount on similar grounds as the objection to the Amended Lease — that the Board did not follow proper procedures — this Court rejects the argument for the same reasons. Plaintiff does not point to any specific procedures violated by the Board, or demonstrate any improper conduct.

Footnote 18:Even removing the first year of impermissible late fees, the percentage rises to only 11.32%.

Footnote 19:The Court is confident, given the professionalism and collegiality displayed at trial, that counsel will be able to collaborate to settle a judgment utilizing the guidance provided in this decision. However, the parties may, if necessary, arrange a further appearance with this Court for the purposes of clarifying any portion of this decision or settling any reasonable disputes which may arise.

Footnote 20:This portion of the abatement fully encompasses the "prior arrears" listed in the ledger on June 1, 2009 (see fn 16, supra).