Board to Unmarried Couples: Drop Dead

Richard Siegler is a partner in the New York City law firm of Stroock & Stroock & Lavan, and a member of the Committee on Condominiums and Cooperatives of the Real Property Section of the New York State Bar Association. He is also an adjunct professor at New York Law School, where he teaches a course on cooperative and condominium law.

May a co-op board apply a different standard for approving single applicants to purchase apartments than it does for married couples? The answer was a clear “no” in Latoni vs. Sherman Square Realty Corp. , where the court refused to dismiss a complaint that a co-op discriminated against single individuals in favor of married couples.

In this case, plaintiffs Lisa Latoni and Andrew Jorgensen were heterosexual, cohabiting, and unmarried. They jointly signed a contract to purchase a cooperative apartment at Sherman Square and jointly sought and received a mortgage commitment from their bank. After reviewing their application, the co-op board informed them that Latoni would be allowed to purchase the shares and become a lessee, but that the couple would not be allowed to purchase the shares jointly, because Jorgensen was not qualified.

Latoni and Jorgensen claimed – and this was not disputed by the co-op – that it was the building’s policy to consider an application from a married couple as an application from a single economic unit, and to approve such applications when the “unit” was financially qualified, even when one of the spouses had no income and would not be financially qualified as an individual applicant. Conversely, board policy considered an application from two unmarried individuals living together as an application from two separate economic units; when one of those individuals was financially qualified and the other individual was not, only the financially qualified individual would be approved.

The dispute was whether these policies and practices constituted discrimination, and/or disparately affected the plaintiffs. The complaint set forth four causes of action. The first two alleged that Sherman Square’s policies and practices had a disparate impact on unmarried individuals, to the detriment of Latoni and Jorgensen, and violated the New York City Human Rights Law. The third and fourth alleged that the co-op had discriminated against Latoni and Jorgensen, respectively, in violation of the city and state human rights laws. Latoni and Jorgensen sought: (1) a declaration that the defendants’ actions violated both the human rights law, as well as the executive law; (2) compensatory damages in an amount to be determined after trial; (3) punitive damages; and (4) costs and attorney’s fees.

In the court’s view, it was obvious and conceded that the board’s policies and practices were to treat applicants differently based on whether they were married or not. That is, married partners were treated as a single economic unit and unmarried partners were not. In our contemporary social environment, the court said that it might be natural to conclude that policies and practices treating married couples differently from others, while reflected in many forms of federal, state, and local laws (such as taxes, inheritances and others), were not only antiquated, but were discriminatory. The court noted that both the New York City and State human rights laws prohibited discrimination on the basis of marital status in the sale, rental, or leasing of housing accommodations, including any of the accommodations, advantages, facilities, or privileges that accompanied them. The city human rights law specifically prohibited facially neutral policies that have a disparate impact.

According to the court, Latoni and Jorgensen’s discrimination claim stood upon a different footing. They did not allege that Jorgensen suffered discrimination as a result of a denial of a benefit to Latoni, but rather, as a result of a denial of a benefit to him. Jorgensen would have been financially qualified had the co-op applied the same policies and practices to him that it currently applied to married individuals; Jorgensen lost a significant benefit solely because he was single. The court said that this was sufficient to make a prima facie case of discrimination, on the basis of marital status, in “the terms, conditions, or privileges of the sale, rental or lease of any, housing accommodation.” The court added that the property’s practices and policies did not favor families, but favored married persons.

The co-op maintained that they had rejected Jorgensen because he was financially unqualified, not because he was single. That was patently untrue. While a spouse with less or no income would be qualified based on Sherman Square’s policies and practices, the board maintained that its policies and practices were based on the fact that such a spouse would be entitled to financial protections under the Equitable Distribution Law and inheritance laws. To the extent that the co-op raised a defense to a prima facie case of discrimination (i.e., a legitimate business reason), the court said that this defense could not be considered on a motion to dismiss the complaint.

The president of the co-op, who was also a defendant, separately argued that the complaint should be dismissed against him because it did not allege that he alone had the authority, to sell, rent, or lease the apartment as required by the human rights laws. The complaint alleged that the president supported, encouraged, and implemented the alleged discriminatory policies. He was not dismissed from the action at this time. However, the court said that it would revisit the issue on a motion for summary judgment, if made, after the completion of discovery.

Comment: The case is not the last word on this matter and the results may change after discovery is permitted. However, it illustrates the plight of individual board members in considering apartment transfer applications. Without good legal advice, it is not difficult to run afoul of statutory prohibitions on discrimination against protected classes of individuals.

Plumbing in the Ceiling

In Duran v. Essex House Condominium, the court was asked to determine whether plumbing pipes in the ceiling of a condominium unit were actually in the unit or in the common elements. However, the court refused to grant a preliminary injunction that would have prevented the defendant from performing further renovations in the apartment above the one owned by the plaintiff.

This was an action to recover for alleged interference with property. The plaintiff was Timothy C. Duran, the owner of Unit 1501/1537 at the Essex House condominium in Manhattan. The defendant was RMP Essex House Holdings, the current owner of Unit 1601, the apartment directly above Duran’s; Barbara Lockhart was 1601’s previous owner. Duran’s complaint alleged that, while Lockhart was the owner of the unit, one of her “agents and/or contractors installed plumbing pipes in the ceiling…without [Duran’s] knowledge or consent” and in violation of his property rights. The complaint further alleged that the condominium, its managing agent, and other adjacent owners gave Lockhart’s agents and/or contractors access to Duran’s unit without his consent.

Duran sought a preliminary injunction enjoining RMP from “(i) performing any construction which is related, in any way, to any plumbing or piping located in Unit 1501, or any plumbing or piping running from Unit 1601 into Unit 1501; and (ii) connecting anything to the plumbing, or to any other plumbing or piping which runs from Unit 1601 into Unit 1501.” RMP opposed Duran’s motion, and cross-moved to dismiss his ninth cause of action, which sought a judgment from the court directing RMP to remove the unauthorized pipes in the ceiling of Unit 1501.

Duran’s complaint alleged that Duran, a resident of San Mateo County, California, had purchased Unit 1501 in July 1998. In August 1998, he began renovation. In the fall of 1999, a dispute arose between the condo board and his contractor, which led to litigation that stopped the work. Duran and the contractor came to an agreement in February 2003, whereby the remaining work was to be completed within 14 weeks. At about the same time, Duran “discovered that the Condominium had permitted a contractor… to use the Unit as an onsite facility complete with an office, phone line and employee lounge, all without plaintiff s knowledge and consent.” Duran objected; the “managers of the Hotel and Condominium” denied knowledge of the use and promised to stop it; later, the plaintiff discovered that the unauthorized use continued until January 2004. Duran’s contractor could not continue work until the condominium’s contractor vacated the space.

The complaint further alleged that “in the course of construction work done by Lockhart in Unit 1601, one of Lockhart’s agents and/or contractors installed plumbing pipes in the ceiling of Duran’s unit without his knowledge or consent...” The defendants allegedly granted Lockhart’s agents and/or contractors unauthorized access to Duran’s unit. Since discovering the encroaching plumbing “in or about the summer of 2004,” Duran allegedly demanded that the pipes be removed, but he says that all his demands were ignored.

Duran said that he discovered the disputed plumbing in February 2004, in the area between Unit 1501’s drop ceiling and the bottom surface of the concrete slab between his apartment and Unit 1601, Duran stated that he and his contractor thereafter determined that the offending plumbing was, in fact, installed in the ceiling of Unit 1501 at some point after the original construction in his apartment had ceased. He further said that he was told by Lockhart, and by one of her contractors, that the plumbing had been installed “sometime during the last couple [of] years.”

Duran cited photographs of the unit in 1998 that purportedly demonstrate that the plumbing was not then present, but no such photographs were included with his submission. Duran claimed that he had been advised that the purpose of the plumbing was to service Unit 1601, including, among other things, to support the transport of waste products out of a new kitchen and bathrooms being installed in Unit 1601. Duran claimed to have learned that “one or more of Lockhart’s agents and/or contractors actually entered his Unit without his permission in order to install the plumbing...”

Duran asserted that the installation of the plumbing in the ceiling of his unit interfered with his property, and violated the bylaws and the declaration of condominium. He pointed to Section 6 of the declaration: “The approximate dimensions of each Unit are from the interior surfaces of its perimeter walls, lowermost floors, uppermost ceilings, windows and window frames, doors and door frames, and trim. Each Unit includes both the portions of the Building within such boundary lines and the space so encompassed.”

It was Duran’s position that the space in which the plumbing was installed – above his drop ceiling and below the concrete slabs of Unit 1601 – was below the uppermost ceiling of his unit, and thus, was part of his property. In addition, Duran contended that the plumbing violated Section 9 of the declaration, which provided that no noxious, illegal, or offensive activity shall be carried on in any unit or in the common elements, nor shall anything be done therein which may be or become an annoyance or nuisance to other owners.

RMP’s attorney affirmed that the area in which the piping/plumbing exists was admittedly below the concrete slab of RMP Essex’s unit and above the sheetrocked ceiling of Duran’s unit, which is a common area under the declaration of the condominium. It was not a part of the definition of “unit” in the declaration.

RMP also referred the court to Section 11 of the bylaws, which provided that: “An owner shall not be deemed to own the undecorated and/or unfinished interior surfaces of the perimeter walls, floors, ceilings, windows and doors bounding his Unit, nor shall the owner be deemed to own the utilities running through his Unit which are utilized for, or serve, more than one Unit, except as a tenant in common with the other owners. An owner, however, shall be deemed to own the decorated and/or finished interior surfaces of the perimeter walls, floors, ceilings, windows, and doors bounding his Unit and shall have the obligations set forth in Section 1 of Article V hereof with respect thereto.”

In an affidavit, James C. Reeves IV, the project manager for RMP’s renovation of Unit 1601, said: “The renovation of Unit 1601 was purely cosmetic in nature. No pipes or conduits behind the walls or below the floor of Unit 1601 were removed, replaced, added, or touched in any way. Neither the two bathrooms nor kitchen were relocated. Rather, RMP Essex, as is relevant here, replaced existing fixtures and connected them to the existing waste and water connections at the wall in Unit 1601.

“I understand from my attorney’s affirmation and it is RMP Essex’s understanding as owner of Unit 1601, that the area below the concrete slab of the floor and above the plaintiff’s finished sheetrocked ceiling is a common element of the condominium. The same way the space above Unit 1601’s finished sheetrocked ceiling and below the concrete slab of the unit above is a common element of the condominium.”

The court said that a party seeking a preliminary injunction bears the burden of proving that: (A) it is likely to succeed on the merits; (B) it will be irreparably injured absent an injunction; and (C) the balance of equities weighs in its favor. Duran had failed to meet this burden.

The court concluded that first, Duran had not presented evidence demonstrating that he was likely to succeed on the merits. He argued that the subject plumbing interfered with his property, but in the court’s view the sections of the bylaws and declaration he cited by no means established that the area in which the plumbing installed was part of his unit. The term “uppermost ceiling” is not defined, and is susceptible to multiple interpretations. Duran submitted no evidence supporting his interpretation. Nor did he submit evidence that the plumbing was illegal, offensive, an annoyance, or a nuisance. Without additional information, such as how other similar spaces in the building and any plumbing were regarded by other unit-owners, the court could not determine this issue.

Similarly, Duran submitted no evidence supporting his claim that he was told by Lockhart and one of her contractors that the plumbing was recently installed, nor did he submit evidence that Lockhart’s agents entered his unit with the aid of the other defendants. But, in the court’s view, Reeves’ affidavit raised a question as to whether the area in which the plumbing was installed was a common element.

The court also concluded that Duran had not shown that he would be irreparably harmed without an injunction. The plumbing he objected to was already present, and he had not presented any evidence that RMP was engaged in further installation of plumbing in the disputed area. The only imminent action he referred to was the attachment of fixtures to the plumbing in Unit 1601. This did not constitute irreparable harm because the fixtures in Unit 1601 could be removed without harm to Duran’s property.

Finally, Duran had not demonstrated that the equities balanced in his favor. Reeves claimed that further delay of construction in Unit 1601 would harm the prospective tenant, a man in his late 70s, who was temporarily housed in one of the hotel rooms on the premises, awaiting completion of the renovation of Unit 1601. Thus, the court concluded that Duran was not entitled to a preliminary injunction. The cross-motion of defendant RMP to dismiss Duran’s demand to remove the pipes in the ceiling was denied because of a factual dispute.

Comment: The issue here concerned who was in control of the space in a condominium building between the ceiling and floor of two units. Either it was part of the lower unit or it was within the common elements. The facts were in dispute. It is usually difficult to obtain a preliminary injunction because of the requisite burden of proof. In this case, the relief sought was denied leaving the plaintiff to establish at a trial on the merits his entitlement to such relief, requiring a more expensive effort.