Harassment, The Audit, The Awful Stench

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.

In Medows vs. Stern, a motion to dismiss a complaint alleging intentional infliction of emotional distress and breach of contract was denied. The court concluded that it needed additional factual information before it could determine the merits of the complaint.

This was a dispute between the residents of two co-op apartments. The plaintiffs resided in the apartment directly above the defendant. They alleged that for over the past 18 months, the defendant, in a continuous course of conduct solely intended to harass and intimidate them, had used a baseball bat and/or broomstick to bang on the ceiling of his apartment directly under their bedroom and living room at all hours of the day and night for no purpose but to awake, annoy, frighten, intimidate and harass them and their three-month-old son. They alleged that, as a result, they had suffered sleep deprivation, bodily pain and mental anguish. The complaint asserted two causes of action. The first was for intentional infliction of emotional distress. The second was for breach of contract in violating the co-op’s bylaws regarding the proscription against making excessive noise. The defendant moved to dismiss the complaint for failure to state a cause of action.

The court noted that, in the first cause of action, in order to recover on the tort of intentional infliction of emotional distress, a party must establish that the other party’s conduct was so extreme and outrageous that it went beyond all possible bounds of decency and could be regarded as atrocious and utterly intolerable. Courts are reluctant to allow recovery under this claim unless there was a deliberate, malicious, and systematic campaign of harassment or intimidation. Since the complaint alleged just such a campaign of harassment by the defendant causing emotional distress to the plaintiffs, the court said that it adequately stated a cause of action.

As to the second cause, the defendant argued that the plaintiffs’ claim for breach of contract must fail because it was not based on any agreement between the parties but, rather, on an agreement between the defendant and the non-party co-op. However, the court observed that some courts had suggested that a tenant may be a third-party beneficiary entitled to enforce certain lease obligations that another tenant has assumed. Since neither party had cited any authority that expressly addressed the issue and since neither party had adequately addressed the issue, the court was persuaded that dismissal of the claim at this time would be inappropriate. Accordingly, the defendant’s motion to dismiss was denied.

Comment: Although this was not a final decision on the merits, the court was loathe to dismiss the complaint without a further review of the facts. So, the decision is a victory for the plaintiff and may be useful in achieving a settlement between the litigants rather than lead to a prolonged and costly exercise in discovery, further motion practice, and, worst case, a trial.

The Audit

What is the extent of the obligation of a condominium board of managers to cooperate with unit-owners seeking to audit the books and records of the condominium? That was the issue in Graber vs. Sheridan where the court held that the board was protected by the Business Judgment Rule.

In this case, the condominium-owner petitioners sent a letter to the board of managers of Imperial Towers Condominium on Staten Island in February 2006 requesting that an independent audit of the Imperial Towers Condominium be conducted. After months of discussion over the exact breadth and scope of documents to be provided, the audit was held on June 21, 2006. As a result of the board’s alleged failure to provide all requested documentation, the audit was unable to be completed. In March 2007, the petitioners began an action against the board members seeking an order to require full disclosure of all requested documents in order to complete the independent audit. The board members contended that they had provided petitioners with all reasonable and available documents as required by law.

Under New York Real Property Law Section 339-w, the condominium’s board of managers is obligated to “keep detailed, accurate records, in chronological order, of the receipts and expenditures arising from the operation of the property” and to ensure that the records are available to unit-owners on weekdays at a convenient time. In analyzing the case, the court said that where an individual owner challenges the actions of a condominium’s board of managers, the Business Judgment Rule applies. In its application, the court said that the rule demands that, unless there were “claims of fraud, self-dealing, unconscionability or other misconduct, the court ... should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the condominium.”

Applying the rule to the case at bar, the court concluded that the board’s determination that all reasonable and available documents were provided to petitioners was not made in bad faith and well within its authority. Furthermore, petitioners failed to allege or prove any claims of fraud, self-dealing, unconscionability, or other misconduct on the part of the respondents. Therefore, the court would not substitute its judgment for that of the board. Thus, the petitioners’ request for further disclosure was denied and the petition was dismissed.

Comment: The Business Judgment Rule remains the controlling precedent for judicial review of unit-owner challenges to a condominium board action. Under the rule, judicial deference is given to board determinations so long as the board acts within the scope of its authority, in good faith, and in the lawful and legitimate furtherance of the condominium’s purpose. This is another in a long line of cases that makes the challenge of a board’s action very difficult.

The Awful Stench

In Zipper vs. Haroldon Court Condominium, the owner of a condominium unit, Sheila Zipper, brought an action seeking to evict her tenant, Rebecca Rosenbaum, on the grounds that she had created a nuisance in her Manhattan apartment. Following a non-jury trial, the Supreme Court dismissed the claim and granted tenant’s motion for attorneys’ fees. The owner appealed to the appellate division of the Supreme Court.

In analyzing the case, the appellate court said that the trial court’s finding that Rosenbaum did not create a nuisance warranting her eviction appears to have been based upon an unreasonable and unsupportable finding that the odors complained of were only occasional and of the type that are unavoidable in close city quarters, an “inescapable reality of urban life.” To the contrary, in the view of the higher court, all the credible testimony regarding the odors that emanated from Rosenbaum’s apartment indicated that they were not of the unavoidable variety but of a type caused by matter that should not be kept in an apartment, such as rotting food. The testimony of Rosenbaum’s witnesses, who denied the presence of any such odors, was refuted by the disinterested testimony of two firefighters regarding their unannounced visit to the apartment just one month before trial. Their testimony corroborated plaintiffs’ claims of ongoing noxious odors by confirming that on that visit the apartment emanated shockingly foul odors. Even though the stench may have dissipated somewhat once the apartment door was closed, that fact was of little consequence. Bad odors, while much worse at the source, generally continue to permeate the vicinity of their source, remaining noticeable in varying degrees. To reject claims of recurring odor problems as it did, the trial court had to conclude that the stench noticed by the firefighters coincidentally happened to be present on the day of their visit and was a rare event. Such a conclusion strained credulity. Indeed, the court’s rejection of the nuisance claim in effect imposed on plaintiffs and the condominium defendants a burden beyond that imposed by law, and impossible to satisfy, of proving only through neutral witnesses the ongoing occurrence of objectionable conduct. The court found that the credible testimony clearly established the claimed presence of an unacceptable level of odor constituting a nuisance and warranting eviction.

Further support for the finding of nuisance was provided by the testimony of the fire department’s Lieutenant Meehan as to the condition of the apartment, which was dangerously cluttered with furnishings, boxes, and debris. Although the trial court simply directed Rosenbaum to cure the condition, it was significant that, in previous litigation years earlier, the court had taken extraordinary measures in an effort to assist Rosenbaum in curing the same condition so as to avoid eviction. Evidently, said the court, the problem had not been solved and could not be solved with a directive such as the trial court included in its order.

Moreover, although the plaintiffs and the condominium defendants were unable, without Rosenbaum’s cooperation, to clearly establish by direct evidence the cause or source of the many water leaks into the apartment below Rosenbaum’s, the testimony regarding prior incidents and observations indicating that, over the years, Rosenbaum had created or allowed flooding conditions to occur in her own apartment. While this alone would not be enough for a finding of nuisance, in conjunction with the other evidence, it did support that finding. So, too, did the testimony regarding the cockroach infestation in Rosenbaum’s apartment and the trash she deposited, even if it did not actually create a building-wide infestation. The court concluded that the eviction therefore should have been granted. The award of attorney fees to Rosenbaum was rejected. The plaintiffs’ claim for an abatement of common charges was properly transferred to civil court.

Comment: This is a clear case where the appellate court strongly disagreed with the conclusion of the trial court. Although lower courts are usually reversed on legal errors, the reversal here seems based in large measure on the facts: a strongly divergent view of the impact of the stench and odors and an evaluation of the extent of the odor level that constituted a nuisance.