I Spy

May a condominium permit a unit-owner to maintain surveillance cameras that show activity in the common hallway immediately in front of that unit-owner’s door? That was the chief question in Branscombe Investments Ltd. vs. Board of Managers of the Olympic Tower Condominium.

Branscombe owned a condominium unit on the 46th floor, in which Munro and Avra Banks lived. Abbas Abdulaziz lived across the hall. They were the only unit-owners who lived on the 46th floor. The Bankses claimed that, in 2004, they discovered that Abdulaziz had installed cameras and eavesdropping equipment in the common hallways of the 46th and 47th floors, in violation of state and federal laws.They also claimed that Abdulaziz installed entry doors that did not match the other entry doors in the condominium and that he placed furnishings in the common hallways. The Bankses maintained that these actions were contrary to the condominium rules and bylaws and that the condominium wrongly approved Abdulaziz’s actions. They asked for removal of the surveillance devices, $20 million in damages for the violation of their privacy rights and the reduced value of their property, and $30 million in punitive damages.

The condominium and Abdulaziz moved for summary judgment. They each claimed that the cameras in the common hallways provided a view only of the space in front of Abdulaziz’s doors, and that they did not and could not view other areas of the hallways. The condominium and Abdulaziz also argued that the board’s decision to allow the camera was within the board’s authority under the Business Judgment Rule.

The condominium and Abdulaziz submitted affidavits stating:

(1) When Abdulaziz purchased his apartment, there were ten security cameras and two intercom speakers already mounted in the hallway ceilings on the 46th and 47th floors.

(2) They had been installed by the prior owner and were in place when the Bankses purchased their apartment.

(3) Abdulaziz claimed that he did not use any of those installed cameras and speakers. Instead, he installed his own system.

(4) He placed a dome-like camera door-viewer in the ceiling above each of his three main entry doors in the hallways. The cameras were connected to a closed-circuit television system in Abdulaziz’s residence. He claimed that the cameras only viewed what was immediately in front of his doors. He said that he had no view of the hallway and that he could not see the Bankses, their door, or their visitors.

(5) None of Abdulaziz’s cameras had microphones or audio capabilities. Moreover, Abdulaziz stated in his affidavit that he had never used any devices to view, record, transmit, or listen to his neighbors’ conversations or movements, or that of their children or guests.

(6) When the Bankses complained in 2004 about the cameras, the non-conforming doors, and the furniture in the hall, the board directed that Abdulaziz remove the furnishings and the previously installed cameras from the hallways of the 46th and 47th floors, except for two previously installed cameras that were embedded in the ceilings.

(7) The board also approved the camera door-viewers that Abdulaziz had installed above his doors. The board approved the non-conforming doors, pending the renovation of the hallways. According to the vice president, the same approval had been extended to the Bankses’ entry doors, which were also non-conforming.

The Bankses continued to claim that they were being spied upon. In July 2005, the board retained the investigative firm of Kroll Schiff & Associates, which came to the building four times and which issued a written report each time. On two of the visits, Kroll inspected the surveillance equipment in Abdulaziz’s apartment. According to Kroll’s reports, Kroll determined that:

(a) The three camera door-viewers, installed in the ceilings above Abdulaziz’s main entry doors, were the only working cameras on the 46th and 47th floors.

(b) A fourth camera found on the 46th floor and a fifth on the 47th floor were non-functional and not attached to any video system.

(c) The three camera door-viewers that Abdulaziz installed were attached to his CCTV system.

(d) The door-viewer on the 46th floor provided a view up to six feet from the front of the door.

(e) The one on the 47th floor provided a view up to two and a half feet from the front of the door.

(f) The other one on the 47th floor provided a view up to seven feet from the front of the door; and

(g) Each camera could see only the area immediately surrounding the door, and did not provide a view of the Bankses’ entryways or the hall between the elevators and the Bankses’ entryways.

Kroll concluded that the door-viewers provided very limited fields of view, that they could not be used to monitor activity at the Bankses’ doors or along any shared corridors to the elevator, that they had no ability to pan, tilt, zoom, or provide additional views, and that they had no local motion-detection or audio-recording features. Kroll performed an investigation using thermal imagers and several other kinds of equipment and found no hidden surveillance tools. Kroll found intercom speakers, one on each floor, and determined that the speakers were part of an old security system that had not been used recently and were not connected to any functioning system. Kroll also removed the two non-functioning cameras and the two intercoms.

Nonetheless, the Bankses insisted that Abdulaziz conducted surveillance of them and their family – although they submitted no evidence to support this claim and failed to address Kroll’s findings.

The court explained the general rule that issues of fact and credibility may not be determined on a motion for summary judgment. However, where the party making the motion submitted evidence of material facts and the opponent did not deny them, the facts were deemed admitted. Further, conclusion-based and unsubstantiated assertions of fact were insufficient to challenge the motion.

The court noted the Bankses’ unsubstantiated assertions of facts and that they were insufficient to show the existence of a factual dispute. The Bankses offered no evidence concerning the cameras so that the Kroll reports and affidavits of the condominium and Abdulaziz were undisputed.

The Bankses’ first claim was that the condominium and Abdulaziz violated Real Property Law Section 339-j – that each condominium owner must comply strictly with the bylaws and with rules and decisions adopted under them. The condominium claimed that the Business Judgment Rule protected the board’s decision to allow the door-viewers and the non-conforming doors. The court explained that the rule limited the court’s power to review decisions made by a condominium’s board of managers.

Under the rule, the court was only permitted to question whether the board’s actions were authorized and taken in good faith and in furtherance of the legitimate interests of the condominium. If the answer to these questions was yes, the court’s inquiry stopped. To obtain further judicial review, the Bankses would have had to have presented evidence that the board acted in bad faith, that it deliberately singled them out for disparate treatment, that the board did not act upon proper notice, or that the board acted fraudulently with self-dealing or unconscionably.

The affidavit of Barry L. Wray, the board’s vice president, explained that after the Bankses complained, he wrote to Abdulaziz and asked him to remove the security cameras, the card access systems, and the planters from the hallways. Wray wrote again requesting that Abdulaziz meet with a member of the board. In addition, the board’s attorney wrote directing Abdulaziz to remove the same items from the hallways.

Wray explained that Abdulaziz, the board president, and a member of the board met on March 10, 2004. The board president then conferred with the rest of the board and wrote a letter to Abdulaziz expressing the board’s desire to balance Abdulaziz’s security concerns with the Bankses’ privacy concerns. [The board determined that Abdulaziz could maintain one camera at each main entry door, that the cameras would have to serve only as the “functional equivalent” of door-viewers, and just focus on the area immediately in front of the doors and not the other side of the hallway.]

After he received this letter, Abdulaziz removed eight of the cameras that had been installed by a previous owner and Kroll removed the remaining two cameras and the intercoms.

The court concluded that the board established that it had acted properly, in good faith, and in furtherance of the legitimate interests of the condominium. The evidence indicated that the board quickly addressed the Bankses’ concerns and directed Abdulaziz to remove surveillance devices.

The Bankses did not put forth any evidence of wrongdoing on the board’s part, nor any evidence that they suffered injuries. There was no evidence that they were singled out for mistreatment or that Abdulaziz was singled out for positive treatment. The fact that only Abdulaziz had camera door-viewers, by itself, was not an indicator of bad faith or favorable treatment. It was also significant that, prior to the Bankses’ purchase of their apartment, security cameras already existed in the hallways, which had been installed by the previous owner. As for the non-conforming doors, the Bankses did not deny that their doors were also non-conforming and, like the door of Abdulaziz, were allowed to remain, pending the renovation of the hallways. Again, there was no evidence that the board was showing favoritism or that the board violated the rules or bylaws.

The Bankses asserted that the condominium and Abdulaziz interfered with their prospective business relations in that, because of the cameras, they were not able to sell or lease their apartment. The court explained that this claim would require an allegation that the Bankses would have entered into an economic relationship with a third party but for the wrongful conduct, which would have had to consist of violence or fraud. The Bankses did not allege these facts and, as previously noted, rented their apartment for $37,000 per month. The court dismissed this and all other claims as not supported by the facts.

The court then addressed the counterclaim by Abdulaziz, who asserted that the Bankses violated condominium rules by allowing their children to play hockey and football in the common hallways. He sought $1 million in damages. The Bankses claimed that this was frivolous and that they never received any complaints regarding the alleged behavior. The court found that Abdulaziz offered only unsupported conclusions and allegations as evidence and did not state a claim for nuisance.

The second counterclaim was for the board’s attorneys’ fees. Under the bylaws, if a unit-owner sued the board for violation of condominium rules and received an adverse determination or the complaint was dismissed, the board could recover its attorneys’ fees and disbursements. The court found that the condominium was entitled to attorneys’ fees and directed the condominium to serve papers in support of its claim. Moreover, based upon the above decision dismissing the complaint, and the applicable bylaws, the condominium was entitled to attorneys’ fees.

Comment: This is a case where the parties should have been able to come to a resolution without resorting to a lawsuit. The court made clear in its decision that it expended significant efforts to try and settle this matter and that, since the parties were neighbors, settlement would have been preferred. From the condominium’s perspective, the court was able to dismiss claims because it complied with the Business Judgment Rule. It retained a competent expert and made decisions based on that expert’s advice. Even though there was a claim that the board acted without holding a board meeting, the evidence submitted to the court showed that its actions were taken at meetings, in accordance with its bylaws.

By pursuing claims in the face of evidence that the condominium retained experts, relied on those experts, and followed its own rules, the Bankses were required to pay the condominium’s legal fees.

In this case, we join the court in its belief that this was a dispute among neighbors that should have been settled.