A Judgment Grows in Brooklyn

Everyone who buys an apartment with a terrace is disappointed at least some of the time. A terrace is an important amenity, and buyers pay a premium for an apartment with outdoor space. But what happens when the building or the terrace needs repairs that prevent the apartment owner from using the terrace for a season, or more than a season? That was the question in Goldhirsch v. St. George Tower & Grill Owners Corp.

Background

St. George Tower is a cooperative corporation that owns the building at 111 Hicks Street in Brooklyn. Lawrence Goldhirsch bought Apartment 5K, which has access to a shared terrace. A month after he moved in, a blocked drain during a rainstorm caused a flood on the terrace. The board of St. George Tower decided that no one would be permitted onto the terrace while they investigated and repaired the area. The occupants of the unit below the damaged space vacated their apartment for a few months in order to allow repairs. They were not required to pay maintenance for that period of time.

Goldhirsch, however, remained in the apartment throughout. He never asked for an abatement of maintenance charges. (The board had actually considered but rejected the idea because Goldhirsch never vacated.)

In the end, the terrace could not be used for two years. Even worse, a few months after reopening, it was again closed for almost two more years so that repairs could be made to the roof of the building.

The Lawsuit

Goldhirsch sued, claiming, among other things, breach of the lease and breach of the warranty of habitability. The warranty is a representation by landlords (including co-ops) that their tenants will not be subjected to conditions endangering or detrimental to their life, safety, or health. The warranty is implicit in all leases in accordance with Real Property Law Section 235-b.

Essentially, Goldhirsch said the proprietary lease gave him the right to use the terrace, but he could not use it for many years because of the ongoing repairs. He argued that, because the terrace was closed, it should be considered dangerous and was therefore a breach of the warranty. He also argued that the co-op had violated a statute because it gave an abatement to the occupants below but not to him.

In response, the co-op argued that the lease required it to make repairs and comply with the law. It was a good faith decision to perform building repairs, and using the terrace to make repairs was within its rights under the lease.

The Ruling

Goldhirsch moved for summary judgment on his claims, arguing that there were no issues of fact that needed to be reviewed that would preclude the court from awarding him judgment.

The court first discussed the breach of lease claim. It reviewed the lease and determined that the lease only required that the co-op give an abatement if there was damage as a result of fire or other cause covered by multi-peril policies. Closing the terrace as a result of the leak fell into this category; the terrace closure for roof repairs did not.

But the co-op argued that it closed the terrace in accordance with its business judgment. Interestingly, the court made a distinction between application of the Business Judgment Rule (BJR) in different New York jurisdictions. The court explained that the intermediate appellate courts in the first (Manhattan, Bronx) and fourth (certain western upstate counties) departments are clear that the BJR provides no protection for a breach of contract. In other words, a board cannot breach a contract and claim that it was good business judgment to do so. The court believed, however, that the second department (which includes Brooklyn) was less clear on this point, and, given the leeway to do so, the court agreed with the board that its decision to close the terrace to repair the leak was protected by virtue of the BJR. As a result, it refused to award damages based on Goldhirsch’s claim for breach of lease.

As to the breach of warranty claim, the court explained that the statute set forth merely a minimum standard of habitability relating to essential functions. The apartment was not unfit for human habitation, nor were there conditions that deprived Goldhirsch of the essential functions of a residence. Thus, Goldhirsch’s motion for summary judgment was denied.

The Takeaway

There have been a number of cases where courts have refused to award damages or abate maintenance charges to an apartment owner because the owner has been unable to use the terrace in connection with repairs, even for an extended period of time. Without performing an exhaustive analysis, the courts have generally held that a co-op has the right to perform building repairs and has the concomitant right to use a terrace to do so. This is provided, of course, that the work is warranted and diligently performed.

The court here engaged in an interesting interpretation of the interplay between the BJR and the apartment owner’s breach-of-lease claim. Although the court quoted certain provisions of the proprietary lease concerning damages from general use of a terrace, it did not state whether there are provisions that specifically allow a co-op the right to use a terrace for building repairs, a provision found in many leases.

Regardless, the result – that the co-op is not required to abate maintenance charges for its use of the terrace for building repairs –appears to be consistent with other decisions.

We note that in a condominium, access rules and use of a terrace would be guided by the particular condominium’s bylaws. The warranty of habitability, codified in the Real Property Law, does not apply.

Attorneys
For Plaintiff
Lawrence Goldhirsch,
pro se (as his own counsel)
For Defendant

Margaret G. Klein & Associates