Caught in the Rumor Mill

Disputes between boards and shareholders or unit-owners have become more disparaging than ever, thanks in no small part to the Internet. The fact that people can complain viciously about something and broadcast it instantly while staying anonymous is an invitation to malcontents as well as those with legitimate complaints.

That was the case in Brightwater Towers Condominium v. Vitebsky, Zilberman and Sosina. A number of unit-owners felt that the board was not handling the operations of the 700-unit Coney Island condominium properly. Three of them — Vitebsk, Zilberman and Sosina — were so upset that they created a Google group, BWTUnitOwners, and sent out accusatory statements to the nearly 500 unit-owners who belonged to it over a three-month period. 

The initial emails stated that board members should not “harass, threaten or attempt any means to control” residents and that the board was “no longer functioning to benefit the owners but to…squeeze extra income from us.” Another declared that the condo had “reached a serious moment of crisis which, if not addressed immediately, will have grave consequences on all BWT owners.”

Within days, an email on the group’s website provided a list of items board members should not do, including accepting any gifts from owners, residents, contractors or suppliers, or spending unauthorized association funds for their own benefit. While the list made complete sense (and should be followed by every board), and the board was not directly accused of improper behavior, one might get the impression that the board was guilty of such actions. In addition, subsequent emails asked why board members were ignoring the condo’s bylaws and whether there was enough misconduct “to substantiate removal for cause.” 

The condo board brought an action for defamation and claimed that all statements by the group were false. In addition, the board claimed that the accusations that it routinely broke the law and generally acted in a manner that would have negative consequences for residents were libelous. According to the board’s complaint, the statements were made with malicious intent to injure its reputation, and the defendants acted with knowledge of the falsity of the statements, and with reckless disregard for the truth. 

The problem in any defamation action is that for the plaintiff to prevail, the statements made must be false, which means they must allege facts and not opinion. It has long been held by New York courts that an expression of pure opinion is not a viable basis for defamation, no matter how unreasonable, obnoxious or vituperative it may be. The second problem involves the fact that the defamatory statements must be “published” to a third party. This traditionally means that the statements must be broadcast or sent in some manner to the public at large — for example, by taking an ad in a newspaper.

However, there is the so-called “common interest privilege,” which in essence allows  statements to be made to a group of individuals who share a common interest, and thus is not the “publication” required under the law. This privilege is frequently brought up as a defense against an action for defamation made by co-op or condo boards. As a result, the vast majority of defamation cases involving co-ops and condominiums are dismissed.

The Brightwater defendants made a motion to dismiss the complaint, but it was denied by the court, which ruled their accusations could be read as “statements of fact, not opinion.” Further, the court felt that the defendants failed to prove that the common interest privilege applied. This decision was appealed by the defendants, and the Appellate Division reversed the lower court and dismissed the action. The appeals court held that the statements constituted rhetorical hyperbole, were laced with words and statements without precise meanings, and were not capable of being proven true or false. Further, the court held that a reasonable reader would have concluded they were reading opinions, rather than facts.

So what can a board do to prevent a handful of dissidents from spreading nasty and often anonymous statements insinuating that it is acting improperly? Communication is the key, since the number one complaint of dissidents is that the board is not communicating with shareholders or unit-owners. Quarterly newsletters are one way to keep residents abreast of the operations of the building and the decisions of the board. But the best way may actually have been provided by the pandemic — virtual meetings. The sniping by a few owners most likely have very little effect if all residents hear directly from the board, and often.  

ATTORNEYS:

For Vitebsky, Zilberman and Sosina: Kenneth Michael Giancola, Sam J. Shlivko

For Brightwater Towers: Daniel Szalkiewicz