15 SQUARE FEET, P.2

The Wirths maintained, among other things, that the premises do not have to be occupied by an artist and that imposing such a condition was improper; and that the co-op board never held a special meeting to determine whether the Wirths, by disallowing the board access to the roof to make repairs, were engaged in "objectionable conduct," which could be grounds for canceling their shares and evicting them.

In a March 23, 2010, decision, Judge Marilyn C. Diamond of the Supreme Court of the City of New York said the co-op board had rightly failed to approve the Withs' apartment-alteration plans because the Wirths had "failed to provide the co-op's architect with the plumbing, electrical and mechanical drawings respecting their planned alterations, and the person in charge of the firm hired to make such alterations was alleged, by the co-op's architect, to be unlicensed."

Waive Goodbye

It further said Dr. Wirth's ouster from the board was proper, since there had had proper written notice of the meeting, that per the bylaws the notice could even have been waived, and that there was quorum of shareholders. The court also confirmed that the proprietary lease gave the co-op board the right to access and examine the roof, and said the Wirths could not use the roof until protective measures were installed. The court sidestepped the objectionable-conduct issue, saying, "[T]he board has not moved to terminate plaintiffs' proprietary lease, rendering this cause of action untimely."

However, the court's finding that the JAR requirement was valid turned out to be in error. That point was overturned yesterday (Aug. 18, 2011) by the Appellate Court, which said that the co-op board misread article 7-B of the New York State Multiple Dwelling Law, which provides that a building that at any time before January 1, 1977, was occupied for loft, commercial or manufacturing purposes may be used for joint living-work quarters for artists or general residential purposes.

Moreover, 158 Chambers Street is in zoning district M1-5, which allows both residential and nonresidential uses. Noting that the Business Judgment Rule does not apply when a co-op board acts outside the scope of its authority, the appellate court said the board could not make JAR certification a condition of sale. Whether the board acted in good faith or not was "at least a triable issue of fact" since the board had relied on the advice of the building's architect.

Most notably, perhaps, the appellate court said the Wirths also raised triable issues of fact as to whether the co-op board withheld their consent due to the apartment's sale due "to malice or vendetta and whether they discriminated against plaintiffs."

All told, it was a split decision: The Wirths — who took the apartment (see living room, above) off the market after the second buyer withdrew — can't use the roof until safety measures are installed, and they have to let the board and its professionals up to inspect the roof. But the Wirths don't have to release the escrow funds until issues of fact are settled about the repair work to the hallway and the stairwell — and it's clear that the issue of whether the board acted maliciously or vengefully against the Wirths also remains in play.

One wonders why the board just didn't offer to pay the Wirths for the minuscule amount that the 15 square feet of the 22 x 13 foot — 660 square foot — roof deck was worth. The financial, and certain the emotional and psychological costs, and the sheer time and effort of depositions, two trials, and much ill will seems as if it would have been a whole lot less.

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