Cohen v. Cassm Realty Corp.

• Decision Date: 14 March 2016
• Citation: 2016 N.Y. Slip Op. 26327,39 N.Y.S.3d 597,54 Misc.3d 256
• Parties: Maxi COHEN, Plaintiff v. CASSM REALTY CORP., Thomas O'Neill, and Thanos Vassilakis, Defendants.
• Court: New York Supreme Court

54 Misc.3d 256

39 N.Y.S.3d 597

2016 N.Y. Slip Op. 26327

Maxi COHEN, Plaintiff

v.CASSM REALTY CORP., Thomas O'Neill, and Thanos Vassilakis, Defendants.

Supreme Court, New York County, New York.

March 14, 2016.

Carol A. Sigmond Esq., New York, for Plaintiff.

Joshua C. Price Esq., New York, for Defendants.

LUCY BILLINGS

, J.

I. BACKGROUND

Plaintiff owns the fifth floor cooperative unit and, with her brothers, co-owns the second floor cooperative unit in a cooperative building of five stories at 31 Greene Street, New York County, which is zoned for residential use by families of an artist certified by the New York City Department of Cultural Affairs (DCA). NY Mult. Dwel. Law §§ 275

, 276. Defendant CASSM Realty Corp. is the residential cooperative corporation that owns and operates the building. Defendant O'Neill owns the fourth floor cooperative unit, is not an artist, and is Vice President of CASSM Realty's Board of Directors. Defendant Vassilakis owns the third floor cooperative unit and is the President and Treasurer of CASSM Realty's Board of Directors. Each floor is represented on the Board, so plaintiff and one of her brothers are also Board members.

In this action, plaintiff alleges six claims. (1) CASSM Realty has breached her Proprietary Lease, for which she seeks damages. (2) CASSM Realty has constructively evicted her from her unit, for which she seeks damages. (3) All defendants have breached their fiduciary duties as the cooperative corporation and its Board members to her as a shareholder under the cooperative corporation's By–Laws and, in so doing, also have violated her Proprietary Lease, for which she seeks an injunction mandating defendants' compliance with the By–Laws and Lease. (4) CASSM Realty and O'Neill have violated the building's Certificate of Occupancy, the By–Laws, Proprietary Leases, and other contractual obligations, by O'Neill's ownership and occupancy of his unit when no one in his family in occupancy is an artist, for which she seeks an injunction mandating that he sell his unit to a person entitled to reside in the building. (5) Among the duties that defendants have breached alleged in plaintiff's third claim is a duty to maintain the building roof beams and roof, yet plaintiff separately claims that defendants have breached their fiduciary duties under the By–Laws by failing to maintain the roof beams and roof and, in so doing, also have violated her Proprietary Lease, for which she seeks damages. (6) All defendants, by failing to maintain common elements of the building, have violated New York Multiple Dwelling Law (MDL) § 78

, for which plaintiff seeks damages.

Defendants have moved for summary judgment dismissing plaintiff's second claim, which is against CASSM Realty only; her third, fifth, and sixth claims, insofar as they are against the two individual defendants, but not against CASSM Realty; and her fourth claim, insofar as it is against O'Neill, but not against CASSM Realty. C.P.L.R. § 3212(b)

and (e). Plaintiff has cross-moved for summary judgment on her claims seeking injunctive relief, C.P.L.R. § 3212(b), and on defendants' liability for her claims seeking damages. C.P.L.R. § 3212(b) and (e).

II. CONSTRUCTIVE EVICTION

Defendants' motion for summary judgment dismissing the second claim against CASSM Realty for plaintiff's constructive eviction relies on Vassilakis's affidavit. Vassilakis attests that either plaintiff or her subtenant occupied her unit continuously during the period she alleges constructive eviction and that, in any event, she is responsible for the condition of her unit, and no conditions in the building's common areas prevented her use of those areas. While these allegations ignore plaintiff's principal claim, that the condition of the common roof prevented the use of her unit, Vassilakis further insists that the water leaks of which she complains resulted from her own failure to repair her skylight.

Finally, Vassilakis points out that the building did not receive maintenance payments from plaintiff for over two years, longer than any possible period of constructive eviction. Yet it is undisputed that plaintiff notified CASSM Realty of her claims concerning nonperformance of building maintenance duties and deposited her maintenance payments in an escrow account due to those claims: a remedy she was entitled to invoke even if she suffered only a partial eviction and even if she remained in possession. Eastside Exhibition Corp. v. 210 E. 86th St. Corp., 18 N.Y.3d 617, 622, 942 N.Y.S.2d 19, 965 N.E.2d 246 (2012)

.

Plaintiff's obligation to pay for maintenance is dependent on CASSM Realty's “satisfactory maintenance” of the premises within its control in a habitable condition. 12–14 64th Owners Corp. v. Hixon, 130 A.D.3d 425, 425, 13 N.Y.S.3d 57 (1st Dep't 2015)

. See

Park W. Mgt. Corp. v. Mitchell, 47 N.Y.2d 316, 327, 418 N.Y.S.2d 310, 391 N.E.2d 1288 (1979) ; 12–14 64th Owners Corp. v. Hixon, 130 A.D.3d at 426, 13 N.Y.S.3d 57. If and when the nonperformance of building maintenance constructively evicted her and she vacated all or part of her unit, the vacatur suspended her obligation to pay for maintenance proportionate to the abandoned space and entitles her to the proportionate maintenance payments in escrow. Leventritt v. 520 E. 86th St., 266 A.D.2d 45, 46, 698 N.Y.S.2d 20 (1st Dep't 1999) ; 85 John St. Partnership v. Kaye Ins. Assocs., 261 A.D.2d 104, 105, 689 N.Y.S.2d 473 (1st Dep't 1999).

The warranty of habitability embodied in New York Real Property Law (RPL) § 235–b

, implied in plaintiff's Proprietary Lease, and equally applicable to proprietary lessees and lessees of rental premises, 12–14 64th Owners Corp. v. Hixon, 130 A.D.3d at 425–26, 13 N.Y.S.3d 57 ; Granirer v. Bakery, Inc., 54 A.D.3d 269, 271, 863 N.Y.S.2d 396 (1st Dep't 2008), protects plaintiff against conditions that render the premises uninhabitable or prevent them from serving their intended function: here, “living-work quarters for artists.” MDL § 275. See

Solow v. Wellner, 86 N.Y.2d 582, 588–89, 635 N.Y.S.2d 132, 658 N.E.2d 1005 (1995). Thus, as long as plaintiff vacated her unit due to a condition of the roof beams, the roof, or another common area or element of the building within CASSM Realty's control that rendered her unit uninhabitable or unusable for its intended function as living-work quarters, she is entitled to damages. 225 E. 64th St., LLC v. Janet H. Prystowsky, M.D., P.C., 96 A.D.3d 536, 537, 947 N.Y.S.2d 27 (1st Dep't 2012) ; King v. 870 Riverside Dr. Hous. Dev. Fund Corp., 74 A.D.3d 494, 495, 902 N.Y.S.2d 86 (1st Dep't 2010) ; Granirer v. Bakery, Inc., 54 A.D.3d at 270, 863 N.Y.S.2d 396. See

12–14 64th Owners Corp. v. Hixon, 130 A.D.3d at 425, 13 N.Y.S.3d 57 ; Adler v. Ogden CAP Props., 126 A.D.3d 544, 545, 2 N.Y.S.3d 902 (1st Dep't 2015) ; Pacific Coast Silks, LLC v. 247 Realty, LLC, 76 A.D.3d 167, 172, 904 N.Y.S.2d 407 (1st Dep't 2010).

The warranty of habitability is independent of CASSM Realty's expressed duties under its Proprietary Lease ¶¶ 6–8 with plaintiff, RPL § 235–b(2)

; Solow v. Wellner, 86 N.Y.2d at 589, 635 N.Y.S.2d 132, 658 N.E.2d 1005 ; Granirer v. Bakery, Inc., 54 A.D.3d at 270, 863 N.Y.S.2d 396, as well as its fiduciary duties under its By–Laws, which specify the building conditions for which the cooperative is responsible and suspend maintenance payments when leased space is “untenantable.” Aff. of Maxi Cohen (July 18, 2013) Ex. D ¶ 8. Whatever the basis for CASSM Realty's responsibility, plaintiff's proceeding for repairs in New York City Civil Court, in awarding plaintiff an abatement of her maintenance payments for a specified period, already has determined the deficient conditions that have limited plaintiff's use of her unit and of common areas, for which CASSM Realty is liable. Reply Aff. of Carol A. Sigmond (Aug. 22, 2014) Ex. B.

Consequently, the court denies defendants summary judgment dismissing plaintiff's second claim and grants plaintiff summary judgment on CASSM Realty's liability for her constructive eviction consistent with the Civil Court's disposition. C.P.L.R. § 3212(b)

and (e). Those months when plaintiff was awarded a 100% abatement of her maintenance payments signal the period when the deficient conditions rendered her unit uninhabitable or entirely prevented them from serving their intended function as living-work quarters for an artist, MDL § 275 ; Solow v. Wellner, 86 N.Y.2d at 588–89, 635 N.Y.S.2d 132, 658 N.E.2d 1005, for which CASSM Realty is liable. Since she is entitled to the full measure of her damages from the conditions within CASSM Realty's control that forced her to vacate her unit, Granirer v. Bakery, Inc., 54 A.D.3d at 270, 863 N.Y.S.2d 396, she is entitled to reasonable expenses for comparable alternative living-work quarters to the extent those reasonable expenses exceeded her maintenance payments had she not been constructively evicted. E.g.,

Missionary Sisters of Sacred Heart v. Meer, 131 A.D.2d 393, 397, 517 N.Y.S.2d 504 (1st Dep't 1987). If alternative living-work quarters were available to her without a charge, then she is entitled to the difference between the reasonable rental value of her unit for the period she was constructively evicted and her maintenance payments had her unit been fully usable. E.g.,

Sabor A. Mexico, Inc. v. 76 S. St. Corp., 127 A.D.3d 952, 953, 7 N.Y.S.3d 401 (2d Dep't 2015) ; Nostrand Gardens Co–Op v. Howard, 221 A.D.2d 637, 638, 634 N.Y.S.2d 505 (2d Dep't 1995).

III. INDIVIDUAL DEFENDANTS' LIABILITY FOR BREACH OF FIDUCIARY, CONTRACTUAL, AND STATUTORY DUTIES AS CORPORATE OFFICERS

Defendants' motion for summary judgment dismissing the third, fifth, and sixth claims only against the individual defendants relies on the absence of any allegations in the complaint beyond defendants' unsatisfactory performance of their duties on the cooperative corporation's behalf. The duties to convene shareholders' meetings, elect officers, establish and collect the payments owed by the shareholders to...