Cooperatives & Condominiums

Retail Condominium Owner Bound By Condominium's Documents

82 Retail LLC v. Eighty Two Condominium

NYLJ 5/27/14, p. 18, col. 5

AppDiv, First Dept.

(memorandum opinion)

In an action by owner of a retail condominium unit seeking damages and declaratory relief against the condominium board, both sides appealed from Supreme Court's order dismissing the claims against individual board members, dismissing the claim for punitive damages, and denying the board's motion to dismiss the remainder of the retail owner's claims. The Appellate Division modified to declare that the retail owner is bound by the condominium's documents and is not free to make any use permitted by the Zoning Resolution.

The condominium consists of one retail unit and seven residential units. At the time the owner of the retail unit purchased the unit, an amendment to the condominium's offering plan provided that the commercial space would “not be used as a restaurant, bar or similar noise causing use.” The declaration also provided that no amendment would change the permitted use of any unit without the consent of the owner of that unit. In May and September 2011, the board adopted amendments to the condominium's bylaws and declaration, over the objection of the retail unit owner. The latter contended that the amendments changed the permitted use of its unit, while the board contended that the amendments merely clarify the permitted use.

In November 2011, retail unit owner leased the unit to a yogurt shop. The lease permitted the yogurt shop to terminate if the May and September amendments were not rescinded within six months. The tenant ultimately terminated the lease, and retail unit owner brought this action against the board seeking declaratory relief, damages for breach of contract, and punitive damages.

The Appellate Division upheld Supreme Court's conclusion that it could not determine, as a matter of law, whether the phrase “restaurant, bar or similar noise causing use” included a yogurt shop. The court also held that fact questions remained about whether the May and September 2011 amendments changed the retail owner's permitted uses in violation of the declaration. But the court held, as a matter of law, that the retail unit owner was not entitled to a declaration that it was entitled to make any use permitted by the Zoning Resolution. The court noted that the offering plan clearly imposed restrictions on the retail owner's use, and declared that the retail owner was bound by those restrictions.

Neither Co-Op Nor Managing Agent Are Debt Collectors

Lautman v. 2800 Coyle St. Owners Corp.

NYLJ 6/3/14, p. 21, col. 3

U.S.Dist. Ct., EDNY

(Ross, J.)

In an action by co-op shareholder against the co-op, its directors, its managing agent, and its former lawyers for violation of the federal Fair Debt Collection Practice Act (FDCPA) and for a variety of state law violations, defendants moved to dismiss for failure to state a claim. The court dismissed all of the claims against the co-op, its directors, and its managing agent, holding that neither the co-op nor its managing agent were debt collectors within the meaning of the statute, but the court did not dismiss the FDCPA claim against the law firm, rejecting the law firm's statute of limitations defense.

Shareholder resides in a co-op apartment building in Brooklyn. After the building's current managing agent took over management responsibilities in 2011, managing agent sent shareholder 18 rent bills showing rent and rent arrears owed. The co-op's board also sent a letter to shareholder threatening to terminate his lease if he did not pay his arrears. In early 2012, the co-op board hired a law firm to represent it in its efforts to collect rent arrears and fees owed by shareholder. The firms sent a “ten-day demand” letter to shareholder, threatening to institute summary proceedings.

On Feb. 15, 2012, the co-op, acting through its law firm, instituted a summary nonpayment proceeding. The co-op ultimately discontinued the proceeding without prejudice. On Dec. 1, 2012, the co-op board sent another demand letter and threatened to institute legal action if shareholder did not make payment within 10 days. Shareholder then brought this action, alleging violations of the FDCPA, violation of General Business Law section 349(a), malicious abuse of process, malicious prosecution, and libel.

The court dismissed the FDCPA action against the co-op board and its managing agent, concluding that neither was a debt collector within the meaning of the federal statute. Instead, the co-op and its managing agent were creditors, not covered by the statute. The law firm, by contrast, was a debt collector covered by the statute, and the statute of limitations did not bar the claim against the law firm because the statute began to run from the time of the shareholder was served with process in the Housing Court action, not the time of filing. As a result, the court denied the law firm's motion to dismiss the FDCPA claim. The court then dismissed the claim that bringing the housing court action violated the General Business Law claim, noting that commencing the housing court action did not involve the deceptive consumer-oriented conduct targeted by the statute. The court also found no basis for shareholder's abuse of process or malicious prosecution claims.

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Retail Condominium Owner Bound By Condominium's Documents

82 Retail LLC v. Eighty Two Condominium

NYLJ 5/27/14, p. 18, col. 5

AppDiv, First Dept.

(memorandum opinion)

In an action by owner of a retail condominium unit seeking damages and declaratory relief against the condominium board, both sides appealed from Supreme Court's order dismissing the claims against individual board members, dismissing the claim for punitive damages, and denying the board's motion to dismiss the remainder of the retail owner's claims. The Appellate Division modified to declare that the retail owner is bound by the condominium's documents and is not free to make any use permitted by the Zoning Resolution.

The condominium consists of one retail unit and seven residential units. At the time the owner of the retail unit purchased the unit, an amendment to the condominium's offering plan provided that the commercial space would “not be used as a restaurant, bar or similar noise causing use.” The declaration also provided that no amendment would change the permitted use of any unit without the consent of the owner of that unit. In May and September 2011, the board adopted amendments to the condominium's bylaws and declaration, over the objection of the retail unit owner. The latter contended that the amendments changed the permitted use of its unit, while the board contended that the amendments merely clarify the permitted use.

In November 2011, retail unit owner leased the unit to a yogurt shop. The lease permitted the yogurt shop to terminate if the May and September amendments were not rescinded within six months. The tenant ultimately terminated the lease, and retail unit owner brought this action against the board seeking declaratory relief, damages for breach of contract, and punitive damages.

The Appellate Division upheld Supreme Court's conclusion that it could not determine, as a matter of law, whether the phrase “restaurant, bar or similar noise causing use” included a yogurt shop. The court also held that fact questions remained about whether the May and September 2011 amendments changed the retail owner's permitted uses in violation of the declaration. But the court held, as a matter of law, that the retail unit owner was not entitled to a declaration that it was entitled to make any use permitted by the Zoning Resolution. The court noted that the offering plan clearly imposed restrictions on the retail owner's use, and declared that the retail owner was bound by those restrictions.

Neither Co-Op Nor Managing Agent Are Debt Collectors

Lautman v. 2800 Coyle St. Owners Corp.

NYLJ 6/3/14, p. 21, col. 3

U.S.Dist. Ct., EDNY

(Ross, J.)

In an action by co-op shareholder against the co-op, its directors, its managing agent, and its former lawyers for violation of the federal Fair Debt Collection Practice Act (FDCPA) and for a variety of state law violations, defendants moved to dismiss for failure to state a claim. The court dismissed all of the claims against the co-op, its directors, and its managing agent, holding that neither the co-op nor its managing agent were debt collectors within the meaning of the statute, but the court did not dismiss the FDCPA claim against the law firm, rejecting the law firm's statute of limitations defense.

Shareholder resides in a co-op apartment building in Brooklyn. After the building's current managing agent took over management responsibilities in 2011, managing agent sent shareholder 18 rent bills showing rent and rent arrears owed. The co-op's board also sent a letter to shareholder threatening to terminate his lease if he did not pay his arrears. In early 2012, the co-op board hired a law firm to represent it in its efforts to collect rent arrears and fees owed by shareholder. The firms sent a “ten-day demand” letter to shareholder, threatening to institute summary proceedings.

On Feb. 15, 2012, the co-op, acting through its law firm, instituted a summary nonpayment proceeding. The co-op ultimately discontinued the proceeding without prejudice. On Dec. 1, 2012, the co-op board sent another demand letter and threatened to institute legal action if shareholder did not make payment within 10 days. Shareholder then brought this action, alleging violations of the FDCPA, violation of General Business Law section 349(a), malicious abuse of process, malicious prosecution, and libel.

The court dismissed the FDCPA action against the co-op board and its managing agent, concluding that neither was a debt collector within the meaning of the federal statute. Instead, the co-op and its managing agent were creditors, not covered by the statute. The law firm, by contrast, was a debt collector covered by the statute, and the statute of limitations did not bar the claim against the law firm because the statute began to run from the time of the shareholder was served with process in the Housing Court action, not the time of filing. As a result, the court denied the law firm's motion to dismiss the FDCPA claim. The court then dismissed the claim that bringing the housing court action violated the General Business Law claim, noting that commencing the housing court action did not involve the deceptive consumer-oriented conduct targeted by the statute. The court also found no basis for shareholder's abuse of process or malicious prosecution claims.

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