Cooperatives & Condominiums

Shareholders made a number of statements challenging the way the board and the agent ran the subject building, provoking the instant defamation action. In dismissing the defamation claims, the court concluded that many of the challenged statements did not have a precise meaning, and others were hyperbolic and incapable of being proven true or false. The court concluded that, particularly in the case of a dispute revolving around control of the co-op board, no reasonable person could have concluded that the statements were conveying facts about the board or the managing agent. Because the statements were not statements of fact, a defamation claim would not lie.

The court also dismissed the claim for tortious interference with prospective business relationships, noting that the shareholders' conduct did not amount to an independent tort and was not done for the sole purpose of inflicting harm on the plaintiffs.

The court did, however, conclude that Supreme Court improvidently exercised its discretion in directing that counsel fees be turned over to the shareholders' lawyer.

Delinquent Unit Owner

The Heywood Condominium v. Wozencraft
2017 WL 113048, AppDiv, First Dept, 1/12/17 (Opinion by Tom, J.)

In a foreclosure action brought by a condominium board, unit owner appealed from Supreme Court's grant of receiver's motion for an order ejecting unit owner from the unit. The Appellate Division modified to dismiss the board's claim for money damages, but otherwise affirmed, holding that the condominium act and the condominium's bylaws authorize eviction of delinquent unit owners.

Unit owner bought his condominium apartment in May 2006. The condominium's bylaws provide that a unit owner who fails to pay common charges and assessments is in default of the bylaws, and becomes liable for late charges. The bylaws also authorize the condominium's board of managers to foreclose a lien for unpaid common charges, and require the unit owner to pay a reasonable rental value for the use of the unit. The bylaws also provide that the board of managers shall be entitled to appointment of a receiver to collect that reasonable rental value.

In April 2007, unit owner stopped paying common charges and assessments, contending that he was receiving inadequate services. The board, acting pursuant to its bylaws, then began curtailing services to the unit owner, and began assessing late charges, interest, and attorneys' fees incurred in trying to collect unpaid charges. In 2011, the board brought an action for recovery of unpaid common charges, seeking a judgment in the amount of $96,021.30, and appointment of a receiver. Supreme Court denied summary judgment motions filed by both parties. Then, in March 2013, the board commenced the instant foreclosure action, and moved for appointment of a temporary receiver. Supreme Court confirmed a report of a judicial hearing officer recommending appointment of a temporary receiver. Six months later, when unit owner failed to comply with an order directing him to pay use and occupancy, the receiver moved for an order ejecting unit owner from the unit. Supreme Court granted the motion, and granted unit owner a stay pending appeal.

In affirming the order directing ejectment of the unit owner, the Appellate Division cited section 339-aa of the Real Property Law and section 5.9 of the condominium bylaws to support its conclusion that the receiver properly required the unit owner to pay rent on the unit. The court concluded that an order ejecting unit owner did not violate any constitutional property rights when the ejectment order followed unit owner's failure to comply with the receiver's order. The court did, however, conclude that the board was not entitled to a money judgment in the foreclosure action because the board was already seeking that remedy in the pending action brought in 2011.

Shareholder Statements

Hollywood Owners Corp. v. Rivera
NYLJ 12/30/16, p. 24, col. 1 AppDiv, Second Dept. (memorandum opinion)

In an action for defamation brought by a co-op board and its managing agent against co-op shareholders, the board and managing agent appealed from Supreme Court's order dismissing the complaint and ordering that any counsel fees the board and agent had paid to their attorneys should be turned over to the shareholders' counsel and held in escrow. The Appellate Division modified to delete the turnover provisions, but otherwise affirmed, holding that the statements allegedly made were matters of opinion that could not serve as the basis for a defamation claim.

Shareholders made a number of statements challenging the way the board and the agent ran the subject building, provoking the instant defamation action. In dismissing the defamation claims, the court concluded that many of the challenged statements did not have a precise meaning, and others were hyperbolic and incapable of being proven true or false. The court concluded that, particularly in the case of a dispute revolving around control of the co-op board, no reasonable person could have concluded that the statements were conveying facts about the board or the managing agent. Because the statements were not statements of fact, a defamation claim would not lie.

The court also dismissed the claim for tortious interference with prospective business relationships, noting that the shareholders' conduct did not amount to an independent tort and was not done for the sole purpose of inflicting harm on the plaintiffs.

The court did, however, conclude that Supreme Court improvidently exercised its discretion in directing that counsel fees be turned over to the shareholders' lawyer.

Delinquent Unit Owner

The Heywood Condominium v. Wozencraft
2017 WL 113048, AppDiv, First Dept, 1/12/17 (Opinion by Tom, J.)

In a foreclosure action brought by a condominium board, unit owner appealed from Supreme Court's grant of receiver's motion for an order ejecting unit owner from the unit. The Appellate Division modified to dismiss the board's claim for money damages, but otherwise affirmed, holding that the condominium act and the condominium's bylaws authorize eviction of delinquent unit owners.

Unit owner bought his condominium apartment in May 2006. The condominium's bylaws provide that a unit owner who fails to pay common charges and assessments is in default of the bylaws, and becomes liable for late charges. The bylaws also authorize the condominium's board of managers to foreclose a lien for unpaid common charges, and require the unit owner to pay a reasonable rental value for the use of the unit. The bylaws also provide that the board of managers shall be entitled to appointment of a receiver to collect that reasonable rental value.

In April 2007, unit owner stopped paying common charges and assessments, contending that he was receiving inadequate services. The board, acting pursuant to its bylaws, then began curtailing services to the unit owner, and began assessing late charges, interest, and attorneys' fees incurred in trying to collect unpaid charges. In 2011, the board brought an action for recovery of unpaid common charges, seeking a judgment in the amount of $96,021.30, and appointment of a receiver. Supreme Court denied summary judgment motions filed by both parties. Then, in March 2013, the board commenced the instant foreclosure action, and moved for appointment of a temporary receiver. Supreme Court confirmed a report of a judicial hearing officer recommending appointment of a temporary receiver. Six months later, when unit owner failed to comply with an order directing him to pay use and occupancy, the receiver moved for an order ejecting unit owner from the unit. Supreme Court granted the motion, and granted unit owner a stay pending appeal.

In affirming the order directing ejectment of the unit owner, the Appellate Division cited section 339-aa of the Real Property Law and section 5.9 of the condominium bylaws to support its conclusion that the receiver properly required the unit owner to pay rent on the unit. The court concluded that an order ejecting unit owner did not violate any constitutional property rights when the ejectment order followed unit owner's failure to comply with the receiver's order. The court did, however, conclude that the board was not entitled to a money judgment in the foreclosure action because the board was already seeking that remedy in the pending action brought in 2011.