Richard Siegler & Dale J. Degenshein in Board Operations on February 7, 2013
Feb. 7, 2013 — Susan Reinhard, a shareholder in Connaught Tower Corporation at 300 East 54th Street in Manhattan, sued that co-op because it did not remediate secondhand smoke she claimed was seeping into her apartment.
Is a co-op liable to a shareholder who claims damages because of this?
Reinhard, who owned and lived in Apartment 31G since 2006, claimed that after she purchased and performed renovations, there was a strong smell of cigarette smoke that entered her apartment from other areas of the building. She claimed she suffered from tightness in her chest, coughing, headaches and watering eyes as a result, and complained to the co-op's managing agent.
The building superintendent inspected and suggested she re-caulk certain parts. Reinhard stated she had done so but that the smoke persisted. The super, with the managing agent, inspected the apartment again in September 2007. The agent told the co-op board he detected a slight smell of cigarette smoke but did not believe it rendered the apartment uninhabitable.
Accordingly, the agent wrote a letter to Reinhard acknowledging the faint odor but that because of alterations she had performed, the board saw no obligation to do further work at the corporation's expense.
Reinhard hired a hygienic engineer to conduct air-flow testing. The engineer inspected the apartment on January 8, 2008, and stated there was a "strong" and "distinctive odor of cigars" along three walls in the bedroom. He issued a report that Reinhard delivered to the co-op. She asked that the co-op locate and seal the source of the odor.
"A Dead Mouse or Whatever..."
On May 27, 2008, the managing agent told Reinhard she could hire a contractor to determine the source of the problem. Reinhard hired the same engineer to conduct specific air-quality tests, and also had holes made in the wall as part of the testing. After the wall was cut, the contractor smelled a "bad odor" that smelled "like a mixture of between cigarettes and ... a dead mouse or whatever...."
The engineer prepared a May 30 report stating there was an "air communication pathway in the interstitial wall space," and recommended cleaning inside the wall and sealing the "fugitive air pathway" from adjacent units and from the outside wall. Reinhard sent that report to the board and said the co-op was responsible for all costs.
In a letter dated July 8, 2008, the co-op board committee told Reinhard it had found that the building construction was typical for the time period, the co-op had not altered the building so as to allow the smoke to enter her apartment, and an air pathway in the wall space was typical and necessary for insulation. It appears, however, that the board would have permitted Reinhard to make alterations in accordance with the report if she accepted full responsibility and entered into an alteration agreement.
Reinhard sued for breach of the warranty of habitability; breach of the lease; rent abatement; breach of fiduciary duty; constructive eviction; breach of the covenant of good faith and fair dealing; injunctive relief; negligence; and attorney's fees.
The Co-op Board Responds
The co-op retained an engineer who inspected Reinhard's apartment. He submitted an affidavit stating there were no odors and attesting that the building's construction was typical of the period and was neither deficient nor predisposed to smoke transmission.
Reinhard's engineer submitted an affidavit that he inspecting using "smoke tubes" and determined there was an "air communication pathway in the interstitial wall space as a result of the furred out wall system." He detected an unintended air pathway and reported that this violated the 1968 New York City Building Code. He found evidence of previous attempts to seal this air pathway, but which had a minimal effect on air transmission.
Reinhard's engineer recommended the pathways be sealed to prevent air movement, saying the repairs were necessary to prevent air and odor migration and to maintain fire separation. The cost of repair, he asserted, would be roughly $12,000, and he disagreed with the board that sealing the space would cause moisture problems. He determined a way to allow moisture to diffuse through the wall in the same way it already did.
The court eventually concluded that the co-op was negligent, as a matter of law, because it had notice of the smoke condition yet did nothing to remediate it. The court also determined that the lease required the co-op to fix the wall. However, the court dismissed Reinhard's claim of breach of fiduciary duty, explaining that a co-op does not owe a fiduciary duty to its shareholders.
This is one in a series of cases where the courts are grappling with secondhand smoke. Breach of warranty of habitability and constructive eviction are issues that have an impact on leased properties, including co-ops — claims unavailable to condominium owners, for whom we've courts consider claims of nuisance where condo owners complain of secondhand smoke.
Richard Siegler is a partner in the New York City law firm of Stroock & Stroock & Lavan. Dale J. Degenshein is a special counsel for that firm.
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