Co-op shareholder Messner lived in the penthouse of an East Side high-rise between Park and Lexington Avenues. In 1983, the prior tenant, from whom Messner had purchased her shares, had received permission from the co-op board to enclose the terrace with a glass roof and windows, creating a greenhouse-like structure. Since that time, the terrace had been used as a living space.

Messner claimed that after moving in, she discovered extensive water leakage in the terrace area, which damaged her personal property and rendered the apartment uninhabitable. She asserted that, despite numerous attempts to have the cooperative repair the leaks, it did not. She also said that, despite her requests, the co-op had failed to provide a certificate of occupancy (C of O) for the enclosed terrace.

Messner's lawsuit accused the co-op and the individual board members of negligence, breach of the proprietary lease and breach of the implied warranty of habitability, and asked for a court order requiring the co-op to allow her to install a heating unit in the enclosed terrace and connect it the building's heating system. She later added two additional causes of action, one directing the co-op to repair the leaks, the other requesting monetary damages resulting from the co-op's failure to obtain a C of O for the enclosed terrace.

The co-op, in response, sought indemnification, plus recompense for damages to the building and other tenants' apartments because of the leak. The board then sent Messner a letter stating that, at her expense, it intended to do repairs that included possibly removing some or all of the terrace's glass enclosure, in order to prevent further leaks. Messner responded with a court order enjoining the co-op from removing her greenhouse.

On October 25, 2004, the court denied Messner's motion. It held that the co-op was protected under the Business Judgment Rule.

Dear Penthouse

As the court explained, Messner had alleged negligence by the co-op in failing to repair her terrace. However, as the board had pointed out, the co-op was under no duty to repair or maintain it. As a condition of the board's approval of her purchase of the apartment, the board had required her to execute an indemnification agreement — which contractually obligated her to pay for the removal and restoration of the terrace enclosure in the event of leakage.

Messner had argued that the indemnification wasn't enforceable, since it was unreasonable. She also said that because she'd been obligated to vacate her previous apartment, she'd signed the agreement under duress. But the court found the indemnification both enforceable and a reasonable condition for approval of sale.

Messner had also alleged that the co-op had breached a provision of the proprietary lease that required it to "provide proper services, including a sufficient supply of hot and cold water and heat to the apartment." Messner claimed that, since the terrace space is part of her apartment, the co-op's failure to provide the terrace with heating and water constituted a breach.

The court disagreed. It said the provision didn't apply since the outdoor terrace was not part of Messner's apartment but adjacent to it: There was no certificate of occupancy, the co-op had never assigned any shares for it, and Messner had never paid maintenance for it. Indeed, the court specifically found that the greenhouse enclosure was never intended to be a separate living space and that Messner was on notice of this fact when she purchased. The fact that she wished to use the space as additional living quarters did not obligate the board to provide additional services.

As to the breach of the implied warranty of habitability, the court found the greenhouse had never been considered or represented by the co-op to be habitable space. That also meant it was under no obligation to permit Messner to utilize building heating services for that area.

Messner, incidentally, had unilaterally hooked up to building's heating system, without the required written permission from the board, saying two employees of the managing agent had told her, immediately after the closing, that she could do so. Such alleged oral representations, however, mean nothing. Messner also argued that the co-op had waived the written-permission requirement by allowing her workers to enter the apartment and make changes to the heating system. But the court said that a doorman or other staffer, on his or her own, allowing workers into her apartment to perform the work did not constitute a waiver.