For the co-op board at 941 Park Avenue, life was on a downward spiral. For more than two years, the board had heard nothing but complaints from the shareholders of Apartments 1B and 2A, each of whom insisted the other had gone too far in assuming ownership of the tiny elevator vestibule the two families shared on the second floor.
The situation was not a new one for the co-op - other residents on other floors had argued over who had a greater right to their shared vestibule - but the tension between the Brauns in 1B, a duplex that sits on the first and the second floors, and the Moores in 2A, a duplex that runs from the second to the third floor, had reached the breaking point.
The problem was the layout of the property. Constructed in 1928 and co-opped in 1955, the building contains mostly duplexes. The downstairs' rooms of each sit next to the upstairs' rooms of the ones next door. From time to time over the years, families would argue over who had a greater right to control the elevator vestibule that the duplexes shared on each floor.
To mitigate the tension, the board crafted a new house rule in 1983. It says that the duplex owner whose downstairs' rooms opened into an elevator vestibule is allowed to control the vestibule: decorate the space, leave personal items, and receive visitors. The owners next door, whose upstairs' rooms opened to the same vestibule, could only use that particular space for the entering and exiting of family members. The logic was simple: to gain access to a vestibule to which they had nearly exclusive right, they could simply go downstairs inside their apartment.
That should have been the end of the problem. But then the Moores moved in during the summer of 1997 and the Brauns in 1998. And the fights started almost immediately.
The problem, again, was an issue of the building layout. Built to serve as the office and home of a family doctor in 1928, 1B is a maisonette. It has no downstairs vestibule, only a front door that leads directly to the street. Over the decades, the doctor's family, and later an art gallery owner, reached a peaceful arrangement with the owners of the duplex next door, 2A. The doctor's family, and then the gallery owner, would be allowed to share use the tiny second-floor vestibule with the owners of 2A, receiving guests, mail, and packages. The gallery owner was even permitted to personalize the tiny vestibule, putting in a small, elegant table as a decorating flourish.
But the agreement came to an end in 1998, when the Brauns moved into 1B. Unaware of House Rule 28, giving the vestibule to the nearly sole use of the Moores in 2A, the Brauns immediately began using the second-floor vestibule: receiving visitors and having mail and packages dropped off. The Moores protested and the battles began.
"There were daily fights, screaming matches, shoving matches, the works," recalls Bruce Cholst, a partner with Rosen & Livingston, which represents the board. Complicating the matter, no one on the board knew about House Rule 28, passed in 1983, until 1999 when there was a search through the house records.
For two years, the board tried to mediate. Flummoxed by the intensity of the disagreement, the directors tried several tacks. First, letters were sent, reminding the Brauns that the Moores had control of the elevator vestibule through house tradition. The Brauns ignored the letters. Then the board invited the two families to meet in an effort to mediate between them. Nothing was accomplished.
The Brauns insisted they had a right to half the tiny space, because they had no downstairs vestibule to call their own. The Moores in turn were equally insistent that they didn't have to share the vestibule at all. Then came the final indignity: during a religious holiday, guests of the Brauns, confused by the color scheme in the second-floor vestibule, walked into the Moores' apartment, interrupting a family celebration. "The whole situation had all the makings of World War III," recalls Cholst.
Enough was enough. It was time to amend the house rules. After a series of meetings in 1999, the board decided on a compromise, drafting an amendment to House Rule 28. Under the amendment, the Brauns would be allowed to receive guests at the second-floor vestibule, but only if those guests were accompanied by a building employee. Packages and mail would be taken straight to the Brauns' kitchen via a service elevator. And the color scheme in the hallway and all decorations would be left up to the Moores.
Crying foul, both families sued. Tough luck, ruled the state's supreme court this past May. The rule stands. Under the Business Judgment Rule, as long as the board's actions did not involve self-dealing and were in good faith, the acts were "lawful and legitimate," declared Judge Walter Tolub.
"The courts simply looked at the house rules and decided that without evidence of self-dealing or favoring or punishing one family over another, the house rule was reasonable," explains the co-op president, Howard Brownstein, who declares himself "very happy" that the lawsuit is over. Of the fight that went on for nearly five years between the Brauns and the Moores, "It was extremely long, arduous, and painful," says the co-op president. "We're a small community and this is the first time something like this has happened." According to the president, the courts simply looked at the board's actions and decided that they had acted within reason and without evidence of any self-dealing. "And that is the essence of the case."
But for some attorneys, the essence goes further, back to Levandusky vs. One Fifth Avenue (1990), in which a board successfully stopped a homeowner from moving a steam riser in a kitchen during a renovation, and to 40 West 67th Street v. Pullman (2003, where a board successfully evicted a combative tenant after a majority of the residents voted in favor of the eviction.
Underlying the ruling is the board's right to establish what the house policy is, observes Arthur Weinstein, a co-op attorney, who called the case a "natural extension of the Levandusky and Pullman cases, which gives boards of co-op corporations broad discretion in handling the business of their cooperative. Certainly, a house rule governing the use of common space in the building in the manner of this case is well within the power of the board."
While an attorney for the Moores declined to comment, Randall Sims, a lawyer for the Brauns, says the judge's decision put his clients at a disadvantage. The Brauns had never received a copy of the 1983 rule, and the judge had overlooked the underlying failure of the co-op board and the managing agent to disclose all the rules before purchase.
"They didn't give fair notice to the prospective purchaser," complains Sims, who says his clients haven't decided whether they will appeal the decision. If the Brauns had known before they bought that they were going to have diminished rights to the second-floor vestibule, they wouldn't have taken the apartment.
But the attorney for co-op maintains that the issue isn't one of full disclosure but of the power of the board to change the rules. Would-be owners should be forewarned: no purchaser can rely on house rules as a permanent set of rights, because they can always be modified. Concludes Cholst: "No house rule is forever."