Will a co-op be liable to a shareholder who claimed damages because the smell of secondhand smoke permeated her apartment? That was the question in Reinhard v. Connaught Tower Corporation.
Was There an Odor?
Plaintiff Susan Reinhard is a shareholder in Connaught Tower Corporation, a co-op building at 300 East 54th Street in Manhattan. She began this action against the co-op and the president of the co-op’s board of directors because they did not remediate secondhand smoke that she claimed was seeping into her apartment. All parties moved for summary judgment.
Reinhard lived in Apartment 31G and had owned the apartment since 2006. Reinhard 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 of the smoke. Reinhard asserted that she had complained to the co-op’s managing agent.
The building superintendent inspected her apartment and suggested that she re-caulk certain areas of the apartment. Reinhard stated that she had performed the work, but that smoke continued to invade her apartment.
Reinhard again complained, and the managing agent and super inspected the apartment in September 2007. The agent detected a slight smell of cigarette smoke in the bedroom and so advised the board. The board discussed this issue at its September 18, 2007 meeting. The minutes stated that there was a faint odor as reported by the managing agent but that he did not believe it rendered the apartment uninhabitable.
Accordingly, the agent wrote a letter to Reinhard in which he acknowledged the faint smell of odors but that
“[u]pon due consideration and recognizing that certain alterations were performed by you in the apartment, the Board of Directors sees no obligation on the part of the cooperative corporation to cause any further work to be done at the corporation’s expense.” In a subsequent letter, he suggested that the origin of the odors had not been discovered and that they could be the result of Reinhard’s alterations.
A Test Is Conducted
Reinhard hired a hygienic engineer to conduct air flow testing in her apartment. The engineer inspected the apartment on January 8, 2008, and stated that 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.
On May 27, 2008, the managing agent told Reinhard that 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 report dated May 30, 2008, in which he stated that 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 told the board and shareholders that she was holding them responsible for all costs.
The Board Declines Responsibility
By letter dated July 8, 2008, a member of the co-op’s legal committee wrote to Reinhard, telling her that the board 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 interstitial wall space was typical and necessary for the insulation of the building. He also advised Reinhard that several recommendations in the report were problematic. It appears, however, that the board would have permitted Reinhard to make alterations in accordance with the report if she accepted full responsibility for the work and any problems it might cause and provided she entered into an alteration agreement. Further, Reinhard was told that the board did not accept any responsibility for the smell of smoke.
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. She sought money damages, including punitive damages.
The co-op retained an engineer, who inspected Reinhard’s apartment on September 16, 2010. He submitted an affidavit that during his inspection, there were no odors, including smoke. The engineer attested that the building’s construction was typical of the period, that it was not deficient, and that it was not predisposed to smoke transmission.
A Pathway Discovered
Reinhard’s engineer submitted an affidavit that during his inspection, he used “smoke tubes” and determined that 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 the pathway was a violation of the 1968 New York City Building Code. He attested that he found evidence that previous attempts to seal this air pathway had been made because the space between the outside wall and the column was stuffed with polystyrene boards. However, because these boards were not sealed to the wall, the column, or to each other, they had a minimal effect on air transmission.
Reinhard’s engineer stated that the air movement was horizontal and recommended that the pathways be sealed to prevent air movement. The engineer added that, within a reasonable degree of scientific certainty, 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.
3 Points in a Covenant
The court discussed the burden on motions for summary judgment. The side making the motion had to show that it was entitled to judgment as a matter of law, with sufficient evidence to eliminate any material issues of fact. The burden then shifted to the one opposing the motion to present proof in admissible form sufficient to raise a genuine, triable issue of fact. If a court finds that there is any question as to whether there is an issue of fact, judgment must be denied.
The court first discussed Reinhard’s claims for breach of the warranty of habitability and constructive eviction. As to constructive eviction, Reinhard had to show that she was “substantially and materially deprive[d] ... of the beneficial use and enjoyment” of the apartment. She had to abandon possession in order to claim constructive eviction. Reinhard claimed that she had not slept in the apartment since 2007 and visited on occasion to collect her mail.
As to the warranty of habitability, the Real Property Law required that landlords, including co-ops, agree to a covenant that (1) the premises were for “fit for human habitation,” (2) the premises were fit for “the uses reasonably intended by the parties,” and (3) the occupants would not be subjected to conditions that are “dangerous, hazardous or detrimental to their life, health or safety.” The warranty protected against conditions that materially affected health and safety or deficiencies that a reasonable person would believe deprived the tenant of essential functions a residence was expected to provide.
Courts had already determined that secondhand smoke could qualify as a breach of the warranty of habitability under certain circumstances. A single occurrence of smoke would not be enough. The court had to look to see if the smoke was so pervasive as to breach the warranty of habitability or be a basis for constructive eviction.
Here, Reinhard gave evidence of more than one occurrence of smoke through her own claims and that of her engineer, a neighbor, and the managing agent. The court thus concluded that there were issues of fact as to whether the smoke in Reinhard’s apartment rose to the level of breach of the warranty of habitability and/or constructive eviction. The court determined, similarly, that there were issues of fact as to whether the co-op breached the covenant of quiet enjoyment in the lease.
Reinhard also claimed that the co-op was negligent. The co-op, for its part, asserted that it did not cause the odor or create the smoke. Reinhard, however, stated that the co-op had notice of the smoke condition yet did nothing to remediate the condition. The court discussed a statute known as the Multiple Dwelling Law, which imposed on a landlord a duty to maintain the premises in a reasonably safe condition. Thus, Reinhard had to show that the co-op either created the defective condition or had notice of it.
The co-op claimed that the building’s construction was typical for the time it was built and that air migration was common. The court stated, however, that it could conclude that the co-op was negligent, as a matter of law. This was particularly so because there was evidence that the co-op had notice of the smoke condition and took no action to remedy it.
4 Points Cause a Breach
Reinhard also claimed breach of the proprietary lease, which is a contract between Reinhard and the co-op. The court explained that Reinhard had to show (1) the existence of an agreement; (2) performance by the plaintiff; (3) breach by the defendant; and (4) damages. Reinhard relied on the provision of the lease that required the co-op to keep the building in good repair. The co-op pointed to another provision that required Reinhard to maintain the apartment.
The co-op also claimed that in order to remedy the condition, it would have either had to tell other shareholders they could not smoke (which it did not have the right to do) or it would have had to reconstruct the building. The court explained that contracts were to be construed in accordance with the parties’ intent and that if it was clear and unambiguous, it must be enforced according to the plain meaning of its terms.
Reinhard’s engineer stated that there was an “air communication pathway in the interstitial wall space,” and that there was “communication of fugitive air ... via a combination of the outside wall interstitial air space, and the furred out wall system.” He found previous attempts to seal the pathway. Based on this, the court determined that the lease required the co-op to fix the wall. However, there was a question as to whether the co-op had maintained the building in good repair as was required under the lease.
The court dismissed Reinhard’s claim for breach of the covenant of good faith and fair dealing, which is implicit in every contract. The claim here, however, was duplicative of the breach of contract claim and could not be sustained.
Reinhard also claimed breach of fiduciary duty. Citing other cases, the court explained that a co-op does not owe a fiduciary duty to its shareholders and dismissed this claim. As to the individual, there was no evidence that he engaged in any wrongful conduct sufficient to impose liability on him. The court explained that individual board members would not be liable unless there was evidence that they had committed an independent tortious act.
This is one in a series of cases – most at the lower court level – 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. The court here determined that there were issues of fact as to whether there was a breach of the warranty, and it will presumably determine at trial whether the infiltration of secondhand smoke was so pervasive as to breach the warranty.
Similarly with respect to the breach of contract (lease) cause of action, the court must determine at trial whether the board maintained the building in “good repair,” as it is required to do under the lease. Breach of warranty of habitability and constructive eviction are claims that are not available to condominium owners, and we have seen courts consider claims of nuisance where condo owners complain of secondhand smoke.
While in certain respects secondhand smoke cases can be analogized to cooking odor cases, as we understand the latest studies, secondhand smoke is a health hazard so that the level of responsibility to abate the smoke infiltration may be greater. This is an evolving area and we await direction from appellate level cases.
As to individual director liability, we note that this decision is dated before the decision in Fletcher v. Dakota, Inc. (previously reported) and cannot comment as to whether the decision would have been different had Fletcher already been decided. It appears from the decision, however, that the board member sued did nothing more than sit on the co-op’s legal committee and sign a letter addressed to plaintiff.
Gartner + Bloom