The shareholder broke the co-op’s rules but won in court.
Does the building have to pay his attorney’s fees too?
After he has successfully had the co-op’s action against him dismissed, may a shareholder receive an award of attorneys’ fees? And should the fact that he broke the rules by keeping a pet in his apartment and leaving it in an unclean condition make a difference? That was the issue in 433 Sutton Corp. v. Broder.
The Facts of the Case
On August 25, 2011, occupants of the apartment next door to Robert Broder complained of a stench coming from his unit. They testified that they believed there were human remains there. The super attempted to use a spare key to enter, but it only opened the bottom lock. The top lock had to be drilled out.
The source of the odor was Broder’s pet cat, which had apparently been alone in the apartment, without water or a clean litter box, for some time. The cat had urinated throughout the apartment. The president ordered fresh kitty litter. The apartment was also, witnesses said, in a “repugnant state,” with mouse droppings, piles of garbage, papers, clothing, food, and narrow pathways to walk through. The appellate court noted that at the time – following Hurricane Irene – Broder was upstate as part of a search-and-rescue team.
The board president contacted him on August 26. Broder said he would return to clean the apartment and did so on August 27 at about 3 A.M. He removed the cat, and the odor significantly dissipated.
The Board Acts
The co-op began an action on September 1 for damages as a result of Broder’s violation of the proprietary lease and house rules. The co-op also made a motion for a preliminary injunction authorizing it to remove “junk and filth” from the apartment, as well as the cat, which the co-op asserted had been abandoned in the apartment for a week. The co-op argued that the conditions required an immediate response because he “seems unwilling or unable to address these conditions.”
The motion court granted the co-op’s initial application – without Broder being present in court, although it is not clear whether he was given notice or just decided not to attend. It also permitted the co-op access to the apartment to remove all odor-producing garbage and foodstuff, as well as waste and areas of infestation. The motion court also ordered that a hearing take place.
Preliminary Injunction Denied
After the hearing, the motion court denied the co-op’s motion for a preliminary injunction because it had violated the proprietary lease by beginning an action and seeking an injunction without first giving Broder notice and an opportunity to cure the problem, as required by the proprietary lease.
The motion court noted that although the affidavits were equivocal concerning whether the cat was still in the apartment at the time the co-op requested relief, it was clear from testimony that the cat had been removed. In addition, a video of the cleanup showed that the co-op had performed a “wholesale taking of things,” and not just a removal of the odor-producing garbage, as directed by the court’s order.
The motion court dismissed the co-op’s action and addressed Broder’s request for attorneys’ fees. It noted that he was in violation of the proprietary lease because he had failed to maintain his apartment in a good state of preservation and cleanliness. The co-op’s rules also stated that no animal could be kept in the building unless board permission was granted in writing. He violated both of these provisions.
In order to receive an award of attorneys’ fees, a party must “prevail” in the action. The motion court noted that courts have denied attorneys’ fees to shareholders, even where a co-op’s action was dismissed, if it was determined that the shareholder breached the proprietary lease. In the cases cited by the motion court, no party was awarded attorneys’ fees based upon equitable considerations.
The motion court explained that the denial of the co-op’s motion for an injunction did not render Broder the prevailing party. The co-op was forced to take action because of complaints of a stench coming from his apartment. The motion court determined that the co-op was not entirely forthcoming when it made its application for temporary relief, which it granted, because the building knew – but did not tell the court – that the cat had already been removed. Regardless, testimony revealed that the co-op was concerned that the condition of the apartment would attract vermin and remain a source of noxious odors.
The motion court specifically stated that the denial of the co-op’s motion for a preliminary injunction was not a finding that Broder was in compliance with the proprietary lease and house rules. It concluded that, based on equitable considerations, his motion for attorneys’ fees would be denied.
In a 3-2 decision, the appellate court reversed and awarded fees to Broder in an amount to be determined by the lower court. The appellate court found that, even if he had breached the lease, the co-op’s remedy was not to start an action but rather to serve him with a notice under the proprietary lease allowing him time to cure. In other words, the appellate court determined that Broder could not be in breach of the proprietary lease until his time to cure had expired.
This case raises a number of issues. We have all seen situations where apartment occupants are hoarders, where they literally build walls of newspapers and magazines and have food and organic debris strewn throughout the apartment. The conditions in these apartments may be unsafe and unsanitary.
Of particular interest is that the appellate majority appears to be saying that in such a situation, the apartment owner will not be in default of the proprietary lease based upon the condition of the unit until the co-op first serves a notice directing them to clean the apartment and the owner fails to do so within the period of time prescribed by the lease. It is only at that point that the co-op may request relief from the courts. The proprietary lease in this case required a 10-day notice to cure. We have seen leases where co-ops are required to give as much as 30 days’ notice. Based on the appellate majority decision, it appears that the board and occupants must wait the prescribed period of time before action can be taken.
As to attorneys’ fees, consistent with the above, the appellate majority determined that the shareholder was not in breach of his lease because he was never given an opportunity to cure. The court was also disturbed because the co-op had misled the motion court when it submitted papers that indicated that the cat was still in the apartment, when it was clear that the cat had been removed.
The appellate majority did not appear to consider the issue of whether equitable considerations should have precluded an award of fees to the shareholder or that Broder had breached the lease by having a pet without first obtaining permission.
Three of five appellate judges rendered the award to Broder. Depending upon other factors, New York’s highest appellate court may be required to hear the case, should the co-op decide to appeal.
Rappaport, Hertz, Cherson & Rosenthal
For the Co-op:
Cantor, Epstein & Mazzola