The State Supreme Court delivered a powerful punch to the co-op community this past January, slamming a co-op for allowing smoke to get in one of its shareholder’s eyes. And faster than you can say “Got a light?” it hit the unlucky building with the bill: the co-op had to refund to a shareholder, Susan Reinhard, all of her maintenance since 2007, which came to about $120,000, plus interest and legal fees.
And it could happen to you.
In the case, Reinhard v. Connaught, New York State Supreme Court Judge Arthur Engoron ruled that Connaught Tower, a Manhattan housing cooperative, had failed to eliminate secondhand smoke from Reinhard’s apartment.
This is the second decision in the case. In the first, which we’ll call Reinhard I, the court noted in 2011 that the board had failed to do anything to remedy the smoking situation, which is why the judge was angry in Reinhard II. In any event, until Reinhard II is appealed and reversed, the law in Manhattan and the Bronx is that co-op boards and rental landlords have to make non-smokers’ apartments smoke-free. The rule could eventually be extended to condominiums.
However, the decision does not indicate how the board or management can accomplish such a herculean task. Completely preventing smoke from entering other apartments or the hallways is nearly impossible, so boards need to follow certain steps to avoid a nightmare scenario in which co-ops are forced to refund maintenance to their shareholders.
Reviewing Reinhard I
Susan Reinhard brought an apartment in Connaught Tower at 300 East 54th Street in 2006, renovated it and complained to the superintendent in January of 2007 that she had started smelling secondhand smoke in the apartment. Reinhard was told by the building’s managing agent and super that she should re-caulk the floor, molding, and faceplates in her bedroom. She did that, but it did not eliminate the odor.
Reinhard then hired an engineer, who crafted an airflow report demonstrating that smoke was permeating the apartment from elsewhere in the building. Reinhard gave this to the board, but it denied responsibility and advised Reinhard that she could alter her apartment to eliminate the smoke, but she would have to comply with the corporation’s alteration policy. Reinhard then sued the corporation and the board president for breach of the warranty of habitability, breach of 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 $1 million in damages as well as punitive damages.
The court in this case determined that
• secondhand smoke invokes the protections afforded by the constructive eviction provisions of the Real Property Law, so there was a breach of the implied warranty of habitability and constructive eviction;
• the board was not negligent;
• the corporation breached Reinhard’s proprietary lease by failing to take reasonable steps to alleviate the problem;
• the board did not breach the covenant of good faith and fair dealing;
• the corporation did not breach its fiduciary duty to Reinhard;
• the board president did not engage in unlawful conduct because a board member cannot be sued individually for actions taken in the board member’s corporate capacity unless there is evidence that the board member engaged in independent tortious conduct.
The members of co-op and condo boards are protected from second-guessing by the courts as long as they act in compliance with the Business Judgment Rule – and do not act out of bad faith, self-dealing, or discrimination. In this instance, the court did not find that the president of the board was personally liable, but it did find that the board failed to comply with the proprietary lease by taking no action to eliminate the smoke.
Prior to Reinhard I, courts had not placed the responsibility for making apartments smoke-free on co-op or condo boards or landlords. In this case, the court found that co-op boards must act reasonably in assisting residents with secondhand smoke problems that permeate their apartments from other parts of the building.
As a result, co-op boards were told to take reasonable steps to assist shareholders with secondhand smoke problems and not just dismiss the shareholders’ complaints or tell them to handle it themselves. Although, on its face, the decision seems to indicate that condo boards are not at risk because the decision is based on the landlord-tenant relationship between the corporation and its shareholders, condo boards were also being advised to take reasonable steps in assisting unit-owners with secondhand smoke problems.
Although many New York City residents have been concerned for years about the effects of secondhand smoke, the courts have been slow to delineate a board’s responsibilities in dealing with this nuisance/health risk. That doesn’t mean that boards can ignore the issue. Moreover, New York City mandates that every building (including co-ops and condos) have a smoking policy, which it must disclose to residents.
The judge in Reinhard II specifically stated “this court takes judicial notice of the overwhelming, irrefutable, ubiquitous evidence that secondhand smoke causes or contributes to lung and other cancers (e.g., larynx, pharynx, brain, bladder, rectum, stomach, and breast) and cardiovascular disease.”
The court found that not being able to utilize the apartment because of secondhand smoke is a violation of the warranty of habitability and entitles the owner of a residential cooperative apartment a total rent abatement. The court also found that “the value of a smoke-polluted residential apartment is zero (cancer and cardiovascular disease being no laughing matter).”
The court then went on to note that “building owners are capable, and tenants are incapable, of providing smoke-free apartments by imposing strict no-smoking policies or by constructing or rehabilitating buildings so that smoke cannot travel between apartments.”
Furthermore, the court noted that “there are no federal, state or local laws that prevent apartment owners and managers from adopting smoke-free policies. Such policies do not discriminate against smokers; they simply require that people smoke outdoors, where their secondhand smoke will not drift into neighboring units. The experience of landlords across the country suggests that smoke-free policies are not difficult to implement and are largely self-enforcing.”
Finally, the court specified that “if you want to avail yourself of the right to rent out residences, you assume the obligations to insure that your tenants are not forced to smell and breathe carcinogenic toxins.”
What Can You Do?
I’m not an engineer, but I doubt that any existing building, either pre-war or post-war, can be made smoke-free. And with the existence of central HVAC systems, I doubt that a building can be constructed that prevents secondhand smoke from traveling between apartments. So the only solution would be to place the burden of enforcement on the residents of a building.
Therefore, my solution is for every board to enact a resolution stating that “a resident permitting cigarette, cigar, pipe, or marijuana smoke to leave the resident’s apartment and enter a common hallway or another apartment is objectionable conduct and the board will seek to terminate the proprietary lease of any shareholder permitting such smoke to leave their apartment.”
The key to solving this puzzle is for co-op boards to look to the landmark 2002 decision in 40 West 67th Street v. Pullman, in which the State Supreme Court gave co-op boards and shareholders the ability to terminate a proprietary lease for objectionable conduct, without having to go through housing court. I have found, over the years, that sending a potential eviction warning to a misbehaving resident is an excellent way to curtail bad behavior. Enacting a similar resolution regarding smoking will not stop the smoke, but it will make smokers reconsider their actions. If Pullman is any indication, this should work. In the 14 years since Pullman was decided, I have sent dozens of predicate notices of bad behavior, and in only a handful of instances have we had to terminate a proprietary lease.
Although the Reinhard II decision does not apply to condominiums, I can see a judge applying the same theory to them. So my suggestion is that condo boards enact resolutions that provide that “a resident permitting cigarette, cigar, pipe or marijuana smoke to leave a unit and enter a common element or another unit is a nuisance and the board will seek a court order, at the smoker’s expense, to enjoin the unit-owner from permitting such smoke from leaving their unit.”
Interestingly, concern about secondhand smoke has become so strong that many co-op and condo boards have amended their proprietary leases and bylaws to make their buildings smoke-free. Although initially I thought that no board would ever be able to get the super-majority vote necessary to eliminate smoking, that has not proven to be the case.
There are, of course, other steps that can be taken, short of making the building smoke-free. One is for co-op boards to pass a resolution stating that they will not approve a purchase application unless the purchaser agrees that no one will smoke in the apartment. Another is for the board of either a co-op or condo to enact a house rule stating that “in the event that secondhand smoke emanates from one apartment to another apartment or common hallway, the owner of the apartment that is the source of the secondhand smoke will be liable for remediation costs to seal both apartments, as well the professional fees to cover the costs incurred to seal both apartments.”