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What happens when a non-artist moves into a zoned artists’ loft?
AUTHORRichard Siegler & Dale Degenshein
Individual board members are not liable for claims for actions taken in their capacities as members of the board.
In New York City, there are buildings zoned specifically for residential use by people certified as artists by the New York City Department of Cultural Affairs (DCA). The apartments in those buildings are “joint living-working quarters for artists.”
The cooperative building at 31 Greene Street in Soho is such an AIR, or Artists-in-Residence, building, and it became the focus of the dispute in Cohen v. CASSM Realty Corp., O’Neill and Vassilakis. The case raised the question of what happens when one or more of the shareholders is not, in fact, a certified artist.
The building is five stories, and each floor has a member on the board of directors. Maxi Cohen owns the fifth-floor unit and, with her brothers, co-owns the second-floor apartment as well. In the lawsuit, she argued that Thomas O’Neill, a board member, was not an artist-in-residence, which was a requirement for his living there. But as the court explained, Cohen could not get the court to enforce the statute – only the DCA could.
However, Cohen sued not only under the statute, but also under the cooperative’s proprietary lease, bylaws, and certificate of incorporation. In essence, she argued that the lease said: “It is intended that the building shall be occupied by artists and their families as combined living-working quarters and for business purposes in connection with the creation, display and sale of their artwork.” The bylaws contained similar language. Consequently, Cohen claimed that she was entitled to live in a building where all units were owned and occupied by artists. And, unlike her statutory claim, Cohen was entitled to seek the enforcement of the rights guaranteed by her proprietary lease.
Cohen demanded an injunction, that is, a court order directing that O’Neill sell his shares to a buyer who is an artist. The court, considering the elements required to grant an injunction, said that Cohen needed to show that she was likely to succeed on the merits of her claim, that without the injunction she was in imminent danger of sustaining irreparable injury, and that the equities balanced in her favor.
Although the court concluded that Cohen had demonstrated a current and ongoing violation of her rights, it did not find that there was imminent danger of irreparable injury. The court recognized the value to an artist (such as Cohen) of living and working in an environment that included other artists, but to the extent that Cohen’s damages could be met with monetary relief, no injunction could be ordered at that point.
Moreover, in seeking to balance the equities, the court considered the burden an injunction would impose on O’Neill, and concluded that the burden – if he were forced to sell – would be disproportionate to the benefit derived by Cohen. Considering all that, the court decided that it was better to defer until trial the decision on whether to grant an injunction.
There is apparently bad blood between these parties; they have been in litigation for years. This particular decision is important largely because the parties’ claims and defenses cover a lot of legal ground. One issue that also came up in the case was whether Cohen – because of the board’s failure to maintain and repair the building’s roof and roof beams, making it impossible to live in her top-floor apartment – was entitled to an abatement of maintenance and the reasonable cost of working/living elsewhere. She had sued O’Neill and another board member, Thanos Vassilakis, and the court said she was not entitled to the abatement and reimbursement. It said that individual board members would not be liable, as individuals, for claims concerning actions taken in their capacities as members of the board. Although the court did not order injunctive relief at this interim stage in the litigation, the court left the issue open for trial, so that the shareholder who is not an artist may indeed be required to sell his apartment.
For Plaintiff: Dunnington Bartholow & Miller
For Defendants: The Price Law Firm