Perhaps the No. 1 complaint in cooperative and condominium living is noise. When a board hears about a noisy upstairs neighbor, board members have a decision to make. How should they handle it? Is the noise unreasonable? Is the complaining neighbor being unreasonably sensitive?
The noise may be under the legal limit but still be quite disturbing. And of course, a noise at 11 p.m. is much worse than it would be at 4 p.m. The board must answer many questions before it determines that something must be done. Even then, the board must determine whether a court would ever grant the ultimate remedy – eviction of the offending party.
What happens if the board decides to do nothing? Can one neighbor do anything if the board does not feel that it is appropriate to bring an action against a shareholder who violates his/her lease? In other words, is a shareholder a third-party beneficiary of the lease between another shareholder and the cooperative?
In a recent decision, Dubin v. Glasser, the Supreme Court in New York County reviewed a noise dispute. Steven Dubin was a shareholder in a cooperative and claimed that he was in the late stages of cancer and thus appreciated the peace and quiet that his apartment afforded him. However, once the COVID-19 pandemic hit and many people stayed home, Dubin became aware of disturbing noises from his upstairs neighbor, Brian Glasser. Dubin complained that most of the noise seemed to be from a chair rolling back and forth on a hardwood floor and the use of what he thought was a shredder. Dubin further claimed that there was nowhere in his apartment to escape the noise, and it became so bad that he called the police to complain.
One complication arose in that Glasser was not actually a shareholder of the cooperative. He was a tenant in a rent-stabilized apartment owned by the holder of unsold shares. This is an important factor, since the house rules required the holder of the proprietary lease to cover at least 80% of the floors. But Glasser was not the tenant under the proprietary lease; he was a subtenant, and therefore he claimed he was not required to cover the floors.
Glasser did not dispute that he had hardwood floors, and he did respond to the complaints by purchasing a floor protector to place under this desk chair. Glasser also admitted that he used a paper shredder at most twice a day, typically for less than a minute at a time, and never at night.
Since Glasser was not a shareholder in the corporation, it could not bring an action against him. But the cooperative did not bring an action against the owner of the apartment, Glasser’s landlord. Dubin, obviously frustrated, decided to bring an action on his own against Glasser. His complaint requested, among other things, that the court direct Glasser to comply with the house rules (including the 80% rule on floor coverings) and abate the nuisance condition.
Glasser asked the court to dismiss the case. Among other things, he argued that Dubin was neither a party to his lease with his landlord, nor a party to his landlord’s proprietary lease with the cooperative. So even if the lease did require Glasser to obey the 80% carpeting rule, it could be enforced only by the cooperative corporation. Glasser took the position that Dubin could not enforce the rule since Dubin was not what is often referred to as a “third-party beneficiary” of the lease or house rules.
The court did not dismiss Dubin’s claim, holding that Dubin had sufficiently asserted rights as a third-party beneficiary to the lease, and that portions of the lease and house rules are for plaintiff’s benefit. Since this decision was based only upon motions by both Glasser and Dubin, this is not the final and ultimate decision of the court. But it is fascinating that this court held that a shareholder might be able to enforce lease provisions or house rules – since only four years earlier, the same court (though a different judge) held otherwise.
In the earlier case, Ran v. Weiner, one shareholder sued another when the upstairs neighbor’s leak damaged the downstairs apartment. The downstairs neighbor sought damages based upon the proprietary lease and the house rules. He argued that he was a third-party beneficiary of the lease and house rules based on the fact that neither document contained a provision that explicitly prohibited third-party beneficiaries.
The court rejected this idea, stating that the parties’ intent to benefit a third party must be apparent from the face of the document, and “absent clear contractual language evincing such intent, New York courts have demonstrated a reluctance to interpret circumstances to construe such intent.” Therefore, the court held that to be a third-party beneficiary of a contact or lease, you must specifically be given that right in the document.
What Does This Mean?
The standard New York cooperative proprietary lease does not expressly state that a tenant-shareholder is a third-party beneficiary of another tenant-shareholder’s lease with the cooperative corporation. Therefore, if a board fails to take action against a shareholder for violation of the proprietary lease or house rules, another shareholder cannot independently bring his or her own action against a shareholder. In addition, the standard lease has a provision that states the co-op is not responsible to the lessee for the non-observance of the lease or house rules. Thus, to remedy a bad situation, the shareholder in a cooperative is dependent on the board to enforce the lease provisions and house rules. If the board refuses, based on the Ran v. Weiner decision, there is nothing for the injured shareholder to do. (Interestingly, the Condominium Act would allow an aggrieved condo unit-owner to bring an action if the condo board does not, but there is no such parallel provision in any laws applicable to cooperatives.)
But perhaps the door has opened slightly by the decision in Dubin v. Glasser. Perhaps common practice in cooperatives will change. Stay tuned, as we may not have heard the last of this from the courts. A shareholder may indeed have the right to enforce the lease or house rules when the board refuses.
For Steven Dubin: Robin Lo Guidice
For Brian Glasser: Bruce Levinson
Andrew P. Brucker is a partner at the law firm Armstrong Teasdale. The statements and views in this article are his own and not necessarily those of the firm.