Richard Siegler and Dale J. Degenshein in Legal/Financial on May 23, 2017
In New York City, there are buildings zoned specifically for residential use by people certified as artists by the city's Department of Cultural Affairs (DCA). The cooperative at 31 Greene Street in Soho is such an AIR, or Artists-in-Residence, building, and it became the focus of a lawsuit that posed an intriguing question: What happens when one or more of the shareholders is not, in fact, a certified artist?
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. She cited a clause in the lease: “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.
Cohen demanded an injunction 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 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. One issue 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, but the court determined 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.
The court left the original issue open for trial, so it’s possible that non-artist O’Neill will be required to sell his apartment to an artist, which would return 31 Greene Street to its pristine AIR origins.
The authors are attorneys at Stroock & Stroock & Lavan.
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