Stanley Somer, Somer & Heller
When neighbors complain about neighbors, the situation can easily escalate. Everyone wants a situation resolved, but usually a board or a building owner doesn't weigh in. That could change, however, because just such a case is now being litigated. Can you tell us in layman's terms what the dispute is?
The dispute arose as a result of a white tenant who lives on the second floor of an apartment building complex coming downstairs, passing by the apartment directly below his, and seeing the windows left open and the door left open. The tenant then went to close the door, anticipating that it was left open by accident, since it was about five degrees outside. When he did that, the tenant who lives on the first floor, who is Black, accosted him and told him, "Keep away from my place. You have no business being here. You're trespassing." The white tenant then made all sorts of nasty racial remarks to the Black tenant, and they got into a verbal altercation. The Black tenant then called the police and made a complaint to the police. Several weeks later, he also notified the landlord that he made the complaint to the police department.
What happened next?
Nothing else happened for the time being. Over the next few months, additional complaints were made to the police department, and the Black tenant notified the office. He didn't ask the landlord to do anything or take any sort of action. Eventually the white tenant was charged with harassment, was arrested and took a plea. At which point, the landlord then advised the white tenant that they would not be renewing the lease. When the lease came up for renewal, about three months or four months later, the landlord did not renew the lease, and the white tenant moved out.
A little bit too late, the Black tenant decided to sue the landlord, claiming that the landlord was responsible for discrimination because the landlord did not take any action against the white tenant and therefore should be held liable for not intervening. In other words, they're talking about a tenant-on-tenant complaint that the landlord should have taken into consideration and done something about. As for the something that they say the landlord would have to do, we have no idea what that is. If the landlord would have taken any sort of action at all, they could have sent the letter. They could have terminated, but by the time they would have gotten to court, the white tenant would have been gone anyway.
I know this has been fought in the courts for quite a while and it’s been quite the legal journey through a variety of courts. Where is the case now?
Well, let me go on to say that the Black tenant made a complaint to the Human Rights Division of New York State, and then withdrew that complaint and decided to bring an action in Federal Court, claiming that the Fair Housing Act and the Civil Rights Act were violated, because the landlord did not take any action between the two tenants. The United States Federal District Court dismissed the case, saying that the statute did not apply to landlords. The plaintiffs appealed, and it was heard by the Second Circuit.
After numerous months and briefs, the Second Circuit came down with the decision, with two judges reversing the lower court, and one judge issuing a dissent. About two weeks after the decision was rendered, the Second Circuit withdrew that decision and asked for new briefs to be presented. The new briefs were presented to the same judges, who basically gave the same decision. The court was then asked to hear the case en banc. That means that the entire court, not just three of the judges but all of the judges, would hear the case.
Why so much back and forth? What is the legal issue at stake here?
The issue here is that we're concerned with the fact that co-ops are basically a landlord-tenant situation. An occupant of a co-op is a tenant. If it turns out that the court sustains that the Civil Rights law says that a landlord must take action with regard to a tenant on any complaint, then that will apply here as well. One of the arguments that the tenant’s attorney is making is that the Civil Rights law should be applied to tenant-on-tenant complaints. And that the landlord – either the owner of an apartment complex or the board in a co-op – should be held responsible for the actions of the tenant who is being complained of. They're trying to equate it to the law that says that an employer is liable for the activities of his employees. Whereas an employer can fire an employee or transfer them, a landlord, when they sign a lease, they’re giving up their proprietary rights. The only rights that the landlord has is to collect his rent and enforce those items which are contained within the lease. Otherwise, if there's no lease and a tenant moves in, the landlord has no right to even visit the property. They're giving up all of their rights. This is a situation where they're claiming a landlord enforces one of the rights. For example, if the tenant is parking in a handicapped zone and the landlord says that the tenant is violating the handicapped parking, well, you're enforcing that rule. So therefore you should enforce the rules regarding tenant-on-tenant complaints. It seems ludicrous to us, but the courts have found that the statute is applicable to the landlord.
Let me just ask you, if these 12 judges that you said are now going to listen to this reach a decision, is that it? Can it be appealed or are we done?
That decision can certainly be appealed. It can be appealed to the United States Supreme Court. Whether they'll hear the appeal or not, we don't know. But it is a situation where the impact of this is nationwide and the cost can be astronomical.
In a co-op, boards have directors-and-officers liability insurance, which I assume will protect them if there is a legal complaint against them and this were to pass?
It may or may not be that the insurance that boards have includes the defense for discrimination. The insurance companies will give a policy that will pay for the defense — but not necessarily pay for the award — because boards did something wrong and that might not be covered, but they can get insurance. Now the board members individually may not be liable, but the co-op could be liable, and it could bankrupt a co-op. You could get a runaway jury, who finds millions for a tenant who made these complaints. If the statute says that the co-op was wrong and they should have taken action and they didn't take action, who knows what the verdict might be? The co-op itself would have to come up with that money.
If you're a betting man, do you have any sense of which way the court will go?
It's like a gut feeling that the court finds this so important that they will listen to it en banc. The Second Circuit has maybe five en banc cases a year, and there are hundreds of them that are presented. This is a case that the court wanted to hear. I believe that they're going to find in our favor that the tenant-on-tenant complaint is not a responsibility of the landlord. But one never knows. There were two judges who found that it was.