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CONDO BOARDS CAN WIN WHEN SUED FOR DELAYING APT. REPAIRS

Condo Boards Can Win When Sued for Delaying Apt. Repairs

March 29, 2010 — What do you do when a condominium unit-owner sues your condo board for failing to restore in a quick and proper manner the apartment after a fire? That was the issue in Katz v. Board of Managers. The action arose from property damage caused to a condominium unit, and the board struggled to prove that its fulfilled its obligation to arrange for prompt repair and restoration.

So where did the condo board go wrong — and right?

Plaintiff Laurie Katz owned apartment 15A/B at One Union Square East Condominium in Manhattan. On October 6, 2003, an electrical fire occurred at the unit, through no fault of plaintiff or defendant. The damage that resulted was declared a "total loss" by both parties' insurance carriers. The apartment was uninhabitable.

The condominium's bylaws provided that the condominium was responsible to "arrange for the prompt repair and restoration." The condominium's insurance covered the cost of cleaning and completely restoring the apartment. Plaintiff's policy covered her personal property and improvements, as well as the cost of alternate living expenses for the reasonable period of time it took to make the unit habitable.

But Katz didn't not return to the apartment after the fire, though she continued to pay paid all common charges, additional fees and homeowners' insurance. Saying it remained uninhabitable, she claimed that the condominium had failed to restore the unit in a timely and workmanlike manner. Through attorney Kenneth J. Glassman, she sought damages for:

  • breach of the bylaws
  • constructive eviction
  • breach of the implied warranty of habitability, and
  • breach of the implied covenant of good faith and fair dealing.

The condo board, represented by the firm Smith Mazure, claimed it had acted properly, consistent with the bylaws, and that it had fulfilled its duties. It claimed Katz was solely responsible for delaying the completion of the repairs — asserting that shortly after the fire it had promptly arranged for contractors to provide bids, but that Katz had refused to provide access unless she was given notice and was present. The board also alleged that Katz had refused to sign a restoration agreement, that she was difficult to communicate with and that she spent an inordinate amount of time negotiating the costs of certain improvements.

Provide a Time Line

The board provided a time line of the attempts it made to restore the unit. On or about January 11, 2007 — over three years since the fire — Katz was notified that the apartment was ready for inspection and possession. Katz maintained that when she inspected the apartment in March 2007, it was incomplete and that there was no kitchen. The board claimed that, ten months later, Katz attended a final walkthrough, after which she submitted a further list of items to restore and repair. The board claimed it exercised its best efforts to accommodate her additional requests.

Both parties moved for summary judgment, which means each party felt that the alone were enough to prove that they was entitled to judgment, without a trial. As the court explained, summary judgment is a drastic remedy that should not be granted where there's any doubt as to the existence of a triable issue.

The board did receive summary judgment on the second and third causes of action — breach of the warranty of habitability and constructive eviction. The court dismissed there a matter of law, because they did not apply to the relationship between a condominium and its unit-owner. The court explained that condo unit-owners were not protected by the warranty of habitability, since they did not hold a lease for the premises but rather possessed a "fee ownership interest." The court likewise dismissed Katz's claim for constructive eviction because, again, the parties did not stand in a landlord/tenant relationship.

Two Down, Two to Go

That left Katz's first and fourth causes of action. The first asserted that the condo board breached the bylaws by "failing to properly insure that the repair of plaintiff's unit was completed in a timely fashion and workmanlike manner." The court reviewed the bylaws, which stated: "In the event that the building or any part thereof is damaged or destroyed by fire...the Residential Board...shall arrange for the prompt repair and restoration thereof (including each Unit, but excluding fixtures, furniture, furnishing or other personal property not constituting a part of such Unit)."

A condominium's bylaws constitute a contract with the unit owners. The court discussed two fundamental principles of contract construction. Agreements were to be construed in accordance with the parties' intent and the best evidence of what the parties intend was what they provided in their writing. As the court explained, a written agreement which was complete, clear and unambiguous has to be enforced according to the plain meaning of its terms.

Next Page: Testing the Business Judgment Rule >>

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