This was originally published on the SGR Blog.
Court Adjudicates Panoply of Claims, Counterclaims, and Defenses
Martha Schwartz alleged that 170 West End Owners Corp illegally installed and/or manipulated industrial fans on the roof of the building directly above her apartment. Schwartz was a tenant in apartment 30E at the building, a cooperative governed by Owners Corp.
Schwartz alleged that in 2009 Owners Corp. relocated a certain number of industrial fans directly above and/or near her top-floor apartment, in an attempt to force her out of the building. She alleged that in 2012 Owners Corp. manipulated the fans to direct polluted and freezing air into her apartment, and testified that she witnessed the fans in different locations by visiting the roof on various occasions both before and after 2009. Schwartz alleged that the relocation and manipulation of the fans caused excessive noise, vibrations, and odors in her apartment which continued and that her health declined as a result of these conditions.
Schwartz produced 2012 and 2013 reports by A&A Consulting Engineers based on inspections of her apartment. In its 2012 report, A&A wrote that “it seemed that … oversized, noisy and low quality exhaust fans for ventilation purpose [were] installed on the roof top about above this apartment.” She also produced a 2013 report from Angstrom Testing Services, which found “strong” levels of offensive musty/earthy odors and “slight” levels of sewage-related odors in the bathroom. In addition, Schwartz produced a 2013 report from Acoustilogs, which determined that the noise in the apartment was coming from mechanical equipment and was “unreasonably loud.”
Owners Corp., a cooperative corporation, claimed that it never took any action relating to the building or the building equipment to the detriment of Schwartz, and alleged that the industrial fans could not have been relocated. Boris Elyukin, the building’s resident manager and a mechanical engineer, testified that “it is physically impossible to relocate any fan on the roof.” Owners Corp. also produced the 2014 report of Anthony Accardo, a licensed professional engineer, who concluded from a site visit that “it would be very difficult to modify the fan locations and I see no evidence that they were relocated.” In response to Schwartz’s complaints regarding the conditions in her apartment, Owners Corp. alleged that, among other repairs, it replaced the exhaust fans and installed vibration eliminators and noise reducers.
On July 17, 2012, Schwartz commenced an action in Housing Court against ACP Realty Group and the Department of Housing Preservation and Development. The Housing Court action was resolved pursuant to a Stipulation of Settlement dated June 2, 2015.
Paragraph 3A of the Stipulation of Settlement included a condition that must be satisfied in order to trigger certain obligations on the part of Owners Corp. It stated, “After [Schwartz] removes the carpet in the [a]partment, which must be done before [Owners Corp.] begins its work under paragraph 5 below, [Owners Corp.] shall make necessary adjustments to the door sweep in the front entrance door to correct air leakage and to facilitate operation of door.” In her deposition, Schwartz was asked whether she had removed the carpet in the apartment, to which she replied “No.”
Paragraph 5 of the Stipulation of Settlement, only to be completed after the condition in Paragraph 3A was satisfied, required Owners Corp. “to complete items 3 and 4 located on page 3 of the Lilker Report.” Items 3 and 4 of the Lilker Report included recommendations to install a vibration isolator on the toilet exhaust fan and the kitchen exhaust fan. Paragraph 5 also required Owners Corp. to “complete work in the [a]partment, including … correcting the violations referenced in paragraph 4 herein, and to install and maintain the airflow registers as recommended in items 7 and 8 … of the Lilker Report, unless advised otherwise by [Owner Corp.’s] professional(s).”
Paragraph 4 of the Stipulation of Settlement required Owners Corp. and ACP to cure “[a]ny and all violations of the Department of HPD and ECB for the [a]partment.” The Stipulation of Settlement expressly provided in Paragraph 11 that it was “without prejudice to [Schwartz’s] right to commence a plenary action in the proper jurisdiction to seek damages allegedly caused by [Owners Corp. and ACP], namely compensatory and punitive damages. All parties reserve[d] their respective rights, claims, and defenses with respect to any such action or proceeding.”
On December 2, 2015, Schwartz commenced this action against Owner’s Corp. and ACP. On March 31, 2017, the Court granted ACP’s motion for summary judgment, which was affirmed by the Appellate Division.
On February 27, 2018, Schwartz filed an amended complaint, asserting eight causes of action: (1) nuisance; (2) trespass; (3) violation of the New York City Noise Code; (4) violation of the New York City Building Code and/or New York City Mechanical Code; (5) breach of settlement agreement; (6) negligence; (7) an injunction to enforce the prior settlement agreement; and (8) an injunction to relocate the industrial fans. Owners Corp. interposed an answer asserting among its affirmative defenses: (1) res judicata, collateral estoppel, and law of the case; and (2) the business judgment rule.
Owners Corp. moved for summary judgment dismissing all claims by Schwartz. Schwartz moved for summary judgment in her favor against Owners Corp. on all causes of action.
As a threshold matter, Owners Corp. sought to dismiss Schwartz’s claims based on the preclusionary effect of the Stipulation of Settlement resolving the Housing Court action. Res judicata, or claim preclusion, precludes a party from litigating a claim where a judgment on the merits exists from a prior action between the same parties, involving the same subject matter. The doctrine applies even if the later claim is based on a different theory or seeks a different remedy, so long as it arises out of the same transaction. However, the doctrine does not apply where the remedy sought was not available in the prior proceeding, such as where the prior proceeding occurred in a court of limited jurisdiction. A stipulation to discontinue an action without prejudice is not subject to the doctrine of res judicata because it is not a final judgment on the merits.
Owners Corp. argued that Schwartz should not be permitted to re-litigate the issues that were resolved in the Housing Court proceeding. According to Owners Corp., all the issues alleged in the pending action were resolved pursuant to the Stipulation of Settlement. Schwartz argued that her claims for damages should not be precluded because the Stipulation of Settlement expressly permitted her to assert her such claims. She argued that her claims for injunctive relief should not be precluded because Housing Court lacked jurisdiction to grant such injunctive relief.
The Court found that, as to Schwartz’s claims for damages (the first, second, third, fourth, fifth, and sixth causes of action), the Stipulation of Settlement was not a final judgment on the merits. Paragraph 11 of the Stipulation of Settlement stated that stipulation was “without prejudice” as to Schwartz’s right to bring a later action for damages. Therefore, res judicata did not bar her claims for damages.
As to Schwartz’s claims for injunctive relief (the seventh and eight causes of action), Housing Court had limited jurisdiction in equity but could grant injunctive relief for the enforcement of housing standards. Schwartz’s eighth cause of action—to relocate the industrial fans—sought an injunction to enforce housing standards and was precluded.
Collateral estoppel, or issue preclusion, requires that: (1) the identical issue was necessarily decided in the prior proceeding and was decisive of the present action; and (2) there was a full and fair opportunity to contest that issue in the prior proceeding. Collateral estoppel is inapplicable if an issue was not fully litigated, e.g., if there has been a stipulation. Here, the Housing Court action was resolved by the Stipulation of Settlement. Therefore, collateral estoppel was inapplicable.
The law of the case doctrine is a policy that addresses the potentially preclusive effect of judicial determinations made in the course of a single litigation before final judgment. Here, the Court’s March 31, 2017 order granting summary judgment to ACP did not preclude Schwartz’s action against Owners Corp. That order predated the filing of the amended complaint and the completion of discovery. Moreover, ACP stood in a different position as defendant in relation to Schwartz. Thus, the law of the case doctrine was inapposite.
Accordingly, Owners Corp.’s motion for summary judgment as to Schwartz’s seventh cause of action was granted. As to the remainder of her claims, Owners Corp. was not entitled to dismissal of Schwartz’s claims based on the doctrines of res judicata, collateral estoppel, and law of the case.
Owners Corp also sought dismissal of Schwartz’s claims based on the application of the business judgment rule.
The proper standard for judicial review of a cooperative board’s decisions is the business judgment rule. So long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith, courts will not substitute their judgment for the board’s. However, the rule permits review of improper decisions, such as when the board deliberately singles out individuals for harmful treatment.
Here, Schwartz alleged that Owners Corp. relocated and manipulated the industrial fans above her apartment with the intention of causing such unbearable conditions so as to force her to vacate her apartment. Owners Corp. contended that it never relocated and/or manipulated the fans. The Court found that there remained a question of fact as to Owners Corp.’s good faith and whether Schwartz was deliberately singled out for harmful treatment. So Owner Corp.’s decisions did not merit protection of the business judgment rule at the summary judgment motion stage. Owners Corp. was not entitled to dismissal of Schwartz’s claims based on the application of the business judgment rule.
Schwartz’s first cause of action alleged nuisance based on the relocation of the fans and the manipulation of the fans and exhaust system, causing excessive noise, vibrations, and noxious air in her apartment. The elements of a claim for private nuisance are: (1) an interference substantial in nature; (2) intentional in origin; (3) unreasonable in character; (4) with a person’s property right to use and enjoy land; (5) caused by another’s conduct in acting or failure to act. Nuisance is often discussed in terms of intentional conduct – but such a claim is actionable upon proof that the invasion was either intentional, negligent or reckless, or otherwise involved abnormally dangerous activities.
At issue in Schwartz’s nuisance claim was whether Owners Corp. acted or failed to act as it relates to the conditions in her apartment. Owners Corp. argued that it did not—and physically could not—relocate the industrial fans, and relied on the testimony of Elyukin that it was “impossible” to relocate the fans and the statement of Accardo that it would be “very difficult” to move the fans. Owners Corp. claimed that it attempted to resolve every complaint regarding the conditions in the apartment. Schwartz testified that the fans were in fact moved, relying on her visual inspection of the roof both before and after 2009. They alleged that the excessive noise, vibrations, and odors had not been cured to date. Neither Owners Corp. nor Schwartz met its prima facie burden. There remained questions of fact as to whether Owners Corp. relocated and/or manipulated the fans to Schwartz’s detriment and whether Owners Corp. failed to act in responding to her complaints. So, summary judgment on the issue of nuisance was not appropriate. Both motions for summary judgment as to the first cause of action were are denied.
Schwartz’s second cause of action alleged that noise, vibrations, and noxious air from the fans constituted a trespass. The elements of a cause of action sounding in trespass are an intentional entry onto the land of another without justification or permission. While any intrusion, however insignificant, may constitute an entry for the purpose of establishing a trespass, such intrusion must generally be physical or tangible. Intangible intrusions, such as noise pollution, vibrations, and blocked natural light are generally treated as nuisances, not trespass, because they interfere with nearby property owners’ use and enjoyment of their land, not with their exclusive possession.
Here, Schwartz claimed that she had experienced excessive noise, intense vibrations, and noxious fumes in her apartment as a result of Owners Corp.’s actions in allegedly relocating and manipulating the fans. Even when the facts were viewed in the light most favorable to Schwartz, such intangible entry was insufficient to establish trespass.
Owner Corp.’s motion for summary judgment as to Schwartz’s second cause of action was granted. Schwartz’s corresponding motion for summary judgment on that cause of action was denied.
Schwartz’s third cause and fourth causes of action alleged that Owners Corp. violated the New York City Noise Code, New York City Building Code, and New York City Mechanical Code. It is the general rule that if a statute does not explicitly provide for a private cause of action, recovery may be had under the statute only if a legislative intent to create such a right of action is fairly implied in the statutory provisions and their legislative history. There was no private right of action explicitly provided and fairly implied from the alleged code violations. Schwartzs’ causes of action for code violations were duplicative of its other claims. Owners Corp.’s motion for summary judgment as Schwartz’s third and fourth causes of actions was granted. Schwartz’s corresponding motion for summary judgment on those causes of action was denied.
Schwartz’s fifth cause of action alleged that Owners Corp. breached the Stipulation of Settlement by failing to make certain repairs and cure violations. Schwartz alleged that Owner Corp. failed to cure HDP and ECB violations pursuant to Paragraph 4 of the Stipulation of Settlement and failed to complete various items described in the Lilker Report pursuant to Paragraph 5 of the Stipulation of Settlement.
Paragraph 3A of the Stipulation of Settlement required that Schwartz remove the carpet in her apartment before certain obligations by Owners Corp. would be triggered, including those in Paragraphs 4 and 5. When asked in her deposition whether she had removed the carpet, Schwartz replied that she had not. As the condition precedent had not been satisfied, the claim for breach of settlement was not ripe. Owners Corp.’s motion for summary judgment as to Schwartz’s fifth cause of action was granted. Schwartz’s corresponding motion for summary judgment on that cause of action was denied.
Schwartz’s sixth cause of action alleged that Owners Corp. was negligent in its relocation and/or manipulation of the industrial fans. The elements of a negligence claim are a duty owed by the defendant to the plaintiff, a breach of that duty, and injuries proximately caused as a result of that breach. As with Schwartz’s nuisance claim, neither Owners Corp. nor plaintiff Schwartz established for the purpose of summary judgment whether the fans were relocated and/or manipulated and whether Owners Corp. successfully responded to Schwartz’s complaints regarding the conditions in the unit. There remained questions of fact. Summary judgment was inappropriate as to Schwartz’s negligence claim. Owners Corp.’s and Schwartz’s motions for summary judgment as to the sixth cause of action were denied.
Schwartz’s seventh cause of action sought an injunction to enforce the Stipulation of Settlement. Since Owners Corp. established it was not in breach of the Stipulation of Settlement at the time of the motions, Schwartz was not entitled to an injunction to enforce the stipulation. Owner Corp.’s motion for summary judgment as to Schwartz’s seventh cause of action was granted. Schwartz’s corresponding motion for summary judgment on that cause of action was denied.