This was originally published on the SGR Blog.
A shareholder in a cooperative apartment building on the Upper West Side demolished a deck constructed by an upstairs neighbor because the deck allegedly encroached on his property.
The deck had been in place undisturbed for 25 years; the Co-op board directed it not be destroyed; and the demolition of the deck created a dangerous condition by leaving his neighbor with an unprotected back door opening to a steep drop to the ground below.
The unsurprising answer was that he was not permitted to exercise the self-help remedy of demolishing the deck. His proper course was to seek relief from the courts or other governmental authorities, not to administer what the Court called “frontier justice”.
After a four day non-jury trial, the Court found the shareholder liable for compensatory damages of $100,000 (plus statutory interest) and punitive damages of $100,000 for the intentional destruction of property.
321 West 100th Street is a building owned by a cooperative corporation. The Co-op operates the building pursuant to a written shareholders agreement, with a proprietary lease for each shareholder.
Marvin Hoffman was the original shareholder and proprietary lessee of the second-floor apartment. Hoffman passed away in August 2015. Evan Hoffman is Marvin Hoffman’s son, and Trustee of the Marvin Hoffman Family Trust. The Trust is the shareholder and proprietary lessee of the second-floor apartment. Joanne Hoffman Beechko and Tara Hoffman are the daughters of Marvin Hoffman.
Chaim Babad is the shareholder and proprietary lessee of the ground floor apartment. He had been in the real estate business since 1975; was involved with “close to forty buildings;” and was, in his words, “pretty successful”.
Congregation Kahal Minchas Chinuch occupies the ground floor apartment pursuant to a 99-year sublease with Babad signed in 1983.
Michael Berkowitz is the Co-op’s Board President, and shareholder and proprietary lessee of apartments six and seven.
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321 West 100th Street is a five-story walk up apartment building in Manhattan. The building has a backyard and a basement. The backyard can only be accessed through the ground floor apartment, which houses the Congregation. In the backyard there is a sukkah, a ritual structure used for the Jewish Holiday of Sukkot and used by the Congregation as a storage structure during the year. The basement has storage space for the residents of the building, and houses a mikvah, a Jewish ritual bath, for the Congregation.
The second floor apartment was occupied by Marvin Hoffman until his death in August 2015. After he passed, the apartment was transferred to the Trust.
On November 29, 2018, shortly after trial, the Hoffman apartment was sold to an independent third party for $875,000.
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On September 22, 1981, the Co-op was incorporated under Section 402 of the New York Business Corporation Law. On November 10, 1981, the Congregation deeded the building to the corporation.
On the same day, Marvin Hoffman, Edward Rivera, Henryke Jahrlich, Roschel Peters, and Chaim Babad and Usher Babad as joint tenants entered into a shareholders’ agreement with the corporation. Each party received 20 shares of stock in the Co-op and was issued a proprietary lease for their premises. The Babads received the “Entire Ground Floor,” and Hoffman received the “Entire Second Floor.”
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In 1990, Marvin Hoffman built a deck adjacent to the back of his apartment. The deck was built on concrete beams and posts anchored in the backyard of the property.
Babad initially testified that he became aware of the deck “after it was done.” He later testified that he became aware of the deck three years after it was built, and immediately objected both in person, and in writing. However, Babad also testified that he visited the building once or twice a year, and that the columns of the deck were so large that he would “probably knock my head off if I didn’t see one of the columns.” From the totality of his testimony, Babad both stated and implied that he was aware of the deck soon after it was built, and allegedly objected to the deck for the first time in or about March 1993.
Evan Hoffman testified that, to his knowledge, from the time the deck was built until his father’s death there were no complaints from any residents in the cooperative.
Berkowitz testified that he had no knowledge of the Co-op ever receiving a complaint about the deck until shortly before Marvin Hoffman passed, when Babad first raised his intention to take down the deck.
Macaluso (the Trust’s Expert) testified that he reviewed the New York City records and there had been no violations issued by the City for a deck.
Babad, on the other hand, testified that he complained about the deck to Marvin Hoffman both in person and in writing.
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In the summer of 2015, shortly before Marvin Hoffman’s death, Babad told Berkowitz that he planned to tear down the deck. Berkowitz had been in frequent contact with Babad that summer due to the conversion of the building from oil to gas.
Joanne Hoffman Beechko testified that she spoke with Babad shortly after her father’s death and asked him to re-affirm that the Trust could keep the deck so that she and her brother could proceed with selling the apartment. Babad testified that he spoke with Beechko some time before September 14, 2015 and explained rather unhelpfully that the only way the deck would be able to stay was if it was suspended without support from the second floor of the building. His unalterable position was that the supporting columns in the backyard of the property had to go.
At a Board meeting held in September 2015, the members told Babad, who was participating by phone, that it was their unanimous opinion that Babad could not unilaterally remove the deck; that the Board did not grant him permission to do so: and he must “work it out” with the Hoffman family.
Despite that admonition, Babad hired a crew to demolish the deck in November 2015. He did so without permits, without insurance, and without an alteration agreement with the Board.
Photographs of the scene after Babad’s actions showed large concrete columns with metal rods protruding from them lying on the floor, surrounded by rubble. After the deck was destroyed, the door in the rear of the Trust’s apartment opened to a dangerous and unprotected drop to the debris-laden ground below. The Hoffmans had to put up a large metal door with horizontal and vertical bars to protect against a potentially catastrophic fall to the backyard below.
The Court found that Babad’s testimony was not credible. He first testified that the deck was not discussed in Board meetings prior to the deck being taken down; then that he did not recall it being discussed; and then that perhaps it was discussed once. He finally testified that he was asked to work it out with the Hoffmans, but to no avail.
When asked at trial whether he had approval to remove the deck Babad responded sarcastically, “the same as he [Hoffman] asked the board to put it up.” When questioned further, Babad said he did not have permission, and did not tell the Board he was going to take it down. And the Co-op board only told him not to remove the deck after he was halfway through its removal. That ignored the September 2015 board meeting.
By letter to Babad dated November 16, 2015, Board members Michael Berkowitz, Marty Dplevil, and Konstantin Vasyukevich, on behalf of the Board admonished Babad for destroying the deck. The letter stated “[e]ver since you first raised the issue of the deck, we instructed you that you were not to take unilateral action. Over the past year, these explicit instructions were delivered several times via phone conversations with Michael Berkowitz in his capacity as Board President… These instructions were also delivered to you in a board meeting held on September 20, 2015, which you participated in via telephone.” Babad confirmed receipt of the letter.
After discovering the deck was removed, Berkowitz called Babad and left him a message expressing his surprise and anger that Babad destroyed the deck. In response, Babad left a voicemail for Berkowitz in which he explained that there was no reason for Berkowitz to be upset or to get involved. Babad explained that “if it’s something and the guy on the second floor wants to sue me he can sue me it’s no problem I spoke to my lawyer… and if Hoffman’s daughter or whatever don’t like what I did let them sue me and I will fight it in court.”
Berkowitz and the Board sent a letter to Babad stating they were “deeply disappointed in [Babad’s] unilateral destruction of the private property of the Hoffman family.” And that neither “[Babad] nor the synagogue is permitted to conduct [anything] other than cosmetic work to the premises… including within the synagogue, the basement space, and the backyard without the express authorization of the Board.”
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At trial, Babad sought to prove that the deck did not conform to building codes because of its size and materials.
The Trust offered the expert testimony of Michael Macaluso, a licensed architect in New York City and New York State. Macaluso visited the property; reviewed the property survey; and reviewed pictures of the deck in forming his opinion. Given destruction of the deck, Macaluso was not able to see the deck itself. Babad’s conduct thus undermined the ability to fully assess whether the deck needed to be “legalized.”
Macaluso testified that the building was in a zone that allowed for a deck. And that, that based on the current zoning resolution, a deck could extend eight feet out, and the entire width of the building. To extend the width of the building, the deck must be made of non-combustible materials. If the deck abuts a property line, all the materials that make up the deck in the first three feet from the property line are required to be non-combustible.
According to the property survey, the deck was within three feet of the property line. The deck was made of concrete, with concrete vertical beams, and horizontal beams. According to Macaluso, wood sitting on top of a concrete base would not qualify the deck as “combustible.” However, if the wood had nothing below, it would not be a compliant deck. Again, however, Babad’s conduct prevented a fully informed assessment of whether the deck conformed to regulatory standards.
Macaluso testified that, based on his observations from the survey, the remnants of the destroyed deck, and the pictures of the deck, the deck could have been legalized under New York zoning and code requirements.
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The Trust’s expert witness Anna Kahn, a licensed real estate broker employed by Halstead Manhattan, opined regarding the value of the deck. Kahn had been working in residential real estate at Halstead Manhattan since 1996, and had been a licensed broker since 1999. She regularly gave real estate price evaluations and broker price opinions for estates. As a broker, she visited properties and priced them for her clients. Kahn’s focus is on co-ops, condos, and townhouses, with the vast majority of her sales and experience on the Upper West Side of Manhattan, where the building is located. Kahn used comparable apartments from the Halstead database to price the apartments she listed for clients.
Kahn performed a valuation of the Trust’s apartment at the request of Evan Hoffman in September 2015, with the deck still intact. She estimated the market value at that time to be approximately $1.2 million.
In connection with the intended sale of the apartment in 2018, Kahn performed a new valuation of the apartment (this time without the deck). For this valuation she used a different set of comparable apartments, i.e., apartments that did not have an outdoor space. She estimated the value to be $875,000. [The apartment ultimately sold for $875,000.]
Kahn testified that the reason for the change in market value between 2015 and 2018 was a combination of a weaker real estate market in 2018 and the loss of the deck. She testified that, if the apartment still had a deck, she “would have increased the price by $100,000 to $200,000 or maybe $150,000.” Kahn later narrowed the range to $100,000 – $150,000. Finally, she settled on an estimated reduction of value attributable to the loss of the deck of $150,000.
Kahn provided an alternative methodology based on her experience. Outdoor space was generally valued at one half the value of indoor space per square foot, though some developers would consider it valued at the same value as indoor space. Based on the $875,000 purchase price for the 1,058 square foot apartment, the value of the interior space of the apartment was $827.03 per square foot. Assuming the value of the outdoor space was half the value of the indoor space, the value of the deck would be approximately $413.52/square foot. For a deck with the dimensions Kahn believed the deck to be (16×19) – again, Babad’s conduct made it impossible to measure it with precision – based on this methodology the market value of the deck would be $125,708.88. For a deck of the same width (19 feet) but of legal depth according to Macaluso (eight feet), the value would be $62,854.44. If outdoor space was valued equally as indoor space, these amounts would be doubled.
The Court found that part of the difficulty in isolating the market value attributable to the deck was the fact that it was destroyed by Babad. There was no certainty as to the size and shape of the deck; whether “legalization” would be required; or what impact either of those or other factors might have had on potential buyers.
Moreover, as a result of Babad’s actions, the apartment was left with a hazardous condition during the process of marketing it for sale.
Although the Trust was not able to establish the amount with precision, the Court believed based that, on the evidence, the reduction in value attributable to the destruction of the deck was at least $100,000.
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The Trust asserted claims for damages based on intentional and prima facie tort; interference to property ; trespass to chattel; conversion and destruction of property; conversion and wrongful disposal of property; and trespass.
Generally, disputes as to whether the property of one allegedly encroaches on the property of another should be resolved through the courts. Where a portion of a person’s property permanently encroaches on that of another, the law generally looks to equity for a solution. Since the preferred form of remedy for trespass and encroachment depends on the particular circumstances of a case, it should be suited to them so that the equitable relief is both realistic, and, at the same time, effective to prevent a continuing encroachment.
Babad’s resort to self-help eliminated the possibility of an orderly and equitable resolution of the dispute. Rather than seeking relief from the courts or other governmental authorities, he hired someone to demolish the deck without regard to safety or compliance with appropriate procedures for such work or to the Trust’s property rights.
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Babad committed the tort of conversion when he destroyed the deck. A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession. Two key elements of conversion are (1)a possessory right or interest in the property and (2) another’s dominion over, or interference with, the property or interference, in derogation of the other’s rights.
Here, it was undisputed that the Trust owned the deck over which Babad took dominion by destroying the deck. Whether the deck was compliant with building codes, or whether Babad could have later established in an appropriate manner a superior right to the backyard of the building, at the time of the demolition the Trust’s had a possessory right and interest in the deck that was an integral part of the dwelling.
The deck sat uninterrupted for twenty-five years. There was no credible evidence of any objections to the deck having been lodged with the Co-op board or government authorities. To the contrary, Berkowitz and the Co-op Board clearly considered the Trust to have a legitimate possessory right or interest in the deck.
Accordingly, the Court found that Babad was liable for compensatory damages arising from his conversion of the deck.
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To establish a claim for trespass to chattel, a plaintiff must show that defendant intentionally, and without justification or consent, physically interfered with the use and enjoyment of personal property in plaintiff’s possession, and that plaintiff was harmed thereby.
Babad intentionally destroyed the deck without consent from the Trust or the Co-op Board. His actions deprived the Hoffmans of the use and enjoyment of the deck, and they were harmed by those actions in that they diminished the value of the home and created a dangerous condition. As such, Babad was liable for compensatory damages arising from his trespass to chattel.
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The general rule with regard to the measure of damages in conversion is to award the value of the property at the time of conversion, together with interest. For trespass to chattel, the wronged plaintiff is entitled to the diminution of value of the chattel. In this case, these values essentially were the same.
There was no question that the demolition of the deck harmed the Trust. Although there were no physical injuries, the value of the property was diminished. Kahn testified that the apartment lost $325,000 in value from 2015 to 2018. She estimated that between $100,000 and $200,000 was attributable to the loss of the deck itself. Kahn’s second potential method of valuation (based on the relative value of interior and exterior space) suggested a loss of value between approximately $60,000 and $125,000. Babad offered no testimony in rebuttal. Taking the evidence as a whole, the Court concluded that Babad’s conduct caused $100,000 in damage to the property.
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Babad was also liable for punitive damages. Punitive damages may be awarded if a defendant purposefully causes, or is grossly indifferent to causing, injury, and are awarded to deter behavior involving moral turpitude. Whether to award punitive damages in a particular case, as well as the amount of such damages, if any, are primarily questions which reside in the sound discretion of the Court. An award of punitive damages must bear a reasonable relationship to the defendant’s culpability.
The evidence plainly established that Babad acted with malice; his actions were intentional and wrong; and he acted with willful or reckless disregard for the rights of the Hoffmans and any others who might have been physically injured by his unregulated demolition of the deck. And the Court noted that Babad undertook these actions while the Hoffmans were still grieving the death of their father.
In this case, based on the evidence, the Court concluded that it was appropriate to award punitive damages to the Trust in the amount of $100,000. Babad appealed.
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The Appeals Court found that there was no dispute that the Trust owned the deck at the back of their unit over which Babad took dominion over and destroyed, in derogation of the Hoffmans’ rights. Therefore, the record supported the Supreme Court’s finding that Babad was liable for conversion. The unrefuted evidence showed that, without the Hoffmans’ consent, Babad destroyed their deck, razing it to the ground; thus, the record supported the finding of liability for trespass to chattel.
The Court properly awarded compensatory damages for conversion and trespass to chattel based upon expert testimony as to the value of the unit at the time of the conversion and the diminution in the value after removal of the deck, respectively.
And in this unique case, the record supported the Court’s finding that, in intentionally demolishing the deck, without Board approval, building permits or insurance, and leaving a hazardous condition in his wake. Thus, Babad acted with malice and willful or reckless disregard of the Trust’s rights, warranting punitive damages.