This was originally published on the SGR Blog.
Roof access and use are among the most sought after, valuable, and fiercely protected amenities of residential coop living. As a recent case illustrates, litigation can go “nuclear” when roof rights are impacted by an imposing change.
Soho Plaza is a 34-unit “pre-war” coop that installed an eight-ton central (“chiller”) air conditioning unit on the roof directly above the penthouse owned by Richard and Cecilia Burbridge– who contended that the chiller made leaks into the penthouse significantly worse.
After years of litigation, a long bench trial with numerous exhibits, multiple witnesses, including experts, and a 120-page post-trial brief, the Court addressed the questions of whether the Burbridge’s carried their burden of proving that the coop breached their roof rights because the chiller took up more than 50% of the “useable” space above their apartment.
The Burbridges, as cooperative shareholders, own a penthouse at 66 Crosby Street, comprised of units 6A and 6B. They purchased unit 6B in 1997 and 6A in 1999. At the time of the purchase of Unit 6B in 1997, the Burbridges renovated extensively. The construction lasted over a year. Those renovations included piercing the roof membrane to install a skylight and a stairway bulkhead to lead to a roof deck built over rooftop dunnage beams. The coop consented to the renovation. The Alteration Agreement between the parties made the Burbridges, as follows, solely responsible for repairs to these items:
I agree that the responsibility for maintaining and repairing all the work remains with me, including, but not limited to, the cost of removing or reinstalling all or any part of the work. I agree that I shall assume full responsibility for any equipment installed as part of the work, including, without limitation, being responsible for any and all costs related to leakage and/or seepage in my unit and/or the Adjacent Premises.
But the Department of Buildings never signed off on the deck and skylight as required. And, around the same time as the deck, bulkhead, and skylight construction, the coop replaced the roof.
There was no dispute that the penthouse apartment had a history of leaks. The Burbridges admitted that, even prior to the placement of the chiller in 2009, there were leaks “especially as sixth-floor tenants began to exercise their roof rights.” The Burbridges did not move into the apartment until the summer of 1999. By that winter, there were leaks around the bulkhead and the skylight. Due to the need to preserve the warranty on the new roof, the coop required the Burbridges to use the building’s roofer to repair those leaks. The building’s roofer coordinated with the manufacturer of the roof’s waterproofing membrane. The Burbridges paid for the repairs that were completed towards the end of 1999.
In 2008/early 2009 that leaks reappeared. Again, the leaks were repaired with the coop’s roofer coordinating with the manufacturer. The Burbridges again paid for those repairs.
Meanwhile, Soho Plaza had been exploring options to address heating, cooling, and electrical consumption in the building. Ultimately, the coop settled on a central heating/air conditioning unit because of several advantages. Those advantages included the elimination of window air conditioning units and more even heat distribution. After a Board of Director’s meeting on May 21, 2004, the building manager, Dan Dermer, sent notices to all shareholders soliciting their feedback about the installation of a chiller. Despite owning what amounted to two penthouse units, the Burbridges gave no feedback. After much deliberation, the Board, in conjunction with Steve Rowland, the building’s structural engineer, decided to place the chiller on the dunnage beam above unit 6A.
On October 30, 2007, the coop held a shareholder meeting to discuss the chiller project. Prior to that meeting, a memorandum was circulated to all shareholders. The memorandum included the following:
The Board of Directors has continued to research the installation of central air conditioning throughout 66 Crosby and 514 Broadway. The Board would like to bring together all the Shareholders of Soho Plaza Corp. on Tuesday, October 30, 2007, at 7:00 PM at the Puffin Room located at 435 Broome Street to review all of the issues related to the project. It is very important that you attend this meeting so that you are aware of the issues. If you personally cannot attend the meeting, we ask that you assign someone to attend on your behalf so they can represent your interests and understand the impact this project would have on the building and your unit.
The notice also invited questions directly to Dan Dermer. The Burbridges admitted that they received notice of the meeting but did not think it was important enough to attend or to send someone to attend for them. In addition to the notice, the coop also circulated tenant worksheets related to the chiller project. Steve Rowland personally met with Cecilia Burbridge to discuss the worksheet.
By winter 2009, after the installation of the chiller, the leaks reappeared. Richard Burbridge attempted to have the leaks fixed the same way as before (i.e., coordinating with the coop’s roofer, who would coordinate with the manufacturer). The relationship between the parties had deteriorated by this point, perhaps because the Burbridges wanted the chiller moved and believed it had been placed over 6A in derogation of their roof rights. The coop at that point determined that the Burbridges had the sole responsibility to fix the leaks but did not lift the requirement that they use the coop’s contractor. As a consequence, the Burbridges received somewhat less cooperation than they had in the past.
The Burbridges insisted throughout the litigation that the leaks they suffer were because of the chiller. They claimed loading the dunnage beam with the chiller was the straw that broke the camel’s back in that this added weight drove the dunnage beam into the skylight and caused more leaks. Their expert testified that the reinforcement of the dunnage beam cut into the skylight in an up and down fashion as the beam moved due to vibrations and temperature change. The reinforcement was placed on the dunnage beam right before the installation of the chiller. However, the reinforcement did not explain the leaks from the bulkhead. As the Burbridges admitted, “it is not easy to identify the source of the leaks.” That was unfortunate for them because they had the burden of proof.
Steve Rowland, the only person who viewed the area of the roof involved prior to the chiller’s installation, testified that the dunnage beam was touching the skylight well before the chiller ever appeared on the scene. Rowland’s report contained a picture that he took in 2007, pre-chiller, showing the skylight in contact with the dunnage beam. In addition, Rodney Gibble, the mechanical engineer for Soho Plaza, testified that the reinforcement of the beam did not cause the dunnage to deflect downwards any more than previously and that because the skylight did not “quite fit” under the dunnage beam, the flashing was cut at installation to get it to fit.
It was undisputed that the Burbridges received notice of the October 30, 2007 meeting that clearly concerned the “central air conditioning” project and contained stark warnings to attend to protect one’s rights. Yet, despite owning a two-unit penthouse apartment with a history of leaks and a roof deck, neither of the Burbridges attended the meeting. Knowing that central air conditioning would have to go on the roof, there being no other place for the chiller (even their own condenser was on the roof), the Burbridges never even asked where the building intended to place the chiller. Cecelia Burbridge did not ask when she met with Steve Rowland specifically about the worksheet related to the project. Not until the chiller was installed above their unit, at great expense to the building, did the Burbridges finally object.
Thus, the Burbridges had their own willful ignorance to blame for their alleged lack of notice about the location of the chiller. Their argument that the notice about the meeting should have been sent via registered mail elevated form over substance, especially given that: (1) the Burbridges would have been even more likely to ignore notice by registered mail than they would personal delivery; and (2) they actually did receive notice, but still decided not to attend. Thus, the Burbridges failed to demonstrate that registered mail would have made a difference. Rather, on these facts, the Court found that they turned a blind eye to any attempts to notify them as to where the coop intended to place the chiller. Their decision not to attend the meeting or not to make inquiries was completely unreasonable considering their large penthouse was directly below the roof, and they had installed a roof deck, stairs, and large skylight. Thus, the Burbridges did not carry their burden to show that the coop deprived them of a fair opportunity to review and object to the location of the chiller.
And the Court found it difficult to understand how the Burbridges suffered any damages from any failure to receive notice about the specific location of the chiller. The Board of Directors chose the location after a long, deliberative process that included experts, several bids, and plans. The Board considered alternative locations and reasonably decided that the best and most cost-effective location for the chiller was on the pre-existing dunnage above unit 6A. Not only was that location near other mechanical equipment, but it also comported with Landmark requirements. Without more, such as bad faith towards the Burbridges, the Business Judgment Rule protected the decision to place the chiller above unit 6A. The Court would not second guess that decision.
An expert testified that the added weight from the chiller that forced the dunnage beam into the skylight was not enough to overcome the coop’s showing, through Rowland’s testimony, that the skylight was already in contact with the dunnage beam before the chiller was ever installed. Also, that there were already leaks from the skylight before the advent of the chiller cut against the Burbridges’ theory. Given that they had the burden of proof, their evidence was insufficient to overcome the showing that the leaks all emanated from items the Burbridges had installed, namely the skylight, deck, and stairway bulkhead.
Moreover, if the chiller resting on the dunnage beam in turn resting on the skylight caused the leak, why were there so many more leaks than just the skylight. Why did JMA Consultants, who looked at a “water penetration problem in the Loft Bathroom” and generated a contemporaneous report back in 2009, state that:
the actual source of the water penetration cannot be determined. However, there are several inadequate flashing details beneath and surrounding the exterior [stair] landing area. Unfortunately, it is near impossible to isolate the exact source of the problem due to the raised metal deck and metal paneling, although it is clear that the source of the problem is directly related to the raised deck/areas/enclosures and the flashing/roofing system.
Thus, it was the Burbridges’ own bulkhead and deck and those items’ interaction with the flashing that was the likely source of the leaks from those areas. The Burbridges did not carry their burden to show that the added weight of the chiller caused the leaks in the apartments. In turn, the did not demonstrate that the coop: (1) neglected the roof; (2) breached its contractual and statutory duties in the construction and installation of the chiller on top of the rooftop dunnage beams; or (3) breached any fiduciary duties to the Burbridges or other shareholders with respect to fixing the leaks.
The proprietary lease stated that: “Any repairs to areas of the roof of the Building exclusively reserved for the use of a Lessee shall be repaired at the expense of such Lessee if the repairs are occasioned by the Lessee’s misuse of such areas.”
The Burbridges parsed that language to mean that, while they may have to pay for the repairs to the roof, it is up to the coop to undertake the repairs. However, they did not carry their burden to demonstrate that it was the roof that was leaking. To the contrary, the evidence at trial demonstrated that it was their own skylight, deck and bulkhead that were leaking. Those were the Burbridges’ property and their responsibility to maintain under the Alteration Agreement. Nevertheless, to the extent that they need the cooperation of the building to arrange for repairs, the building must use its best efforts to coordinate or allow the Burbridges to coordinate with the various repair contractors.
The roof rider for 6A. as follows, provided that Soho Plaza was allowed to place structures on the roof above 6A so long as 50% of the useable area remains available to the Burbridges.
Lessor reserves the right to complete construction on the roof for use by all shareholders, provided such construction shall result in at least fifty (50%) percent of the useable area over the apartment made available to Lessee as provided in this amendment.
The key term there was “useable.” The Burbridges did carry their burden to show that the chiller occupied more than 50% of the useable roof space above 6A. They demonstrated that not all the area was useable. For example, a roof deck for 6A would not be allowed to block the fire escape. Thus, certain areas around the fire escape were not “useable.” Also, the area around the chiller needed to remain free in order to service the unit. The area of the roof closest to the street slopes inward and, as a result, was also not “useable” as it was not level.
The coop’s opposition failed to take into account those particulars. Thus, they breached the terms of the roof rider that granted the Burbridges the right to have available to them 50% of the useable area over 6A. And they are entitled to money damages for that breach. However, the Burbridges were not entitled to injunctive relief to move the chiller because money damages would suffice — and they squandered their opportunity to object to the chillers location before it was installed it and moving the chiller would not be a fair expense to force on the building considering their lack of diligence.
According to the Court, the Burbridges over litigated the roof rights issue to assert additional claims for trespass and conversion. However, trespass was not applicable. It was duplicative, and the coop had a right to be on the roof to install equipment pursuant to the proprietary lease and the roof rider itself. And the conversion claim was duplicative of the breach of contract claim.
It was not the coop’s responsibility to repair the Burbridges property– so punitive damages were not appropriate. However, even if the coop had the responsibility, it would not be liable for punitive damages. Punitive damages are awarded to punish and deter behavior involving moral turpitude. Here, the coop’s conduct did not come close to that level. And the Burbridges failed to demonstrate activities directed towards the public.
The Burbridges established at trial that the noise and vibrations from the chiller interfered with their ability to fully enjoy their roof deck and that the mezzanine inside the apartment was noisy. However, they did not establish that the noise was of such a continuous decibel level or the vibrations so severe that the coop somehow breached the warranty of habitability. Moreover, the Burbridges insisted all along that the chiller should be moved. It was unreasonable to commence litigation to force a move of the chiller while at the same time expecting them to go to great expense to reduce noise levels. Those efforts would just have gone to waste had the chiller been moved. However, given that the Court was not issuing a mandatory injunction to move the chiller, the coop was required to install the noise reduction mechanism they planned to install before the Burbridges asked for an injunction.
The Burbridges were not the substantially prevailing party. Their request for attorney’s fees was denied.