40 West 67th Street v. Pullman

Saxe, J.

(dissenting.) To the cooperative shareholders of 40 West 67th Street in New York City, defendant David Pullman, the proprietary lessee of apartment 7B, is a difficult tenant, so difficult that the shareholders of his co-op by resolution voted to terminate his lease and seek his ouster from possession. The propriety of this termination is the subject of this appeal.

The story of the relationship between Mr. Pullman and the plaintiff cooperative corporation is one of accusations, recriminations and, not surprisingly, litigation. Problems began soon after Mr. Pullman moved into his apartment, when he began to complain of unreasonable noise coming from apartment 8B, immediately above his, in the form of excessively loud footsteps, stereo and television sound. His subsequent complaints included a claim of an illegal book binding business being run out of 8B, and another that toxic and flammable chemicals were being stored there. He complained first to the managing agent, but was dissatisfied with the responses he received— that 8B had been inspected and there was no evidence of any illegal business being conducted there, nor was there a lack of bedroom carpeting as he had claimed. Pullman thereafter ad*130dressed his complaints of unreasonable noise to the cooperative board’s president, but was not satisfied with the response. Failing to resolve his complaints, Pullman commenced four lawsuits against the cooperative corporation, its managing agent, its president, and his upstairs neighbors. He also circulated flyers to building residents complaining of his treatment and of other perceived misconduct. In addition, he claimed that in an altercation with his upstairs neighbor, he was physically assaulted, resulting in his neighbor’s arrest.

The proprietary lease between the cooperative corporation and Pullman contains a provision allowing for termination of the lease upon the occurrence of specified events:

“If, upon, or at any time after the happening of any of the events mentioned in subdivisions (a) to (g) * * * the Lessor shall give to the Lessee a notice stating that the term hereof will expire on a date at least thirty days thereafter, * * * this lease shall expire on the date fixed in the notice, it being the intention of the parties hereto to create hereby a conditional limitation, and it shall thereupon be lawful for the Lessor to reenter the apartment and to remove all persons and personal property therefrom, either by summary dispossess proceedings, or by any suitable action or proceeding at law or in equity, or by force or otherwise, and to repossess the apartment in its former estate as if this lease had not been made; * * *
“(f) if at any time the Lessor shall determine, upon the affirmative vote of * * * at least two-thirds of * * * [the proprietary lessees] at a meeting of such stockholders duly called to take action on the subject, that because of objectionable conduct on the part of the Lessee, * * * the tenancy of the Lessee is undesirable * * *.”

Pursuant to this provision, plaintiff cooperative called a special meeting of shareholders and held a vote at which over two thirds of the other proprietary lessees concluded that Pullman had engaged in objectionable conduct and therefore his tenancy was undesirable. A notice was then sent to Pullman terminating his lease as of August 31, 2000 and asking him to surrender his apartment by that date. Thereafter, following his failure to do so, the co-op corporation brought this ejectment action in the Supreme Court on the ground that Mr. Pullman’s *131proprietary lease had been terminated due to bis pattern of objectionable conduct.

Defendant sought dismissal pursuant to CPLR 3211 for failure of the co-op to comply with the directives of RPAPL 711 (1), and plaintiff cooperative corporation cross-moved for summary judgment under CPLR 3211 (c) on its ejectment claim, relying on the standard of review established for the decisions and conduct of a co-op’s board of directors in Matter of Levandusky v One Fifth Ave. Apt. Corp. (75 NY2d 530).

The IAS court granted defendant’s motion to dismiss only as to the cause of action based upon the business judgment rule, and denied summary judgment to plaintiff on its remaining causes of action.

I would affirm the order on appeal, dismissing the cause of action that relies upon application of the business judgment rule, and leaving the remainder of plaintiffs causes of action to be decided at trial. In my view, the motion court properly held that the Levandusky rule is inapplicable in these circumstances, and that the co-op corporation has the obligation to demonstrate its entitlement to possession of the apartment by proving to the satisfaction of the court that the lessee had engaged in objectionable conduct. Moreover, based upon an examination of this record, I would hold that material issues of fact exist, precluding the grant of summary judgment. Application of Matter of Levandusky v One Fifth Ave. Apt. Corp.

I respectfully disagree with the position taken by the majority, namely, that application of the rule enunciated in Matter of Levandusky v One Fifth Ave. Apt. Corp. (75 NY2d 530) precludes the court from considering the evidence and determining independently whether the plaintiff co-op corporation has established the right to eject the proprietary lessee from his home on grounds of objectionable conduct. I suggest that the proprietary lessee, like any other tenant, is entitled to judicial scrutiny of the basis of the ejectment sought against this allegedly undesirable tenant (see, RPAPL 711 [1]).

In Levandusky (supra), a residential cooperative corporation sought to enforce its determination prohibiting a proprietary lessee from realigning the steam riser in his kitchen as part of his renovation plans. The Court explained that such a board must be given broad leeway in order to enable it to manage the day-to-day affairs of the cooperative, to make business and financial decisions, to make and enforce building policy, and to promulgate house rules and regulations, for the benefit of its *132residents as a whole (id. at 536-537). Focusing on the most appropriate standard of court review for challenges by tenant-shareholders to the actions of cooperative boards, the Court held that:

“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. Stated somewhat differently, unless a resident challenging the board’s action is able to demonstrate a breach of this duty, judicial review is not available” (id. at 538).

Therefore, when tenant-shareholders challenge the business and financial decisions of a cooperative board, under Levandusky, the board will not be required to prove in court the reasonableness of its actions unless the tenant shows that (1) the board was acting other than to further the interests of the corporation, (2) the action taken by the board was outside the scope of its authority, or (3) the board was acting in bad faith (id.).

The types of disputes to which Levandusky has generally been applied have usually involved shareholder challenges to board decisions regarding management of the building and the enactment and enforcement of house rules (see, e.g., Katz v 215 W. 91st St. Corp., 215 AD2d 265 [restrictions of placement of planters on roofl; Nuzzo v Board of Mgrs. of Jefferson Vil. Condominium No. 1, 228 AD2d 568 [motorcycle ban within condominium development]; Longo v Town 'N Harbor Owners Corp., 180 AD2d 779, lv dismissed 80 NY2d 924 [dumpster placed near proprietary lessee’s apartment]; Rubinstein v 242 Apt. Corp., 189 AD2d 685 [common usage of roof garden expanded]). It has also been applied regularly with regard to decisions rejecting prospective apartment purchasers (see, e.g., Cooper v Greenbriar Owners Corp., 239 AD2d 311; Simpson v Berkley Owner’s Corp., 213 AD2d 207).

The foregoing types of day-to-day business or financial decisions are qualitatively different from a decision to evict a tenant-shareholder from his home. While it is eminently reasonable to impose Levandusky’s severely limited form of judicial review upon co-op shareholders’ challenges to business decisions by their elected boards of directors, this limited type of review is simply too narrow a prism to protect tenants against the loss of their homes. While the ordinary management decisions of a co-op board may result in some sort of negative impact upon an individual tenancy, they cannot compare *133to the loss of a person’s home. Nor may we equate a board’s decision to reject a proposed purchaser with an eviction of a present tenant; a proposed purchaser has no present possessory interest in the property, and is merely being prevented from obtaining it.

However, it is not merely on policy grounds that we should require a co-op board to offer evidence in court proving the allegations that formed the predicate for the proceeding before permitting it to evict an allegedly undesirable tenant-shareholder. It is also because the Levandusky rule, which provides co-op boards with the broadest possible leeway to manage their property without undue interference, must yield to a statute which specifically controls the actions of a co-op board in a particular circumstance. Notably, despite the apparent breadth of the Levandusky rule, it has never been used to permit a co-op board to avoid the application of an otherwise applicable statute. Its intended application is in regard to the types of actions by cooperative boards that are not controlled by statute.

It would violate both law and logic to allow a co-op board to use Levandusky as a shield to avoid a shareholder’s challenge if that challenge was based upon an alleged violation of law. For example, if a co-op board should decide to undertake some form of construction on its property in violation of applicable building codes or zoning laws, it is readily apparent that a tenant-shareholder would not be prevented by the Levandusky rule from challenging such planned construction on the ground that it was illegal. Indeed, some might argue that such actions should be considered to be outside the scope of the board’s authority, because a board cannot have the authority to act illegally.

If we were merely presented with a claim that the cooperative corporation failed to follow the agreed-upon procedures for termination, namely, the board’s calling a meeting, presenting its position to the tenants, and conducting a shareholder vote, Levandusky would indeed apply to any challenge that the board had conducted itself improperly, absent a showing of bad faith or discrimination (see, Sirianni v Rafaloff, 284 AD2d 447, 448; Cannon Point N. v Abeles, 160 Misc 2d 30, 31). However, this is an action to recover possession of Pullman’s apartment.

“The relationship between a shareholder-tenant and the cooperative is that of landlord and tenant” (1 Dolan, Rasch’s Landlord and Tenant — Summary Proceedings § 4:26, at 197 [4th ed]). Once the corporation, in the position of landlord, *134proceeds to seek a court order ejecting the proprietary lessee from his home, the rights and obligations of the parties are dictated by statute, and the lessee, like any other tenant, is entitled to the statutory protections designed to ensure that an assertedly objectionable tenant is not ejected from his home without a court’s review of the evidence. The protections provided by law to tenants facing eviction must apply with equal force whether the tenant is a renter or a proprietary lessee of a cooperative apartment.

Applicability of RPAPL 711 (1)

The articles of the RPAPL that provide for recovering possession of real property (see generally, RPAPL arts 6, 7) reflect the recognition that our law must protect tenants’ rights as well as the rights of property owners. These statutes provide for the simplest possible means by which landlords may regain possession of property wrongfully held by a tenant (see, New York Univ. v Farkas, 121 Misc 2d 643), while at the same time protecting tenants who are peaceably in possession of real property from unilateral entry by the landlord to retake possession (see, DeGraffe, The Development of Unlawful Evictions and Tenant Remedies for Injurious Conduct in New York, 41 Syracuse L Rev 1179, 1181).

Depending upon the provisions of the parties’ lease, a lessor seeking to recover possession of property may be entitled to proceed by summary holdover proceeding, such as where a tenant remains in possession of premises following the expiration or automatic termination of his lease term resulting from an occurrence set forth in a conditional limitation; or, if circumstances do not warrant treating the tenant as holding over past the expiration or automatic termination of the lease, the lessor must commence an ejectment action in the Supreme Court (see, Perrotta v Western Regional Off-Track Betting Corp., 98 AD2d 1, 2, 5; see generally, 2 Dolan, Rasch’s Landlord and Tenant — Summary Proceedings § 23:28 [4th ed]). In this instance, whether for a perceived strategic advantage or otherwise, plaintiff proceeded by an ejectment action rather than by summary holdover proceeding. In any event, however, plaintiffs legal position is the same either way: the lease term was terminated simply by the shareholders’ vote deeming Pullman an undesirable tenant and the subsequent 30-day notice sent to him pursuant to that vote.

Notwithstanding the form and setting of the present action, the dictates of RPAPL 711 (1) are directly applicable to these circumstances. The language of the statute provides in relevant part that:

*135“[a] proceeding seeking to recover possession of real property by reason of the termination of the term fixed in the lease pursuant to a provision contained therein giving the landlord the right to terminate the time fixed for occupancy under such agreement if he deem the tenant objectionable, shall not be maintainable unless the landlord shall by competent evidence establish to the satisfaction of the court that the tenant is objectionable” (emphasis added).

Although the statute specifically applies to summary holdover proceedings, I agree with the motion court that it must apply to an ejectment action as well. If the cooperative corporation would be required to comply with the dictates of RPAPL 711 (1) in the context of a summary holdover proceeding, it should not be permitted to avoid those requirements by proceeding in the nonsummary, less streamlined context of a common-law ejectment action.

The cooperative corporation stands in the exact position contemplated by the statute: that of a landlord “seeking to recover possession of real property,” having terminated the lease after deeming the tenant “objectionable.” From the language of section 711 (1), and in accordance with its underlying policy of having a court ensure that a claim of objectionable conduct is established by competent evidence, the statute’s protections must be applied in an ejectment action as well as in a summary holdover proceeding. The form of the lawsuit should not determine whether a proprietary lessee may be evicted based solely upon a resolution of shareholders. Indeed, plaintiff has not disputed that aspect of the motion court’s holding.

If RPAPL 711 (1) must apply regardless of the form of the action against an objectionable tenant, the only possible grounds for declining to apply it to the present action would be either that the Levandusky rule somehow “overruled” the statute, or that by signing the proprietary lease the lessee waived the statute’s protections. Yet, neither of these approaches provides a viable basis for disregarding the statute.

There can be no waiver of a statutory protection without a clear, unequivocal, and deliberate acknowledgment that this particular protection is known and that its relinquishment is intentional (see, City of New York v State of New York, 40 NY2d 659, 669; Matter of Civil Serv. Empls. Assn. v Newman, 88 AD2d 685, 685-686, affd 61 NY2d 1001; Matter of Columbus Park Corp. v Department of Hous. Preservation & Dev. of City of N.Y., 170 AD2d 145, 149, revd on other grounds 80 NY2d *13619). And, a ruling by the Court of Appeals regarding a standard of review of corporate decision-making simply may not be relied upon to eliminate the applicability of a statute that would otherwise apply.

The majority glosses over the glaring applicability of RPAPL 711 (1) by stating that the vote of the supermajority is “the functional equivalent of ‘competent evidence [which would] establish to the satisfaction of the court that the tenant is objectionable’ (see, RPAPL 711 [1]).” Under this view, once the supermajority of shareholders has spoken, there is nothing left for the court to do but rubber-stamp that decision. But, of course, that is not what RPAPL 711 (1) says or requires.

Applying RPAPL 711 (1) to this ejectment action requires that the plaintiff present competent evidence, as opposed to its mere conclusion, establishing to the satisfaction of the court that the tenant is objectionable (see, Brisbane House v Sims, 122 Misc 2d 46; Adams Hotel Owners v Wolf, 64 Misc 2d 614). The question is not whether the conclusion was arrived at by the proper employment of the requisite procedures; that the board handled the process properly is unassailable at this time. However, the conclusion the cooperative corporation arrived at by shareholder vote as to Pullman’s undesirability as a tenant is merely the equivalent of a unilateral assessment by an individual landlord that a particular tenant is objectionable. The question for the court to answer is whether the cooperative corporation, as lessor, having come to that conclusion, is now able to establish that fact before the court by competent evidence, just as would any lessor seeking to oust a tenant it found to be objectionable.

For all the foregoing reasons, in my view Levandusky cannot be relied upon to definitively establish the cooperative corporation’s entitlement to recover possession of Pullman’s apartment without the in-court evidentiary review contemplated by statute.

This does not mean the co-op is prevented from ridding itself of objectionable tenants or objectionable activity. It merely requires the cooperative to follow the steps set out in the law to accomplish its purpose.

Summary Judgment

In concluding that summary judgment should be denied in this instance, I do not suggest that the showing made by plaintiff corporation is insufficient as a prima facie showing entitling it to judgment. In contrast to such cases as Douglas *137L. Elliman & Co. v Karlsen (59 Misc 2d 243), the cooperative has made a sufficient showing that Pullman had engaged in objectionable conduct. However, Pullman’s submissions create issues of fact as to whether his increasingly disputatious conduct was the result of, and made necessary by, the cooperative’s complete failure to take reasonable action to respond to his legitimate complaints regarding unreasonable noise in the apartment above his.

With his own affidavit as well as that of an expert in the area of acoustics, Pullman has shown that the noises emanating from apartment 8B, directly above Pullman’s, comprised of banging and rolling sounds and excessively loud footsteps, were measured at the rate of 58 to 66 decibels, which he states is well in excess of the 45-decibel maximum set by city regulation for low-frequency sounds such as those heard. The expert expressed the view that these noises, as measured, are per se unreasonable under Administrative Code of the City of New York § 24-218. He also explained that a sound level of 66 decibels is subjectively experienced as approximately four times as loud as the maximum decibel level set forth in the Code specification. Finally, he explained several reasons why the mitigating measure offered by the Board, namely blowing foam insulation into the ceiling above Pullman’s apartment, would merely transform the booming sounds into thudding sounds, and would cause other disadvantages to Pullman as well.

While a reading of the escalating dispute between Pullman and the board seems to raise serious questions as to the propriety of his conduct at the cooperative, it appears, upon more careful scrutiny, that there was a factual predicate to his noise complaints. Accordingly, it is my belief that the view espoused by my colleagues here, that Pullman’s responsive conduct was so unreasonable as to warrant, as a matter of law, summary judgment on the objectionability of his conduct, resulting in the termination of his tenancy, is not only unfair but wrong. Put another way, whether his conduct was a reasonable response to his experience with excessive noise and the cooperative’s failure to come up with a workable solution presents a question of fact necessitating a trial, as the motion court concluded.

For the foregoing reasons, I would affirm the dismissal of the first cause of action and the denial of summary judgment.

Sullivan and Friedman, JJ., concur with Mazzarelli, J.P.; Saxe and Wallach, JJ., dissent in a separate opinion by Saxe, J.

*138Order, Supreme Court, New York County, entered July 12, 2001, modified, on the law, to grant plaintiff summary judgment on its first, third, fourth and fifth causes of action, to remand for a hearing on use and occupancy, legal fees and costs, to dismiss plaintiffs second cause of action, and otherwise affirmed, without costs.