A finding by the New York City Environmental Control Board (ECF) that a cooperative violated the Building Code may preclude the cooperative from defending against similar allegations in a civil suit, according to the court’s decision in Kosovsky v. Park South Tenants Corp., Index No. 602813/07, NYLJ 1202676834599 (Sup. Ct., N.Y. Co. Nov. 10, 2014).

 

The Cooperative undertook a construction project that included replacing roof and balcony railings, replacing terrace floors, and repairing façade and balconies. During the project, the tenant-shareholder made several complaints to the Cooperative, including that dust had infiltrated his apartment; that the work created a pervasive and offensive odor permeating his apartment; and that vibration caused by the loading and unloading of heavy materials, roof removal, and jackhammering had caused ceiling damage, cracks in his walls, and holes in his bedroom wall and window.

 

The tenant-shareholder moved out of his apartment and sued the Cooperative, among other parties. The Complaint alleged, among other things, that the Cooperative breached the proprietary lease by failing to maintain his apartment in various ways, including that the apartment suffered “cracked walls [and] holes through the bedroom wall and window” resulting from the construction.

 

Plaintiff also filed a complaint with the New York City Department of Buildings (DOB). The DOB issued a violation against the Cooperative based on a “failure to maintain” and found that the “[b]rick and stone work below [the] interior of [the] window has deteriorated and top of window is leaning outward approximately one inch in [the tenant-shareholder’s] apartment.” The Cooperative failed to cure the violation.  The ECB held a hearing, at which the Cooperative was represented by counsel, but failed to present evidence.  The ECB found that the Cooperative had violated the New York City Building Code and fined it $200.

The court then granted the tenant-shareholder partial summary judgment on his claim for breach of the proprietary lease. The court determined that the findings in the ECB’s order were binding on the Cooperative under the doctrine of collateral estoppel, which applies where an issue in a legal proceeding “was raised, necessarily denied, and material” in a prior proceeding and the party to be estopped had a full and fair opportunity to litigate the issue in the prior proceeding.  Accordingly, the Cooperative was barred from asserting that it had “properly maintained [the] brick and stone wall and the window in [p]laintiff’s apartment.”

 

In light of this decision, cooperatives and other landlords need to be mindful of the potential implications of not defending violations alleged before the ECB on the merits, even where the penalties that ECB may impose might otherwise be nominal, where an adverse ECB determination could be binding against the owner in related civil litigation.