A fire took place in a condominium unit. The Board of Managers asked the unit owner to provide access to the unit to make necessary repairs, but the unit owner refused to grant access. The Board of Managers sued for a court order permitting access, which the court granted. The Board then filed a lien against the unit owner’s unit to recover the legal fees it incurred in this litigation.
The unit owner moved for sanctions against the Board of Managers, asserting that it had engaged in “frivolous conduct” in the litigation in violation of Court Rules. The alleged frivolous conduct consisted of the Board’s contention that it was authorized to assert a lien against the unit to recover the Board’s legal expenses in the litigation that it brought to compel access. The relevant By-Law provision provided that a unit owner’s violation of the rules and regulations adopted by the Board of Managers, or of the By-Laws or the Condominium Declaration, shall give the Board of Managers the right to enter the unit for the purpose of curing the breach, or “to enjoin, abate or remedy by appropriate legal proceedings, either at law or in equity, the continuance of any such breach.” The unit owner emphasized that the only By-Law provision allowing for the recovery of legal fees related to non-payment of common charges, not to disputes regarding access.
The court denied the motion for sanctions. “Although the parties disagree over the meaning of these bylaw provisions, disagreement is not a basis for sanctions. [The Board] has presented a rational interpretation of the bylaws that permits it to assert these liens – that it was forced to bring a lawsuit to comply with its obligations under a bylaw provision that states that such acts would be at the expense of the defaulting Unit Owner. Whether [the Condominium] ultimately prevails on this theory is immaterial – [it] need not win on this point in order to avoid sanctions. . . . Courts do not sanction parties, even if a party’s argument ultimately fails, simply because one party does not like another party’s position.” Board of Managers of 1255 Fifth Condominium v. Foschi, Index No. 653512/2012, NYLJ 1202796730471 (Sup. Ct. N.Y. Co. Aug. 8, 2017).
This case is a reminder that boards may wish to review the legal fee provisions of their governing documents to ensure that they broadly cover any situation in which the Condominium or Cooperative is forced to incur legal fees in a dispute with a unit owner or tenant-shareholder, whether arising due to breach of the governing documents, or in a dispute between the unit owner or tenant-shareholder and a third party.