Commercial Unit Owner Awarded Summary Judgment on Claims Against Residential Board of Directors
By contrast, the court in Ripley LLC v. Board of Mgrs. of Avery Condominium, 2017 N.Y. Misc. LEXIS 438, 2017 N.Y. Slip Op. 30240(U) (Sup. Ct. N.Y. Co. Feb. 3, 2017), held that the short four-month Article 78 statute of limitations did not apply to a unit owner’s claims that a Condominium Board of Managers was improperly composed under the By-Laws and that the amounts billed to the unit owner for maintenance were excessive, also allegedly in violation of the By-Laws.
The Condominium in this case included both residential and non-residential units. The By-Laws provided for establishment of separate Residential and Non-Residential Boards of Managers, as well as a combined Board of Managers comprising five residential and two non-residential representatives. Nonetheless, since 2009 the Condominium Board consisted solely of the five residential members.
After one of the commercial unit owners purchased its unit, a series of disputes arose between that unit owner and the Board of Managers. Among other things, the commercial unit owner asserted that its maintenance charges were too high and included categories of expenses that were invalid under the By-Laws. The unit owner deposited its maintenance payments into an escrow account. The unit owner then sued the Board of Managers on a series of claims and sought, among other things, an order invalidating the maintenance charges and an injunction mandating election of non-residential board representatives.
The Condominium moved to dismiss plaintiff’s claims as time-barred under the four-month Article 78 statute of limitations. The court rejected plaintiff’s contention that the four-month limitations period applies only to cooperatives and not to condominiums. However, the court concluded that in this case, Article 78 did not provide the exclusive basis for plaintiff’s claims because “the relief sought … is not merely ‘ministerial.’” In addition, Article 78 was not the exclusive remedy for plaintiff’s contention that the Board of Managers had violated the By-Laws with respect to its composition and maintenance calculations. The court granted plaintiff summary judgment on its claim that the Board of Managers was invalidly composed and that non-residential members must be elected.
The Herriott and Ripley cases, which were decided by different judges of the same court in the same week, reflect uncertainty regarding when challenges to actions by cooperatives and condominiums are governed by the four-month Article 78 statute of limitations, rather than much longer limitations periods that might otherwise apply. Moreover, when the four-month limitations period applies, it will often begin to run on the date that a disputed action is taken (e.g., when a By-Law amendment is adopted), rather than on the much later date when the action directly affects the plaintiff (e.g., when plaintiff’s sale of her apartment is disapproved). As a result, a shareholder or unit owner who believes that a Board decision is improper would be well-advised to pursue his or her legal remedies promptly or else risk being unable to pursue them at all.
Another aspect of the Herriott decision concerned plaintiff’s claim that it had been denied access to the meter room of the Condominium’s building, so that plaintiff was unable to turn on electrical service to its unit and operate its business. The Condominium had insisted that access to the meter room would be provided only in connection with a global settlement of the parties’ disputes and plaintiff’s payment of its back maintenance. The court held that the denial of access to the meter room violated Real Property Actions and Proceedings Law section 853, which forbids forcible or unlawful denial of access to real property. Although this provision is usually applied in the context of landlord-tenant relationships, the court held that it is not limited to that context and may be applied to co-owners, such as condominium owners, as well.