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Cooperative Shareholder May Not Sue to Enforce Proprietary Lease Provisions Against Another Shareholder

One tenant-shareholder in a cooperative does not have standing to enforce the terms of another tenant-shareholder’s proprietary lease.   Ran v. Weiner, 2019 N.Y. App. Div. LEXIS 1511, 2019 N.Y. Slip Op. 1530 (1st Dep’t Mar. 5, 2019).  This case involved property damage caused by a leak in the defendant tenant-shareholder’s apartment, directly above plaintiff’s apartment.  Much of the damage that plaintiff suffered was covered by insurance, and plaintiff sued for the balance.  The defendant tenant-shareholder was a party to a proprietary lease with the Cooperative, which incorporated the house rules, one of which provided that “[d]amage caused by any water leakage is the responsibility of the Lessee in whose floor the leak originated.”

Although plaintiff is not a party to defendant’s proprietary lease, she asserted standing to enforce it as an intended third-party beneficiary.  Disagreeing, the court concluded that “the proprietary lease and the house rules incorporated therein establish conclusively that plaintiff is not a third-party beneficiary of [defendant’s] lease” with the Cooperative.  The only party entitled to enforce the proprietary lease would be the Cooperative.

Plaintiff also sued the Cooperative itself for its failure to enforce the terms of the defendant tenant-shareholder’s proprietary lease.  However, section 11 of the proprietary lease provided that “[t]he Lessor [the Cooperative] shall not be responsible to the Lessee for the nonobservance or violation of House Rules by any other Lessee or person.”  Thus, the claim against the Cooperative was also dismissed.  The court did not address any other claims that plaintiff could have sought to assert against the other shareholder or the Cooperative.