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Perspectives

Lawsuit Against Condo Board and Its Managing Agent Is Dismissed

An action brought by a condominium unit owner against the Board of Managers and the managing agent, alleging that they improperly failed to make repairs to her unit and overcharged certain fees and penalties, was dismissed in its entirety.  Makhnevich v. Board of Managers of 2900 Ocean Condominium, 2021 N.Y. Misc. LEXIS 4082, 2021 N.Y. Slip Op. 50679(U) (Sup. Ct. N.Y. Co. July 21, 2021).  

The court first addressed the claims against the Board of Managers.  The Board asserted that the action should be dismissed because the Board was not properly served.  Plaintiff attempted service on the Board by delivering the summons and complaint to the Condominium’s managing agent.  The court held that this was improper service because General Associations Law § 13 requires that an unincorporated association be served by delivering the papers to its President or Treasurer.  The court rejected plaintiff’s argument that the Condominium was a corporation, not an unincorporated association, based on a building registration filed with the Department of Housing Preservation and Development, which referred to the Condominium as a corporation.  The court observed these registrations exist to provide contact information for owners of multiple dwellings, not to provide definitive information on an owner’s legal status, such as would be found in filings with the Secretary of State.  As in other recent court decisions addressing service of process on condominiums, the court did not discuss provisions of the Real Property Law providing for alternative means of service.

The court then turned to plaintiff’s claims against the managing agent.  Plaintiff’s first claim, for negligence, was dismissed because the managing agent was “an agent for a disclosed principal (namely the board of managers)” and thus could be liable “only for ‘affirmative acts of negligence,’ as opposed to merely failing to take action.”  An exception to this rule might apply if the managing agent was “in exclusive control of the building,” but this was not alleged.  Plaintiff’s second claim, for breach of fiduciary duty, was dismissed because the managing agent “owes a fiduciary duty only to the Board of Managers, rather than to individual unit owners with respect to their particular units.”  Plaintiff’s third claim, for breach of contract, was dismissed because plaintiff did not identify any contract between herself and the managing agent (for example, the managing agent is not a party to the Condominium’s By-Laws).  Plaintiff’s fourth claim, for fraud, was dismissed because plaintiff failed to provide particulars of any alleged misrepresentation by the managing agent.  Plaintiff’s final claim, for deceptive practices in violation of General Business Law § 349, was also dismissed because that statute prohibits fraudulent acts that “have a broader impact on consumers at large,” rather than the unit owners of a particular condominium building with respect to their individual units.