Court Opinion

ID: 5706543
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:47:57.30804+00
Date Added: 2024-06-11T08:40:25.765077
License: Public Domain

Saxe, J.
(concurring in part and dissenting in part.) The
conflict between the residents of two adjacent units in a Park Avenue cooperative, both of which units have main entryways that open onto a shared vestibule, presented a unique problem for the cooperative’s board to resolve. The solution arrived at by the board was to rely upon a previously enacted house rule, modified so as to add a provision that applies solely to the vestibule in question. Because the rule the board relied upon, as applied to this situation, gives one shareholder extra benefits while depriving the other of even the ordinary benefits of coop ownership provided to every other resident, I am unable to view this resolution as reasonable.
Generally, the acts of a cooperative’s board of directors are reviewed pursuant to the business judgment rule, which “prohibits judicial inquiry into actions of corporate directors ‘taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes’ ” (Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530, 537-538 [1990], quoting Auerbach v Bennett, 47 NY2d 619, 629 [1979]). Therefore, absent a showing of bad faith, self-dealing, or some other breach of fiduciary duty, a court normally may not reach the issue of whether an act of the board is reasonable (see id. at 538-539). However, where, as here, a cooperative’s governing documents require that house rules must be reasonable, judicial review of the challenged house rule must address whether it meets the more exacting standard of reasonableness (see Ludwig v 25 Plaza Tenants Corp., 184 AD2d 623 [1992]).
The determination of a rule’s reasonableness requires consideration of its relationship to the legitimate purposes of the cooperative or condominium, and its impact on the respective parties:
“While the courts that have utilized this standard have not elaborated on its doctrinal basis, reasonableness review resembles an equity court’s balancing of the relative hardships among the parties. But, if a challenged rule bears a relationship to the legitimate purposes of the co-operative or condominium, the board’s discretion in promulgating the rule will ordinarily not be deemed arbitrary and capricious” (Garrison Apts. v Sabourin, 113 Misc 2d 674, 677 [1982] [internal quotation marks and citation omitted], quoting Note, Judicial Review of Condomin*27ium, Rulemaking, 94 Harv L Rev 647, 658 [1981] and citing Hidden Harbour Estates, Inc. v Norman, 309 So 2d 180, 181-182 [Fla 1975]).
It is therefore appropriate to consider the relative hardships the rule imposes upon the parties, as well as whether the rule bears a relationship to any legitimate purpose of the cooperative.
This Park Avenue building, the lobby of which is staffed by a doorman as well as a “hallway man” 24 hours a day, contains three lines of apartments, served by two passenger elevators located in the main lobby. The front elevator primarily serves the “A” line of apartments, which are duplex apartments that have their living quarters on their lower level and their bedrooms on the upper level. The “A” line elevator opens at each floor onto a 6-foot-by-6½-foot vestibule from which, beginning at the third floor, a door leads to each “A” line apartment’s main entryway, and another door leads to the upper level “private” rooms of the apartment below.
A separate elevator in the rear of the lobby serves the.“B” and “C” lines, and opens onto a 6-foot-by-13-foot vestibule. Some of these apartments are duplexes; others are not. So, at some floors there is only one main apartment entrance reached from the vestibule outside the elevator, while on other floors the entryways to the main living quarters of both the “B” and the “C” apartments are on opposite sides of the same vestibule.
Apartment IB differs from all the other apartments in the building. From the time of the building’s initial construction in 1928, this unit was designed for mixed professional/residential use. The first floor of this duplex unit was built as a medical or professional suite, and the second floor, connected to the first by an internal staircase, was built as an ancillary “Classic 6” residence. The professional suite was constructed so as to have its own separate entrance directly from 81st Street, while the entrance to the living quarters of the unit was reached from the vestibule at the second floor of the “A” line elevator, where the main entrance to apartment 2A is also located. Thus, 2A is unlike the remaining “A” line apartments, in that the small vestibule outside of its main entryway is also the site of the main entryway to the living quarters of another apartment, that of IB. This has been the case from the time the building was constructed.
The cooperative’s House Rule 28, as enacted in 1983, served to give primacy over vestibules to the apartment whose lower floor was located at the vestibule. The rule’s phrasing assumed *28that an apartment’s lower level contained its public rooms and its upper level contained its private rooms:
“The elevator lobby giving ingress to and egress from the lower floor of a Lessee’s apartment . . . shall be under the jurisdiction of that Tenant and may, subject to the provisions of House Rule Three, be decorated in such manner as he or she determines. The tenant shall also have responsibility for cleaning and maintaining that elevator lobby.
“An occupant of the apartment below a Tenant’s apartment . . . whose door to the upper floor of an occupant’s apartment opens on to a tenant’s lobby, shall have access through that Tenant’s lobby only for use by members of the Occupant’s immediate family. An Occupant may not, without the specific consent of the Tenant, use that door from his upper floor through the Tenant’s lobby for visitors or for any other purpose. The Occupant shall under no circumstances leave overshoes, umbrellas, packages or any other objects of the Tenant, have newspapers, mail, laundry or packages delivered through the Tenant’s lobby.”
Notably, the terms of original House Rule 28 were not quite applicable to a number of vestibules. As to those vestibules where the main entryways to both a “B” and “C” line apartment are on opposite sides of the hallway, historically, these were understood to be shared vestibules, and treated as such without incident, notwithstanding House Rule 28. The rule was similarly ill-suited to the unique arrangement of 1B/2A, since the rule clearly contemplated that the “occupants” (the resident with limited rights to use of a vestibule) had their main living quarters — and entrance — on the floor below the living quarters of the “tenant’s” apartment. But until this dispute arose, there was no suggestion that House Rule 28 applied to the 1B/2A vestibule; rather, as with the shared vestibules on the “B”/“C” line, prior residents of 2A and IB shared their vestibule without incident for decades.
Then, the Moores purchased apartment 2A in 1996 and the Brauns purchased IB in 1997. The Brauns renovated IB, with the board’s cooperation, so as to make it solely residential, replacing the medical offices on the lower level with private rooms, and leaving the main living quarters as they had been, on the upper level. Importantly, this renovation did not alter the location of the main entryway to IB’s living quarters, which had always been located at the second floor of the “A” line elevator.
*29Upon completing their renovations in March 1998, the Brauns moved in, and were surprised to discover that the Moores had, with the cooperative’s approval, redecorated the vestibule outside their front door, including repainting the Brauns’ front door to match the bland color of the service door and elevator, in contrast to the deep wood tones of the Moores’ own front door. While the Brauns attempted to assert that they had an equal right to treat the vestibule as their own, and for their front door to appear as such rather than as some sort of service door, the Moores wrote to the board, requesting that the Brauns’ use of the vestibule be sharply curtailed. In a letter dated May 28, 1998, the board advised the Moores that it saw no basis for restricting the Brauns’ access; in fact, it specified that the tenant/shareholder before the one that sold to the Brauns had used the vestibule as “a primary residential means of egress.”
Nevertheless, the dispute continued and escalated. The Moores said they had been assured before purchasing 2A that the occupants of IB had not used the vestibule as a primary entrance, and therefore it would be unfair to force them to treat it as a shared vestibule. They complained that visitors sent up to the Brauns’ apartment had by mistake entered their apartment instead. They also complained of packages and mail being left at the Brauns’ doorway, and of the Brauns’ placement of personal items such as a small umbrella stand in the vestibule. Essentially, while the Brauns insisted that the vestibule must be treated as a shared one, the Moores continued to take the position that they had primary rights to the vestibule, and that the Brauns’ street (non-lobby) entrance, rather than the second floor vestibule, must be treated as their main entrance.
Although the board had initially responded to the dispute with the assertion that the vestibule was shared and the parties must work things out, as a result of the escalating intensity of the imbroglio between the Brauns and the Moores, the board revisited the issue, and ultimately concluded that the Moores had voiced valid concerns regarding clutter, overcrowding, security and privacy. It modified House Rule 28 so as to add new restrictions on the Brauns’ use of the common vestibule. Specifically, the board added the following to House Rule 28: “With respect to the Tenant’s lobby appurtenant to Apartment 2A, the Occupant [i.e. the Brauns] may receive guests when they are personally accompanied by a member of Lessor’s staff. Lessor will provide a staff escort for Occupant’s guests at all reasonable times . . . .” Pursuant to other provisions of House Rule *3028, the Brauns were instructed that their second floor kitchen service entrance would be used for delivery of mail and packages, and was the proper location for them to store personal items.
The Brauns challenge this house rule as imposing unreasonable and unconscionable restrictions on their tenancy. They contend that as applied, the rule simply discriminates against them, taking from them rights to which they were entitled, and granting special privileges to the Moores, not for any reasonable purpose of the cooperative, but simply because that was the only way to appease the Moores.
Initially, the board’s adoption of a rule applicable to only one vestibule is not in itself unreasonable or improper. There is no requirement that a house rule must apply universally throughout the building. Such rules must only be reasonably related to their stated purpose, consistent with the law, and not destructive of any vested right (see Note, Promulgation and Enforcement of House Rules, in Symposium on the Law of Condominiums, 48 St John’s L Rev 1132, 1133 [1974]; Vernon Manor Co-op. Apts., Section I v Salatino, 15 Misc 2d 491, 494-495 [1958]). Where a dispute is particular to only certain individuals, and both parties repeatedly look to the board to resolve the dispute, the enactment of a particularized provision is proper and necessary. Here, the adoption of a modification to the prior house rule was an appropriate approach to resolving this particular conflict. The board was essentially forced to make some ruling; its initial direction that the parties work out an arrangement sharing the vestibule had no effect.
However, that a particularized resolution was necessary does not automatically render the board’s action reasonable. In my view, it was not.
The majority’s limited disapproval of the rule as modified seems to be insufficient. While I agree that the newly adopted provision requiring an escort for the Brauns’ guests is unreasonable as well as discourteous, it is just as unreasonable to give the Moores complete control of the vestibule. Most importantly, while the Moores obtained all the benefits of an exclusive vestibule in the “A” line of duplex apartments, the Brauns are relegated to second-class status that denies them the use of a front door as every other building resident understands that term.
Every other building resident has a front door recognizable as such; the Brauns’ front door has been painted to create the *31impression in the mind of visitors (or future potential purchasers) that it is a service entrance. Worse, the Moores retain total discretion over whether to alter the door’s appearance so as to acknowledge it as the Brauns’ main entry way. Additionally, everyone else is entitled to leave small personal items, such as wet shoes and umbrellas, outside their front door; the Brauns may not. All others may have their mail and packages left at their front door; the Brauns’ are left at their kitchen service entrance, near their trash cans.
Although the vestibule leading to 2A and IB is half the size of the shared vestibules in the “B”/“C” line of apartments, the same premise should be applied to it. When two units have their main entryway on one vestibule, the residents of both must be entitled to leave reasonable amounts of personal items outside their front doors as they enter, whether the space they have to use is six feet long or three feet long. In short, both front doors must be treated as front doors.
The Moores’ assertion that because IB is a “maisonette” apartment, its ground floor entrance must be viewed as its true front door, is based upon wishful thinking rather than the historical structure and use of IB. Indeed, the board acknowledges that it would be unreasonable — not to mention potentially unsafe — to require the Brauns to treat their (non-lobby) street access door, leading to what are now private rooms in the lower level of their unit, as the front door of their apartment. Yet, the cumulative effect of the board’s determination is to effectively deprive unit IB of any true front door, as that term is understood by all the other residents of this Park Avenue building.
The Moores say they were assured before they purchased their apartment that the vestibule primarily served apartment 2A, and was merely a secondary doorway for IB. It appears that the board fostered that belief by approving the Moores’ decoration plans for the vestibule, which plans asserted complete dominion over the vestibule and were designed to create the impression that only one of the two apartments had its front door there. Despite the board’s approval and the Moores’ misapprehension, it was nevertheless unreasonable for the board to have resolved the dispute so as to allow the Moores such total dominion over the shared vestibule, at the expense of the Brauns’ basic rights, especially the right to a true front door.
The board’s answer to the dispute was more than merely imperfect; it was so unbalanced as to be unfair. Ending a dispute, as useful and necessary as that may be, is not legiti*32mate if accomplished by appeasing one shareholder and imposing extraordinary restrictions on another. The application of the house rule here fails to meet the reasonableness standard that rules in this cooperative must satisfy, and should be rejected.
Finally, we note that on appeal the Brauns failed to address the trial court’s finding that because neither they nor the Moores are a “prevailing party” in this matter, the cooperative is not responsible for the attorneys’ fees of either. Accordingly, any such claim must be deemed abandoned. In any event, because the Brauns, in effect, merely sought a declaration as to their rights under the proprietary lease, they are not entitled to attorneys’ fees under the lease (see Salvato v St. David’s School, 307 AD2d 812 [2003]; Spinale v 10 W. 66th St. Corp., 193 AD2d 431 [1993]).
Mazzarelli and Williams, JJ., concur with Buckley, P.J.; Anurias and Saxe, JJ., concur in part and dissent in part in a separate opinion by Saxe, J.
Judgment, Supreme Court, New York County, entered June 29, 2004, reversed, on the law and the facts, without costs, the complaint reinstated and an amended judgment entered, declaring that that portion of the house rule pertaining to visitors is unreasonable. Appeal from order, same court, entered August 28, 2003, dismissed, without costs.