Adam Leitman Bailey, P.C. Wins Unprecedented Motion to Dismiss Affirming that Condominium Garage and Commercial Unit Owners Must Pay Their Fair of Share Local Law 11 Work on any Portion of a Condominium’s Façade
As an unruly commercial condominium unit owner recently learned the hard way, an excellent real estate attorney is a Condominium Board’s best friend, especially when a unit owner refuses to pay its fair share of common charges and assessments for work on the Building’s common elements. Adam Leitman Bailey, P.C. is counsel many of New York’s most prominent residential and commercial buildings, including a a 20-story condominium on Manhattan’s Upper East Side that contains residential units, a commercial unit, and a garage, all of which share a common façade. Under New York’s infamous Local Law 11 (“LL11”), all buildings must undergo period inspections and repairs to their facades to, among other reasons, prevent injuries from insecure façade elements that may fall to the ground (which is responsible for much of the scaffolding constantly surround older New York buildings).
It is a fundamental aspect of condo life in New York that LL11 work is authorized by the condo’s Board of Directors and then typically billed out as a common charge or special assessment to individual unit owners in accordance with their ownership percentages in the condominium. For years, the garage unit owner in our client’s condominium paid its proportionate share of approximately of 2.7% of every LL11 charge. However, without any change in circumstance, it suddenly decided even that was too much; and it refused to pay for common charges related to any further LL11 façade work – which every other shareholder continued to pay without dispute – asserting that the largely underground garage was not responsible for the façade that primarily surrounded the other, above-ground, unit owners.
The Board engaged Adam Leitman Bailey, P.C, which immediately recognized that, although the amount in controversy were not enormous, the costs over time would quickly mount, it would set an incredibly dangerous precedent for the building – and other similarly situated buildings – if the garage owner was able to avoid rightfully assessed common charges for city-mandated repairs. When Adam Leitman Bailey, P.C. and the Board refused to acquiesce, the garage sued the Board in New York state Supreme Court, seeking, among other things, a declaration that they should never have to pay for LL11 charges and their past payments should all be refunded. However, Adam Leitman Bailey, P.C. had not one, but two aces in its pocket: (1) a damning precedential decision in which the Appellate Division, First Department had already determined that the commercial unit owner in the very same Condominium – was required to pay its fair share of LL11-related common charges; and (2) intricate insider knowledge from our team of real estate experts of the ways that LL11 and the very definition of a building’s ”façade” intentionally dovetail with the most common Cooperative declaration terms, including those in this Condominium’s governing documents.
In order to try to minimize costs to the Board from a motion to dismiss – and in the hopes that the garage would see the folly of pursuing its implausible claims, and settle the matter without further costs – Adam Leitman Bailey, P.C. filed a detailed answer including in-depth analysis of the prior First Department opinion and the Condominium’s governing documents. However, when the garage doubled down and amended its complaint to claim that the Board – and all other Unit Owners — should now pay for repairs wholly within the garage while the garage still refused to pay for repairs to the common façade, enough was enough; and Adam Leitman Bailey, P.C. moved to dismiss the entire complaint and force the garage to pay all of the Board’s legal fees related to the garage’s frivolous litigation.
In typical fashion, Adam Leitman Bailey, P.C.’s team presented a multi-prong attack, including a meticulously detailed analysis including (i) why the Condominium’s governing documents’ requirement that every unit owner pay its fair share of common charges specifically applied to repairs to a common item, like a facade that surrounded or benefitted more than one unit and was necessary for, among other things, the safety of the entire building; (ii) how clauses in those same documents granting certain easements for the use by the garage of portions of the façade implicitly recognized it as a common element; (iii) the interplay between LL11 and the New York City Department of Building’s definition of a façade as encompassing the entire exterior walls of a building; (iv) the binding precedent already set by the First Department’s decision concerning the commercial unit owner’s responsibility to pay its share of LL11 work at this Condominium; and (v) that, under New York’s Voluntary Payment Doctrine, the garage’s prior payments without protest for LL11 work waived any claims to such payments.
From any perspective, these arguments should have prompted the garage to explore settlement, but it refused to cede any ground. In mid-November, the Court held oral argument; and, in a turnaround without precedent, the very next day, and in language largely mirroring Adam Leitman Bailey, P.C’s arguments, the Court dismissed each and every one of Plaintiff’s LL11 claims, held that the façade is a common element of the condominium, and ordered that the garage must pay its fair share of all LL11 charges now and in the future. This decision is particularly significant for Condominium Boards throughout the City because it affirms, once and for all, that costs to maintain Condominium building facades – and, by extrapolation, other similar common elements — must be shared by each and every unit owner, regardless of size or location; and, with able Board counsel like Adam Leitman Bailey, P.C. in place, any Unit owner that protests such charges faces the likely risk of paying the Board’s legal fees when they inevitably lose.
Eric S. Askanase, Courtney J. Lerias, and Caleb J. Brown of Adam Leitman Bailey, P.C.’s New York Supreme Court Litigation Group secured this unprecedented result for this Board.