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Matter of Cohan v Board of Directors of 700 Shore Road Waters Edge, Inc. 2011 NY Slip Op 31857(U) June 27, 2011 Supreme Court, Nassau County Docket Number: 18310/10 Judge: Karen V. Murphy Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication.

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Short Form Order

SUPREME COURT - STATE OF NEW YORK TRIAL TERM. PART 15 NASSAU COUNTY
PRESENT:
Honorable Karen

Murphv Justice of the Supreme Court
JI

In the matter of: .
The Application of MARLA COHAN,
Petitioner(s ),
Index No. 18310/10

Motion Submitted: 3/22/11 Motion Sequence: 001, 002

For a Judgment under Article 78 of the Civil Practice

Law and Rules,

-againstTHE BOARD OF DIRECTORS OF 700 SHORE ROAD WATERS EDGE, INC, JEFFREY S. GOLDSTEIN a/l(/a JEFF GOLDSTEIN, individually and as President of THE BOARD OF DIRECTORS OF 700 SHORE WATERS EDGE, INC.,
Respondent(s).

The following papers read on this motion:
Notice of Motion/Order to Show Cause...o..o...o...o..o...... Answering Papers.... 0....... 0'''" ....... ........ 0.. ... 0"" ......... 0" .
Reply 0"'0""'0'" ...... 0.0..0.0"" 0'0'" 0""" 0" 0.. 0 ".0.0.. 0"'" 0"" 0.0.00 o Briefs: Plaintiff s/Petitioner ' so... O' 0 0""" 0.0.. 0" 0"'00' 0....... O' o

Defendant' s/Respondent'

so. o. 0 0...0... 00.. 0 0

0... 0'0"

O' 0'0 o

Petitioner moves this Court by order to show cause for an Order , pursuant to Article , directing respondents to rescind its determination to impose a sublet fine upon petitioner pennanently enjoining respondents from making any future determination regarding the alleged subtenant and imposing additional monthly fines , permanently enjoining respondents

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from taking action against petitioner for an alleged noise nuisance, and awarding petitioner
punitive damages , costs , and disbursements , including reasonable attorney

fees.

Respondent cross-moves to dismiss the petition , and for an Order awarding respondents the sublet fine , and attorney s fees.

Petitioner is the owner of a certain number of shares in respondent 700 Shore Road Waters Edge , Inc. cooperative corporation (" the cooperative ), and a tenant pursuant to a proprietary lease for Apartment 5N located at the cooperative. Petitioner purchased the shares and became a tenant at the cooperative in February 2002. Respondent Goldstein the cooperative Board' s president , having been elected to that positioh for the past eighteen

(18) years.
In or about late 2009 , two issues were raised with respect to petitioner and her
One issue concerned the fact that it was alleged by respondents that she was no longer residing in the apartment , but that another individual was residing
occupancy ofthe apartment.

therein as an alleged ilegal subtenant. The other issue concerned noise emanating from
petitioner s apartment about which complaints were made by at least one neighbor residing in the apartment above petitioner

Petitioner claims that respondents acted in bad faith and " beyond the scope of (the Board' s) authority " in imposing the $3 000 sublet fine because the individual residing in her apartment with her is her sister , which is allowed by the proprietary lease. Petitioner also contends that she resides in the apartment on a full- time basis. Petitioner asserts that the sublet fine was imposed in the absence of respondents ' ability to fine her for the alleged noise nuisance; thus , defendant Board' s actions are alleged to be in violation of the " business
judgment rule.
On the cross-motion , respondents have submitted
inter alia

affidavits from

respondent Goldstein , Danny Foceri , vice president of respondent Board , and from the

tenants above and below petitioner s apartment regarding the alleged noise nuisance. Respondents contend that they did not violate the " business judgment rule " and that the fine was a proper exercise of the Board' s authority, pursuant to an enforceable house rule. In addition , respondents state that they attempted to contact petitioner for a period of approximately six months in order to investigate the occupancy and noise issues , but that petitioner did not respond until advised that the $3 000 fine would be imposed. Respondents further state that the decision to finc petitioner was made by the Board as a group, during a
Board meeting, I and that the Board has never met regarding the noise nuisance issue in this

case.

Respondents have not provided the minutes of that meeting.

" "

. . .

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It is undisputed that petitioner and her attorney met with respondent Goldstein prior to the bringing of this petition in an attempt to resolve the issues herein presented, but that such meeting was not productive because of petitioner s " reaction " which " was the result of a buildup of frustration and resentment onher part to what she regards as unfair criticism and treatment directed toward her (and her mother and sister) over a long period of time regarding the noise issue. ,,2

Services of Nassau County,

At the outset , the Court finds that the facts in this case are so fully presented in the papers of the respective parties that an answer to the petition does not need to be submitted by respondents , and that no prejudice wil result (Matter of Nassau BOCES Central Council of Teachers v. Board of Cooperative Educational 63 N. 2d 100 , 102 , 469 N. 2d 51 I , 480 N. S.2d 190
from the failure to require an answer

(1984 )).

CPLR 7803 (3) provides that a court may review " whether a detennination was arbitrary and capricious or an abuse of discretion. . . Arbitrary action is action without sound basis in reason , and is generally taken without regard' to the facts , such that the
administrative action is without foundation

(Pell v. Board of Education 34 N. Y. 2d 222 231
2d 833 (1974);

313 N.

2d 321

356 N.

see also Matter of Peckham v. Calogero ,

12

883 N. 2d 751 (2009)). Further , a court may not substitute its judgment for that of the board or body it reviews unless the board or body s decision is arbitrary, unreasonable (Pell at 232).
, and thus constitutes an abuse of discretion , supra

3d 424 911 N.

2d 813 ,

The business judgment rule is a " common law doctrine by which courts exercise
restraint and defer to good faith decisions made by boards of directors in business settings (40 West 67'h Street v. Pullman 100 N. 2d 147 , 153 , 790 N. 2d 1174 , 760 N. 2d 745 (2003)), and it is the proper standard of judicial review when evaluating decisions made by at 149- 50). If a board acts within its authority, in
(Id.

residential cooperative corporations

good faith ,

and for the benefit of the cooperative ,

judicial review pursuant to the business judgment rule

a board' s actions are protected from (Romeo v. Barrella 82 A. D.3d 1071

921 N. Y.. 2d 83 (2dDept. 2011);Pinkv. Hal/Moon CooperativeApartments, South, Inc. 68 A. D.3d 739 891 N. 2d 107 (2d Dept. , 2009)).
In this case

, it is undisputed that the cooperative
(see also Real Property Law

s proprietary lease pennits an

aparent to be occupied as a private dwellng by the lessee , and the lessee s brothers and
sisters , among other relatives described in paragraph 14 thereof, without the lessee having
to obtain written consent from the lessor 235-f

/2), /3)).

Petitioner s counsel' s e-mail to respondent Goldstein dated August 21 , 2010 , included as Exhibit 3 in petitioner s counsel' s affirmation in opposition to the cross-motion.

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Respondent relies upon Article III , Section 8 of the cooperative s by- laws, which provides the Board with the right to amend and adopt the cooperative s house rules as necessary, and paragraph i30fthe cooperative s proprietary lease , which clearly states that those adopted house rules become part ofthe proprietary lease once furnished to the lessee.
With respect to the issue of unauthorized subletting, the proprietary lease , by itself provides only one remedy therefor , which is termination ofthe lease. Respondents claim that their authority to fine petitioner $3 000 for the alleged unauthorized subletting of her
apartment is found in the cooperative

s handbook (Respondent Goldstein

s Affidavit in

Opposition to Petition and in Support of Cross- Motion , Exhibit C).
The Court' s review of that handbook reveals that it covers a multitude of topics including a " sublet policy. " In the " Welcome " section , respondent cooperative states that the handbook includes house rules and recommendations that have been adopted by the

Board of Directors. It further states that all house rules " stated

herein " apply to

all

shareholders and household members , guests and household employees. The body of the handbook contains clearly marked sections pertaining to each specitic topic. Some of the sections are marked " (House Rule)" following the name of the topic , while other sections are
not so marked.

The " sublet policy, " appearing on page 15 of the handbook , states that the Board does not permit shareholders to sublet their apartments. Any shareholder who sublets their apartment is subject to a $3 000 fine. . . This section of the handbook is not marked (House Rule), " and nowhere in the brief statement is there any reference to this fine being , not part of the a " House Rule. " Thus , the tine is not a " House Rule " and is , therefore proprietary lease to which petitioner is subject.
Based on the foregoing, this Court concludes that respondents ' actions were arbitrary 7803 (3), as respondents and capricious , and without foundation were apparently without authority to fine petitioner $3, 000. Concomitantly, the Court also finds that respondents ' actions are not protected by the business judgment rule because the Board did not act within its authority.
, in violation of CPLR

Accordingly, petitioner s request that the $3 000 sublet fine be reversed , rescinded and annulled is granted , without interest.

In any event , respondents ' basis for opposing the instant petition has been rendered
moot. Respondents acknowledge that petitioner has submitted proof of her residency at the

cooperative , and that Sandra Jager is petitioner s sister. Respondents ' counsel asserts that
Petitioner has not paid the fee to date.

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is simply too despite having attached proof of her residency to her opposition papers, it " the late. " While it may have beeh more effcacious for the proof to have been provided at August 2010 meeting between petitioner , her counsel , and respondent Goldstein, the fact of resident of the

the matter is that respondent acknowledges petitioner is a fullcooperative.

time

, it is evident from the eAs to the issue of Sandra Jager s relationship to petitioner s cross-motion and mail chain submitted as petitioner s Exhibit 3 in opposition to respondent s apartment is her in further support of the petition , that the other occupant of petitioner his August 17 2010 e-mail sister. Respondent Goldstein actually refers to Sandra Jager in requesting petitioner s counsel to " convince (petitioner) that the current issue is with her an issue when sister , not her , re the noise complaints. . . and there never seems to be " Respondent also refers to (petitioner) is here. Prior to her sister it was her mother. . . the having had a " run- " with petitioner s sister when a telephone repair man came to the " of the apartment is not an building. " Thus , this Court finds that Ms. Jager s occupancy .
unauthorized sublet iri contravention ofthe
proprietary lease ,

Property Law 9 235rescinded.

and is indeed pennitted by Real f (21, (3)), and for this reason as well , the $3 000 sublet fine must be

The Court declines to enjoin future actions of the Board with respect to taking action against petitioner for an alleged noise nuisance , and from making a detennination in the s requests future that Ms. Jager is a subtenant in violation of the proprietary lease. Petitioner in those regards are denied.
s action With respect to the award of attorney s fees , the Court does not find petitioner to be frivolous. Thus , respondents are not entitled to attorney s fees pursuant to 22 NYCRR
9 130- 1.1.

Propert Law Petitioner s request that she be awarded attorney s fees pursuant to Real landlords 9 234 is likewise denied. That statute provides for a level playing field between s fees for and tenants where leases contain clauses permitting a landlord to recover attorney Propert a tenant's breach of a lease. A reciprocal cause of action has been codified in Real s fees for a Law 9 234 , in favor of the tenant , enabling the tenant to recover attorney , if landlord' s breach of a lease covenant. In this case , plaintiff has failed to articulate what (see Matter of Duell
any, covenant under the lease respondents are alleged to have breached

Salvato v. St. 2d 891 (1995); 2d 773 , 779- , 647 N. 2d 96 622 N. Kuttas v. Condon , 290 , 2003); 2d 42 (lSl Dept. David' s School 307 A. 2d 812 , 763 N. 2d 402 (2d Dept., 2002)). D.2d 492 , 736 N.

v. Condon 84 N.

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The foregoing constitutes the Order of this Court.

Dated: June 27 ,

2011

Mineola , N. Y.

ENTERED
JUN 3 0

2011

NASSAU COUNTY COUNTY ClER-K' S OFFiCE



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