SUAREZ v. RIVERCROSS


107 Misc.2d 135 (1981)

Marcelo A. Suarez, Appellant, v. Rivercross Tenants' Corp., Respondent.

Supreme Court, Appellate Term, First Department.


Attorney(s) appearing for the Case

Rosenberg, Stone & Notkins (Nathan M. Ferst of counsel), for appellant. Finkelstein, Borah, Schwartz, Altschuler & Goldstein, P. C. (Myron Altschuler of counsel), for respondent.

TIERNEY, J. P., and RICCOBONO, J., concur in Per Curiam opinion; ASCH, J., concurs in a separate opinion.


Per Curiam.

Order entered April 16, 1980 affirmed, with $10 costs.

Plaintiff has, since July, 1978, occupied his co-operative apartment in a building owned by the defendant co-operative corporation and located on Roosevelt Island. The plaintiff, beginning in August, 1978, complained to corporate management of many problems, but especially about malfunctioning of the air-conditioning-heating unit. He alleges that the problem of lack of heat became acute with the 1978 winter season; at times, it is alleged, the room temperature in his apartment "could not be raised above 40°." A daughter was born to the plaintiff in October, 1978 and on the advice of his physician he "had to find shelter elsewhere", although he does not state when or where or for how long. He further alleges that his purchase of supplemental electrical heating units was of no help because the building wiring could not handle the added load. Finally, he himself hired a man to repair the three units at a cost of $375.

Plaintiff brought this action in March, 1979 against the defendant co-operative corporation, alleging breach of the lease terms as well as breach of the statutory duty to supply heat. On January 31, 1980, he moved for summary judgment and asked that the matter be set down for inquest solely on the extent of damages; plaintiff sought damages in the amount of $5,000, which included the cost of repairing the heating units and "pain and suffering", etc.

On March 19, 1980, the defendant cross-moved for summary judgment. An affidavit submitted by defendant's managing agent in conjunction with that cross motion, details the steps taken by management to cope with the problem. A contractor was sent who determined that the problem resulted from malfunctioning fan coils in the units. Parts were thereafter ordered; a resurvey in February, 1979 indicated that the units were then functioning properly. The court below denied both plaintiff's and defendant's motions for summary judgment noting that fact issues required a trial.

Both in the court below and on appeal, the plaintiff argues that the deprivation of heat constituted a violation of the implied warranty of habitability (Real Property Law, § 235-b) and required a granting of summary judgment.

While there are indeed fact issues that require a trial, this court cannot ignore the issue of whether or not the statute (Real Property Law, § 235-b) applies to co-operative apartments. In fact, by denying summary judgment to the defendant corporation, the court below implicitly recognized the applicability of the statute to proprietary tenancies since that was the major item of contention of each party. We have been unable to locate any appellate authority specifically accepting or rejecting the application of the warranty of habitability to the relationship of co-operative tenants and their co-operative landlords.

Numerous decisions have established that a co-operative tenant's acquisition of stock in a co-operative corporation is essentially the same as his acquisition of stock in any other corporate entity except that it affords him, in addition, a right to reside in a particular apartment allocated to that stock (Matter of State Tax Comm. v Shor, 84 Misc.2d 161, affd 53 A.D.2d 814, affd 43 N.Y.2d 151). Furthermore, it has been said that the proprietary lease given to the tenant is not different from any other type of lease and it creates a landlord-tenant relationship between the stockholder and the co-operative corporation (Matter of State Tax Comm. v Shor, supra; see, also, Hauptman v 222 East 80th St. Corp., 100 Misc.2d 153; Carden Hall v George, 56 Misc.2d 865; Rasch, 1 New York Landlord & Tenant, Summary Proceedings [2d ed], § 82).

On the other hand, the relationship created has also been called sui generis, i.e., peculiar, unique, different (Matter of State Tax Comm. v Shor, 43 N.Y.2d 151, 154, supra). As Chief Judge BREITEL, writing for a unanimous Court of Appeals, observed (p 156): "One has, therefore, a mixed concept and terminology, superficially resembling the traditional rental apartment lease, except, for example, that the lessee pays monthly maintenance charges and is subject to assessments instead of rent. For some purposes it is a lease; for others it is a compact between co-operative corporation and co-operative tenant." (See, also, dissenting opn by STEUER, J., in Silverman v Alcoa Plaza Assoc., 37 A.D.2d 166 — status of co-operator or proprietary lessee is for practical purposes indistinguishable from an owner of the fee; and compare this language in Penthouse Props. v 1158 Fifth Ave., 256 App Div 685, 691, "in a very real sense the tenant stockholders enter into a relation not unlike a partnership, though expressed in corporate form.")

In Jimerson Housing Co. v Butler (97 Misc.2d 563, 565), the court refused a co-operative corporation the right to bring summary proceedings against a nonpaying proprietary lessee, noting that "[t]he cooperative ownership plan is sui generis", and denying that the resulting relationship was truly that of landlord and tenant. That determination was, however, overruled by the Appellate Term, Second Department, which noted (102 Misc.2d 423, 424): "the relationship between the petitioner, a co-operative, and respondent, its stockholder, is that of landlord and tenant to the extent that petitioner may maintain a summary proceeding against respondent".

Does it follow that the warranty of habitability applies to proprietary leases? Subdivision 1 of section 235-b of the Real Property Law provides: "In every written or oral lease or rental agreement for residential premises the landlord or lessor shall be deemed to covenant and warrant that the premises so leased or rented and all areas used in connection therewith in common with other tenants or residents are fit for human habitation and for the uses reasonably intended by the parties and that the occupants of such premises shall not be subjected to any conditions which would be dangerous, hazardous or detrimental to their life, health or safety."

In 158th St. Riverside Drive Co. v Launay (NYLJ, April 6, 1976, p 9, col 2), the court denied the relevance of the statute to proprietary tenancies noting: "While section 235 (b) refers to `every written or oral lease * * * for residential premises' * * * it is clear that the conventional landlord-tenant relationship is contemplated. * * * Respondent's remedy lies elsewhere." But in Hauptman v 222 East 80th St. Corp. (supra, p 155), the Civil Court, New York County, held as to such a tenancy: "There is nothing here which indicates an intention by the Legislature to exempt co-operatives from the ambit of the warranty." (See, also, Laight Co-op. Corp. v Kenny, 105 Misc.2d 1001; Lehner & Sweet, Conversions of Residential Cooperatives, Lofts, NYLJ, Dec. 24, 1980, p 1, col 2, p 6, col 2, which would apply section 235-b of the Real Property Law to co-operative apartments.)

In approving section 235-b of the Real Property Law (L 1975, ch 597; NY Legis Ann, 1975, p 437), Governor Carey noted that the section was intended to remedy tenant inequities "founded upon legal principles that evolved during the middle ages." As to this legislation, the Governor further stated, "By one large step this bill moves the law of landlord and tenant into the twentieth century." (NY Legis Ann, 1975, p 438.) Whether the ameliorative legislation was intended to apply to the proprietary lessor-lessee situation — whose origins are of much more modern vintage — is, however, not expressly stated in the statute. Nevertheless, "It is not unprecedented in our jurisprudence for language shaped by a particular purpose to be found useful in responding to other problems" (Curry v New York City Housing Auth., 77 A.D.2d 534, 536), and as a matter of sound policy the proprietary tenant, subject as he is to being ousted for nonpayment of charges and probably other delinquencies, should enjoy whatever benefits flow from the warranty of habitability. It is not enough to say as the court did in 158th St. Riverside Drive Co. v Launay (supra): "Respondent's remedy lies elsewhere." A proprietary lessee is entitled to the statutory protection as well as the noninvesting, ordinary tenant. While there is thus created the anomalous situation that one who is essentially an owner (by virtue of his purchase of shares) is in a sense suing himself, the situation is not vastly different from any stockholder who has occasion to sue the corporation of which he is a pro rata owner by purchase of stock. No one would deny the owner of shares of stock in General Motors the right to sue that corporation if he purchased a defective vehicle. While this may indeed be pounding square pegs in round holes, the result should be a salutary one, viz., an increased attention on the part of co-operative boards of directors to the well-being of the members of the co-operative.

Nevertheless, summary judgment was properly denied to the plaintiff. The landlord is no absolute insurer of services which do not affect habitability nor is it a guarantor of "every amenity customarily rendered in the landlord-tenant relationship" (Park West Mgt. Corp. v Mitchell, 47 N.Y.2d 316, 327). While it is not disputable that health and safety are adversely affected by insufficient heat, not every such deprivation will constitute a breach of the warranty. "Each case must, of course, turn on its own peculiar facts" (supra, p 327). Even the breach of an applicable housing code violation is not decisive. "In some instances, it may be that the code violation is de minimis or has no impact upon habitability" (supra, p 328). A decision as to a breach of the warranty will turn on the extensiveness of the breach, the manner in which it impacted on the health of the tenant and even the measures taken by the landlord to alleviate the violation (supra, p 328). The test is whether or not the defects (supra, p 328) "deprive[d] the tenant of those essential functions which a residence is expected to provide" as viewed by the eyes of a reasonable person. The question is rarely capable of resolution by papers alone and is not in this case. We have in N Town Roosevelt Assoc. v Muller (NYLJ, Oct. 27, 1980, p 6, col 4) set forth the law controlling recoverable damages if a breach of the warranty of habitability be established.

ASCH, J. (concurring).

I concur with the majority to the extent that I find plaintiff's motion for summary judgment was properly denied.

The majority has outlined the relevant facts of this case, indicating that the plaintiff initiated this action to recover damages of $5,000, arising out of defendant's alleged failure to provide adequate heat, that the plaintiff moved for summary judgment and that the defendant cross moved for identical relief. The court below denied both motions, noting only that "Issues of fact remain which may only be resolved at trial." My colleagues suggest that "by denying summary judgment to the defendant corporation, the Court below implicitly recognized the applicability of the [breach of warranty] statute to proprietary tenancies since that was the major item of contention of each party." While plaintiff in his affidavit submitted in support of his motion for summary judgment indicates he is relying upon the breach of warranty statute, and while defendant in its affidavit submitted in support of its cross motion for summary judgment and in opposition to plaintiff's motion argues that the breach of warranty of habitability statute should not be applied to co-operatives, I believe the subtle complexities of the issue of whether section 235-b of the Real Property Law applies to co-operative corporations are such that no implication can be gleaned from the order on appeal as to whether Special Term was of the opinion that the statute did or did not apply to co-operative corporations.

It is noted by my brethren that, although there is no appellate court authority as to whether section 235-b of the Real Property Law applies to co-operative corporations, three lower court decisions have addressed the question: 158th St. Riverside Drive Co. v Launay (NYLJ, April 6, 1976, p 9, col 2) held that section 235-b of the Real Property Law does not apply to co-operative corporations, Hauptman v 222 East 80th St. Corp. (100 Misc.2d 153) and Laight Co-op. Corp. v Kenney (105 Misc.2d 1001) held that it does. The dispositions in those three cases are, however, as conclusory as they are contradictory.

The relationship of co-operative corporations to their shareholders has not often been defined in law. In Vernon Manor Co-op. Apts., Section I v Salatino (15 Misc.2d 491), Judge JAMES HOPKINS, then writing as a County Court Judge, noted (p 494): "This action, based on the construction of the relative rights and liabilities of a cooperative housing corporation and its members, has little precedent in this State. Sparse are the cases treating of the relationship between such a corporation and its member tenants". Case law dealing with the relationship which exists between co-operative corporations and their shareholders has not greatly expanded since Judge HOPKINS observed in Vernon Manor Co-op. Apts., Section I v Salatino (supra, p 494): "A co-operative corporation is defined to be a corporation `for the cooperative rendering of mutual help and service', and `classed as a non-profit corporation, since its primary object is not to make profits for itself as such, or to pay dividends on invested capital, but to provide service and means whereby its members may have the economic advantage of cooperative action, including a reasonable and fair return for their product and service' (Cooperative Corporations Law, § 3, subds. [c], [d])". The concept of a co-operative corporation existing as a not-for-profit entity, organized for the good of its members, not only affords a parity of relationship between shareholder tenant and co-operative corporation, which section 235-b of the Real Property Law seeks to impose in conventional landlord-tenant relationships (Park West Mgt. Corp. v Mitchell, 47 N.Y.2d 316, 325), but clearly provides the shareholder tenant an arsenal of rights not available to the ordinary tenant.

Section 235-b of the Real Property Law essentially codified the rights of the conventional tenant as they had evolved under common law prior to the enactment of that statute (Tonetti v Penati, 48 A.D.2d 25; Steinberg v Carreras, 74 Misc.2d 32; Morbeth Realty Corp. v Velez, 73 Misc.2d 996; Jackson v Rivera, 65 Misc.2d 468). There is little if any basis for concluding that the Legislature intended to extend the application of section 235-b of the Real Property Law to the sui generis relationship which exists between the co-operative corporation and its shareholders. As the majority has observed, it is nowhere stated in the statute (Real Property Law, § 235-b) that the ameliorative legislation was ever intended to apply to the proprietary lessor-lessee situation.

The relationship which exists between a co-operative corporation and its shareholders "is to be determined from a reading together of the original plan of organization, the prospectus under which stock was offered, the stock subscription agreement and the payments made thereunder, the members' contract, that is, either the proprietary lease or the occupancy agreement, the certificate of incorporation and the bylaws, and the rules and regulations of the cooperative, provided that the laws of the state are not thereby infringed." (11 NY Jur, Co-operatives, § 133.) Significantly, none of those items are contained in the instant record on appeal, and thus the plaintiff, without even affording this court an opportunity to assess instruments, which no doubt amply and explicitly detail the rights and nature of the relationship between the parties, would have this court reach beyond such concrete agreements and documents and apply a statutorily implied warranty which in all likelihood and the Legislature only intended should apply to conventional landlord-tenant relationships.

The suggestion made by the majority that since a shareholder of General Motors may sue that corporation for damages arising from the purchase of a defective vehicle, a proprietary lessee should be able to sue his co-operative corporation under section 235-b of the Real Property Law is unpersuasive. In the first place, General Motors is a profit-making entity which seeks to exploit sales potential among shareholders and nonshareholders alike, so the analogy made between a shareholder of General Motors and his corporation and a proprietary lessee and his nonprofit co-operative corporation is inapposite. In the second place, no one questions the right of a proprietary lessee to sue his co-operative corporation; the only question is whether he may rely on section 235-b of the Real Property Law.

The relationship between a co-operative corporation and its shareholders, which is fiduciary in nature, requires the corporate directors to manage the affairs of the corporation so as to carry out its purpose to house its members in a comfortable and efficient manner, and to treat its members in a fair and equitable way (Vernon Manor Co-op. Apts., Section I v Salatino, 15 Misc.2d 491, supra). Given the spectrum of remedies available to a dissatisfied co-operative shareholder which arise from this fiduciary relationship, there is no reason to believe that the Legislature considered it necessary to further protect the co-operative shareholder through application of section 235-b of the Real Property Law.

The majority indicates that "as a matter of sound policy and the proprietary tenant, subject as he is to being ousted for nonpayment of charges * * * [in a summary proceeding], should enjoy whatever benefits flow from the warranty of habitability." The question, however, is not whether the co-operative shareholder is entitled to assert a breach of the warranty of habitability in a summary proceeding, but whether he is entitled to assert such a breach in any proceeding. Parenthetically, we are not here dealing with a summary proceeding but a plenary action.

Two last points, first, co-operative corporations run the gamut of co-operative brownstones to co-operative housing consisting of thousands of units. The impact of applying section 235-b of the Real Property Law will differ across this broad spectrum of co-operative housing and such a standard of strict liability should not be applied to this varied sector of the housing market without a clear and express mandate of the Legislature.

Second, subdivision 2 of section 235-b of the Real Property Law provides: "Any agreement by a lessee or tenant of a dwelling waiving or modifying his rights as set forth in this section shall be void as contrary to public policy." In view of the equity interest of co-operative shareholders in the building, they may arrange as between themselves to take responsibility for renovating and upgrading an existing structure to the extent of making it habitable. Under the above-quoted subdivision 2, such agreements between co-operative shareholders would be in violation of the law, as inconsistent with subdivision 1 of section 235-b of the Real Property Law. There are obvious shortcomings in any judicial determination which would limit the right of co-operative shareholders to contract as between themselves as to responsibility for maintenance of their property.


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