The owner of a new Condominium Unit alleged that the concrete slab under her hardwood floors had not been properly leveled and flattened, resulting in numerous loose floorboards and warping in some areas.
The Unit Owner decided to undertake the repairs herself. Pursuant to their standard procedures, the Condo Board asked that the Unit Owner sign their “alteration agreement” before she started any work. These agreements are common practice in such situations to protect the Building from any damage caused by the Unit Owner’s work.
However, the Unit Owner took the standard alteration agreement and demanded that several changes be made to it before she would sign it.
The Board discussed the changes and determined that they would need to have an attorney review the proposed agreement before it could agree. So the Board requested that the Unit Owner, rather than all the other unit owners, pay this extra legal expense.
The Unit Owner refused to pay for an attorney to look at her changes, and she refused to sign the Board’s standard agreement. Instead the Unit Owner started a lawsuit alleging that the Board was acting improperly and in bad faith.
The Board and its insurers retained Adam Leitman Bailey, PC who immediately prepared a motion to dismiss the Unit Owner’s pleadings on the grounds that the Board had acted properly, and in good faith, and were therefore protected by the “business judgment rule”.
The Supreme Court initially denied the motion to dismiss. However, following an appeal, the Appellate Division overturned the lower court’s findings, writing in a highly publicized decision, that “it was not unreasonable for the Board to require (the Unit Owner) to adhere to the same rules that apply to all other unit owners wishing to make structural repairs.”
The Appellate Division also agreed with Adam Leitman Bailey, PC that the Board had acted in good faith at all times, and had acted within the scope of its authority, and in furtherance of a legitimate purpose.
Accordingly, the Unit Owner’s case against the Board was dismissed and the Unit Owner was ordered not to start work on the flooring until the standard alteration agreement was signed or she had paid for attorneys to review and advise the Board on her changes.
Adam Leitman Bailey and John M. Desiderio represented the board of directors on corporate matters and at the trial level. Jeffrey R. Metz prevailed on behalf of Adam Leitman Bailey, P.C. on appeal.