Firm News

LANDLORDS  AND SECONDHAND SMOKE COMPLAINTS:
THE  APPELLATE DIVISION CLEARS THE AIR

By Joseph Rapice and Arthur P. Xanthos

This Firm recently won a successful appeal concerning whether a co-op has an obligation to guarantee an odor free apartment for a shareholder.  The appellate decision, Reinhard v. Connaught Tower Corporation, is available on this website under Publications.

Shareholder-tenant Susan Reinhard sued her co-op, the Connaught Tower Corporation, alleging that a cigarette smoke odor condition rendered her apartment uninhabitable for nine years, thereby forcing her to live in another premises.  Prior to trial, plaintiff had made a settlement demand of $600,000.00, essentially making settlement impossible and forcing a trial.

At a three-day non-jury trial, plaintiff testified that she, her family, and a close family friend smelled cigarette smoke in the apartment on a handful of occasions over a nine year period, although the source of the odor was never identified.  Plaintiff also proffered the testimony of an expert industrial hygienist, who testified that air passageways existed behind the walls in plaintiff’s apartment, implying that offensive odors could have been entering the apartment via those passageways.  The industrial hygienist also testified that he too smelled a smoke odor in the apartment during his inspections. 

In defense, we noted at trial that plaintiff’s expert, although he could have done so, failed to do a nicotine test.  We pointed out as well via cross-examination that such tests are inexpensive and easy to do.  We further demonstrated that without such objective testing and data, plaintiff could show no threshold amounts of any toxin (i.e.,secondhand smoke) in the apartment.   Essentially, we proved that the only objective evidence presented by plaintiff was that yielded by her nose – she smelled something she did not like.

At trial we also introduced other critical facts: plaintiff was a full time resident of Connecticut, never actually inhabited her apartment, and instead desired to use the apartment as a Manhattan pied a terre.

Despite these facts, the trial court ruled that the co-op had breached the proprietary lease and the statutory warranty of habitability, thereby constructively evicting Plaintiff.  The trial court awarded plaintiff a full return of nine years of maintenance payments in an amount of $120,000.00, and an award of attorneys fees.  In so ruling, the trial court found that “significant cigarette smoke permeates and pollutes the apartment,” that the apartment was “infiltrated by secondhand smoke”, and that the apartment was “smoke-polluted.” We appealed that decision.

On May 4, 2017, the Appellate Division First Department unanimously reversed the trial court’s decision, dismissed plaintiff’s complaint in its entirety, and awarded attorneys’ fees to our client – the co-op.  The appellate court held that the evidence failed to show that the subjective odor of cigarettes on a few occasions over nine years rendered plaintiff’s apartment uninhabitable.  Critically, the appellate court reasoned that plaintiff failed to show that the alleged odor was present on a consistent basis and that it was sufficiently pervasive as to affect the health and safety of the occupants. (The Court also noted that plaintiff lived in Connecticut and only intended to stay in the apartment occasionally.) 

The Reinharddecision marks a significant victory for building owners, cooperatives, and condominium boards, as well as for their insurers.  The trial court’s ruling had temporarily opened a Pandora’s Box with regard to habitability claims, as it seemed to imply that a tenant need only claim a subjective odor to recover a full rent abatement.   (Indeed, this Firm had seen an uptick in smoke odor cases following that decision.)  The Appellate Division First Department’s decision, however, reaffirmed two rules: (i) that a plaintiff-tenant must present objective evidence of the presence of a toxin, a threshold level of it, and proof of a causal connection to health and safety of an occupant; and (ii) that a claim based upon the habitability of an apartment dwelling requires proof that the plaintiff occupied the dwelling. 


                                                                                                                -5/9/17

Firm Wins Significant Dismissal in Construction Defect Case, by Alexander D. Fisher, Esq.

In a recent New Jersey decision, this Firm succeeded in obtaining partial summary judgment in a construction defect case, dismissing multiple causes of action and claims against our client.  With this decision, the Court dismissed over 98% of the Plaintiff’s claimed damages of $6.1 million asserted against our client. The case is Views at Hudson Pointe Condominium Association v. K. Hovnanian at Hudson Pointe, LLC, et al., venued in Superior Court, Hudson County.
  
In the Views at Hudson Pointe case, Plaintiff condominium association claims significant construction defects in a large residential condominium complex located on the shores of the Hudson River in North Bergen, New Jersey.  Our client, a concrete subcontractor, is alleged to have been responsible for concrete cracking and piping deficiencies in the two on-site garages.  As part of a plan to repair the alleged cracking, Plaintiff’s expert opined that an expensive traffic coating would be needed in each garage, at an approximate cost of $5.8 million dollars.

Through discovery, the following was determined: (1) the garage plans provided to our client did not include a traffic coating; (2) our client was not contracted to put down such a coating; (3) our client was not retained to design the garages, only to construct them; (4) no one ever requested our client to install a traffic coating; (5) Plaintiff’s expert stated that the inclusion of a traffic coating would have been a “better design” for the garages; and (6) multiple parties acknowledged that our client had no role in the installation of piping, and that the claimed deficiencies were the responsibility of the piping contractor.

Accordingly, we moved for summary judgment at the close of discovery, on the grounds that the installation of a traffic coating was an obligation not found in the contract and for which Plaintiff could not recover.  In granting this portion of the motion, the Court found it clear that the traffic coating had not been part of the original plans for the garages.  Furthermore, the Court found that our client had no role in the design of the garages, and therefore, could not be held responsible for the proposed cost of installing such a coating.  Therefore, the Court limited the Plaintiff’s recoverable damages against our client to the cost of repairing the cracks in the garages with concrete filler, which Plaintiff’s own expert estimated at approximately $100,000.00 dollars.  

The Court also dismissed the claims relating to piping in the garages, stating that the evidence clearly showed that our client played no role in this work.

This decision highlights that a Plaintiff in a construction defect matter may only recover damages that provide them with the benefit of the bargain – in this case, two garages without a traffic coating.  A Plaintiff in this type of action is not entitled to receive a better building than was envisioned by the plans.  

It is common for condominium association experts in construction defect cases to inflate the cost to repair the alleged defects by inserting items that substantially improve upon the design of a particular building.  With this decision, the Court affirmed that a plaintiff will not be permitted to inflate its damages estimates in order to improve a building with upgraded designs and/or materials.  


Kenneth Bloom to Speak at the 2016 CLM National Construction Claims Conference in San Diego CA

Gartner + Bloom is proud to announce that managing partner Kenneth Bloom will be speaking at the 2016 CLM National Construction Claims Conference.  The conference will be held in the Manchester Grand Hyatt in San Diego, California, September 28-30.
This September, the Claims and Litigation Management Alliance (CLM) will hold the most comprehensive construction claims conference ever. In addition to addressing construction defect claims, conference sessions will also address facets of construction-related claims including construction site accidents/injuries, coverage issues, subcontractor issues, and new technologies. Sessions also will address issues on the national, regional, and state levels.

About Ken: Ken Bloom is a founding partner of Gartner + Bloom, PC., an AV rated law firm in existence for twenty-two years and with offices in New York City and Springfield New Jersey. Ken is a skilled trial attorney, who concentrates his practice in the areas of Casualty/Liability Defense; Insurance Coverage; New York Labor Law (Scaffold Law); Construction Litigation including construction defect, EIFS, apparent microbial growth (AMG), asbestos and lead paint matters, as well as Insurance Fraud Defense and Commercial Litigation. Ken was admitted to the bar in the District of Columbia in 1981; New York 1982; Pennsylvania 1990; the U.S. District Court, Eastern and Southern District of New York in 1983; U.S. District Court, Northern District of New York in 1990; U.S. Supreme Court in 1985; U.S. District Court, Eastern District of Michigan in 1988; and the U.S. Court of Appeals, Second Circuit 1990.  He is a graduate of Cornell University (B.S., 1978), where he serves as a guest lecturer for the course, “Managing and Resolving Conflict.” He obtained his J.D. from American University in 1981.  

Prior to founding Gartner + Bloom, Ken was an Assistant District Attorney, Kings County, New York, 1981-1982; Senior Staff Attorney, New York City Mayor's Strike Force, 1982-1983; Partner, O'Donnell, Fox & Gartner, P.C., New York City, 1983-1990; Resident Senior Partner Cozen and O'Connor, New York City, 1991-1994.Ken is a member of the New York State Former District Attorneys Association, Brooklyn, New York; Pennsylvania and American Bar Associations- member of the Tort and Insurance Practice Section and Alternate Dispute Resolution Section; Co- chair of the Construction Committee of the ABA Section on Dispute Resolution (2004-2005); District of Columbia Bar and the New York County Lawyers Association. He is a frequent lecturer on construction and coverage related topics, as well as ADR.

MOLD PERSONAL INJURY LAWSUITS: WHY DO THEY CONTINUE? By Arthur P. Xanthos

In our August 6, 2014 article, we explained the import of the New York State Court of Appeals' Cornell decision -- without medical community acceptance of causation between mold and bodily injury, courts in New York State will dismiss lawsuits for bodily injury premised on mold.

Since the Cornell decision came down, this Firm has used it twice to dismiss mold-related bodily injury claims against our clients: first in June of 2014 in Benton v. 80 Cranberry, and now in August of 2016 in a case called Sylla-ba v. The Colton Condominium. (Both of these decisions can be accessed on the Firm's website, www.gartnerbloom.com, under Publications.)  In Sylla-ba, Justice Cynthia Kern reiterated what the Court of Appeals held: an 'association' between mold and the alleged symptoms of a plaintiff is not the same as 'causation' between them; therefore, proving that there is such an association is insufficient for the bodily injury claims to survive dismissal.  

Cornell should have resulted in a sharp drop in the number of mold-related personal injury lawsuits brought in New York's state courts; yet these lawsuits continue to be brought in roughly the same numbers as before Cornell. We suspect the reasons for this counter-intuitive statistic are, (1) the plaintiffs' bar's unfamiliarity with the 2014 Cornell decision (viz., the flawed belief that if you can get one doctor to say 'mold caused the plaintiff's illness', that such is sufficient), (2) the use of a mold-related bodily injury claim as an 'add on' claim to bolster the settlement value of the case, and (3) publication in the popular press of other states' mold verdicts and settlements.

So, we repeat what we wrote in our August 6, 2014 entry: Absent a major change in the science of mold illness, the next few years will see many more summary judgment decisions in favor of land owners and against mold plaintiffs.

                                                         -APX 8/15/2016
        

WHERE THERE’S A WILL, THERE’S A FAMILY – By ALEXANDER D. FISHER, ESQ.


Recently, the Firm succeeded in obtaining summary judgment on behalf of our client - a well-known catering establishment in Great Neck, New York - in a case involving a dispute over the ownership rights of shares in a family-owned business.

In this matter, Plaintiff, one of the sons of the deceased founder of the business, sought to block his stepmother from taking shares of the company that had been bequeathed to her by the decedent’s “pour over” will and subsequent trust.  Plaintiff argued that per the terms of a shareholders agreement for the business, which pre-dated the will by almost 20 years, his stepmother was not entitled to hold the shares because the agreement had purportedly limited the right to hold shares to “family members”.  Plaintiff argued that as a spouse of the decedent, his step-mother did not qualify as a “blood” relative, and therefore was not a family member.  He also noted that a separate clause in the agreement required any spouse who was no longer married to a member of the decedent’s family to return her shares in the company, and argued that since the decedent had passed away, his stepmother could no longer be married to him.  He accordingly commenced a declaratory judgment action seeking a declaration that his stepmother was not entitled to hold these shares, and forcing her to sell the shares to the remaining shareholders, including Plaintiff.

In our motion for summary judgment, we argued that there was no language in the shareholders agreement that limited the right to hold shares to “blood” relatives – rather, the agreement limited the right to hold shares to family members.  Accordingly, as the spouse of the decedent at the time of his death, the stepmother was clearly a family member under any reasonable definition of the term.  We noted that the requirement in the agreement requiring divestiture of shares in the company once a spouse was no longer married to a member of the decedent’s family was clearly limited to spouses of the decedent’s relatives – there was no clause requiring the spouse of the decedent himself to return any shares she held.  We also noted that Plaintiff had repeatedly acquiesced to his stepmother receiving the shares, both in a very detailed waiver agreement signed in Florida at the time of the distribution of shares from the trust, and in multiple clear ratifications of his stepmother’s status as a shareholder thereafter.  Furthermore, we argued that per the terms of the waiver, any contest to the terms of the trust were to be made in Florida under Florida law, and that pursuant to the statute of limitations governing such claims in Florida, Plaintiff was barred by the statute of limitations from challenging the terms of the trust.

In his decision, Nassau County Justice Thomas Feinman agreed with our position that Plaintiff’s stepmother unquestionably qualified as a member of the family based upon even a narrow reading of the term “family”.  The Court also found that the terms of the agreement did not contemplate the return of shares held by the decedent’s spouse upon his death, but only those shares held by a spouse of the decedent’s relatives.  Moreover, Justice Feinman noted that Plaintiff had unequivocally waived his right to challenge the grant of shares to his stepmother when he executed the waiver agreement at the time the shares were transferred.  The Court therefore granted our clients summary judgment as to all claims asserted against them.

This decision highlights the value of a well-worded waiver agreement relating to the distribution of property from an estate or a trust, particularly when there may be the potential for inter-family squabbles down the line.  Such an agreement allows the parties finality, and ensures that an aggrieved relative will not seek to undo various grants of property years later.  The decision also illustrates the value of a carefully drafted agreement regarding transfer of shares in a business, and how a seemingly mundane choice of words when drafting agreements can have massive unforeseen consequences a generation later.


The decision, Sessa v Sessa, can be found on this Firm’s website under Publications.

                                                                          -7/19/16


New York City Building Owners and the Legionella Outbreak, by Arthur P. Xanthos

This past week has seen an outbreak of legionella in buildings in the South Bronx section of New York City.  Legionella is the bacterium that causes legionnaires disease and flourishes in the water of air conditioning and central heating systems. Utmost concern is for the health and safety of building residents, and pending New York City regulations address this concern by imposing on building owners new registration, testing, and maintenance requirements. Given the number of deaths and hospitalizations already reported, building owners and their insurers should be aware of the following facts and suggestions:

1. There have been fewer than a dozen reported legionella/personal injury decisions in New York State in the last decade, and far fewer such decisions involving residential buildings. As in any toxic tort lawsuit, the legionella claimant will have the burden of proving that the building owner negligently allowed a toxin to develop (namely, legionella), and that the claimant was exposed to the toxin in an amount that caused injury to the claimant -- two very difficult though not impossible burdens to meet. (For a detailed discussion of the burden of proving causation in toxic tort lawsuits, see our prior blog entry titled Mold up in the Air: Settled.)

2. A building owner must report to its insurance carrier immediately any notice of bodily injury or property damage arising from the outbreak. A building owner should also notify its HVAC/cooling tower contractor, and the insurer for that contractor, of the incident(s).

3. The insurance carrier for its part must assemble a pre-lawsuit response team -- legal, engineering, medical, and environmental -- to investigate the premises and establish the facts.

4. New York City is now inspecting and testing building cooling systems. As these test results will be admissible in any subsequent lawsuit, building owners (or, preferably, their insurance carriers) should retain environmental consultants to photograph, monitor, and report on how the City performs the testing.

5. Finally, if the cooling tower or HVAC system is going to be dismantled or modified significantly, care should be taken to avoid a spoliation penalty.  (For a detailed discussion of this topic, see our prior blog entry titled Spoiling the Evidence, Spoiling the Case.) 

-APX 8/10/15