New York Supreme Court

Tucciarone v. Hamlet on Olde Oyster Bay Homeowners Association, Inc.

11231/13.

2013 NY Slip Op 51992(U)

JOSEPH TUCCIARONE and ANITA TUCCIARONE, AS HUSBAND and WIFE, Plaintiffs,
v.
THE HAMLET ON OLDE OYSTER BAY HOMEOWNERS ASSOCIATION, INC., JEROME CLINE, MARK KOHN, LAURA LEWIN, LEN FRUCHTER, ALBERT GOLD, BARBARA GETTENBERT and FRANK BIANCULLI, Defendants.

Supreme Court, Nassau County

Decided December 4, 2013.

Stanley S. Zinner, P.C., Stanley S. Zinner, Esq., 58 South Service Road, Ste. 410, Melville, NY 11747, Attorney for Plaintiff.

Bryan J. Mazzola, Esq., Cantor, Epstein & Mazzola, LLP, 49 West 37th Street, 7th Floor, New York, NY 10018, Attorney for Defendant.

DANIEL R. PALMIERI, J.

Plaintiff's motion for a preliminary injunction pursuant to CPLR §6311 is granted.

All requests for relief not specifically addressed are denied.

Plaintiffs are the owners of, and reside at, 100 Sagamore Dr., Plainview, NY 11803 (the Premises) which is located in a gated community known as The Hamlet on Olde Oyster Bay (the Hamlet). Governance of the Hamlet is reposed in a home owner's association (HOA), one of the defendants herein, which operates through its Board of Directors (the Board) consisting of the seven defendants. The rights of the parties are governed by the Bylaws of the HOA, (the Bylaws) and a Declaration of Covenants, Restrictions, Easements, Charges and Liens (the Declaration).

The plaintiffs (and the HOA) have been named as defendants in an action initiated by their neighbor, Jill Fadlon under index number 12-14407, presently pending before another justice of this Court (Fadlon and Fadlon Action respectively). Plaintiffs have cross claimed against defendants in the Fadlon Action, which is being defended on plaintiffs' behalf by attorneys designated by their insurances carrier and according to plaintiffs they have been trying to settle the Fadlon Action. The Fadlon Action complaint alleges that plaintiffs previously planted an invasive form of bamboo vegetation which has spread to the Fadlon property, causing property damage and rendering her yard unusable. The HOA is accused of failing in its responsibility for landscaping and maintenance and for allowing this condition to continue.

In this present action it is claimed that the Board has imposed fines on the plaintiffs based on this bamboo infestation. As of June 2013 plaintiffs have been assessed fines of $14,000 of which they have paid over $8,000. Except for the above mentioned fines, the Plaintiffs, who are both in their 70's, have never been and are not now in arrears of any monetary obligations.

Although neither side has submitted the minutes of any meetings or authenticated copies of any Board resolutions, the Board s attorney informed the plaintiffs' attorney that if the bamboo were not removed from Fadlon's property and common area, fines on an escalated basis would be imposed on plaintiffs.

Plaintiffs contend that Fadlon would not permit entrance upon her property for purposes of removal, and they paid fines of over $8,000, but the Board continued to impose monthly fines of $1,000 each throughout this period. As noted above, plaintiffs also have made efforts to resolve the Fadlon Action.

In August 2013 the Board voted that as of September 15, 2013 residents in arrears for over 60 days will have their vehicles denied access to the Hamlet, and will be denied access to all amenities. Further, vehicles may not be parked near the gatehouse. Again, neither party has submitted an authenticated copy of the resolution, minutes of the meeting or any notice of the meeting.

According to the plaintiffs the Hamlet's entrance is on the Long Island Expressway, parking is about a mile away, and the Board vote therefore effectively denies them access to the Premises. Moreover, since they are not permitted access to the Fadlon property they cannot comply with the Board's abatement directive. The only recourse would be to settle the Fadlon Action, and as to common areas, arrive at a settlement of cross claims with the HOA.

The response of the defendants is that plaintiffs will still have access to their house (albeit not by vehicle) and an admission that the purpose of the new directive is obtain remediation, i.e., settlement of the Fadlon Action, of the bamboo infestation.

Aside from the above, the opposition of the defendants consists of surmise, speculation, and hearsay regarding the events leading up to the Fadlon Action. However, the issue here is not the merits of the Fadlon Action but whether the above penalties have been properly imposed.

Elsewhere defendants contend that the point of the resolution is to make access inconvenient. Absent from defendants' submission is any resolution imposing fines on plaintiffs for failing to abate the bamboo problem. The only evidence submitted in this regard are letters from the HOA attorney to plaintiffs and their attorney threatening fines if the bamboo is not abated on the common areas and neighboring properties. However, lacking is any resolution of the Board regarding the action required to be taken by plaintiffs in order to avoid the penalties, an authenticated copy of the resolution, or the notice of the meeting or the minutes.

At this juncture, the plaintiffs find themselves barred from vehicular access to their home, denied use of the Hamlet amenities and facing escalating charges unless they abate the bamboo condition on the Fadlon property or pay something to Fadlon, conditions over which they have no control, because Fadlon's assent is required. They must further do likewise for the Hamlet common areas, which are under the control of the HOA and this requires the assent of the Board. These too are out of the control of plaintiffs.

The Declaration provides at Article V', Section 2:

Article IV, Section 1. Members' Easement of Enjoyment. Subject to the provisions of section 3, every Member shall have a right and easement of enjoyment in and to The Properties and such easement shall be appurtenant to and shall pass with the title to every Home. Section 3. Extent of Members' Easements. The rights and easements of enjoyment created hereby shall be subject to the following: (a) The right of the Association, as provided in its By-Laws to suspend the enjoyment rights of any Member for a period during which any assessment remains unpaid and for a period not to exceed thirty (30) days for any infraction of its published rules and regulations." Article VI Section 2: "Purpose of the Assessment. The assessments levied by the Association shall be used exclusively for the purpose of promoting the recreation, health, safety and welfare of the residents in The Properties as a Community and in particular for the improvement and maintenance of properties, services and facilities devoted to this purpose and related to the use and enjoyment of the Common Properties and of the Homes situated upon The Properties, including, without limiting the foregoing, the payment of taxes (if any), insurance thereon, and repair, replacement and additions thereto, and the cost of labor, equipment, materials, services, management and supervision thereof, in order to maintain a luxury resort style community.

Article XI ll Use of Property provides in pertinent part for a procedure to make rules to carry out "these use restrictions", which includes the determination of the validity of a complaint, the sending of written notice of the violation to the violator, a second notice and a fine. The Court finds, that taken in context a finder in fact could interpret Article XII ll as applying only to the matters described in that Article. Further, in defendants' Memorandum of Law, which quotes Article XII ll, the word "the" is replaced with the word "a" which distorts the meaning of the quoted phrase which should begin If the violation.... No explanation is given for the change of wording. However, the Court interprets the sentence as referring to the procedure immediately preceding in the same paragraph.

In any event there is no evidence that the procedure was followed by the Board or even what the findings are.

The By-Laws give the Board the authority to determine and levy monthly assessments and vote special assessments not to exceed an increase of 10 per annum (Article VIII Section 5: Powers) as well as the right to make reasonable rules or regulations and amendments. However, they must be approved in writing and a copy delivered to each "Member".

The By-Laws also contain a grievance procedure (Article VIII, Section 5(b)) and establish a grievance committee. There is no evidence that this procedure was followed here.

Based on the above facts, it appears to the Court that the defendants are arguing the merits of the Fadlon Action to justify their imposition of a punitive series of fines upon the plaintiffs, and that when that tactic failed, defendants escalated the stakes by imposing measures affecting the physical well-being of plaintiffs. Further, it is questionable whether defendants followed the procedures of the Declaration and By-Laws in imposing the measures recited above, and a trier of fact could well interpret the action of defendants as a means of forcing plaintiffs into a settlement of the Fadlon Action.

In order to obtain a preliminary injunction the movant must demonstrate by clear and convincing evidence a probability of success on the merits, irreparable harm absent the granting of the relief, and a balancing of the equities in the movant's favor. Behar v. Quaker Ridge Golf Club, Inc., (2d Dept. 2012); Blinds & Carpet Gallery, Inc., v. E.E.M. Realty, Inc., (2d Dept. 2011). Aetna Ins. Co. v Capasso, (1990); Grant Co. v Srogi, (1981); Washington Deluxe Bus Inc., v. Sharmash Bus, (2d Dept. 2008); Abinanti v. Pascale, (2d Dept. 2007). As noted above and below, plaintiffs have demonstrated a probability of success on the merits.

The requirement of irreparable injury is not satisfied by mere economic loss which is compensable by money damages. Here, plaintiffs have alleged damages of a non-economic nature, namely, the inability to drive to the Premises or to use the Hamlet amentities. DiFabio v. Omnipoint Communications Inc., (2d Dept. 2009). Lastly, plaintiffs have demonstrated a balancing of equities in their favor. Defendants have placed plaintiffs in the untenable position of either entering into a settlement of the Fadlon Action or loss of their rights. Moreover, plaintiffs will be required to surrender what may be legitimate claims against the HOA or defenses in the Fadlon Action in order to secure the continued use of the Hamlet. In balancing the equities, the Court finds that a preliminary injunction will maintain the status quo and, while defendant can be made whole by a payment of money, the plaintiffs risk the loss of the Fadlon Action and their substantial ownership rights if this motion is not granted. Hence, the equities weigh in favor of plaintiff. Randisi v. Mira Gardens, Inc., (2d Dept. 2008).

Plaintiffs have thus made a prima facie showing of entitlement to injunctive relief.Based on the foregoing the motion for a preliminary injunction is granted.Any requests by defendants for affirmative relief are denied because defendants did not make a cross motion seeking such relief. CPLR § 2215; New York State Div. of Human Rights v Oceanside Cove II Apt. Corp., (2d Dept 2007); see generally Bucceri v Frazer, (2d Dept 2002). To the extent the defendants ask the Court to pass on requests not made by formal notice, in the exercise of its discretion, the Court declines to do so. Fried v Jacob Holding, Inc., ___ AD3d ___, 2013 NY Slip Op 05555 (2d Dept. 2013).

Defendant's contention that this motion as barred by the business judgment rule is lacking in merit under these circumstances. Levandusky v. One Fifth Ave., Apartment Corp., (1990).

Levandusky is premised on the precept that there should be no judicial inquiry into board actions taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes Id. at 538.

The business judgment rule does not preclude review of improper decisions, as when the challenger demonstrates that a board's action has no legitimate relationship to the welfare of the organization, deliberately singles out individuals for harmful treatment, is taken without notice or consideration of relevant facts or is beyond the scope of the board's authority Id at 540.

In 40 W. 67th St. v. Pullman, 100 N.Y.3d 147 (2003), the Court of Appeals revisited the issue of business judgment and held that a court should defer to a board's determination so long as the board acts within the scope of its authority and in good faith, and that Levandusky does not mark the boundaries of the business judgment rule, Id at 154. Courts should review board decisions where a showing is made that a board acted (1) outside the scope of its authority, (2) in a way that did not legitimately further the corporate purpose or (3) in bad faith Id. at 155. In a recent Second Department case, the court noted that "unconscionability" might serve as an exception to the limited judicial review of a board's decision. 1812 Quentin Road, LLC v. 1812 Quentin Road Condominium, Ltd., (2d Dept. 2012). For purposes of determining whether plaintiffs have made a sufficient showing of probability of success on the merits, the Court finds that the circumstances outlined above could well bring this action within the orbit of the above exceptions on the ground of unconscionable action on the board's part.

CPLR §6312(b) requires that a party seeking a preliminary injunction must give an undertaking. Griffin v. 70 Portman Road Realty, Inc., (2d Dept. 2008). The preliminary injunction is conditioned upon the plaintiff filing an undertaking in accordance with CPLR §6312. The Court fixes the amount of said undertaking to be $10,000.00. Plaintiffs shall have a period of 60 days from the date of this Decision and Order to file an undertaking.

In the interim, the temporary stay continued in the Order to Show Cause is modified to enjoin and prohibit the defendants from denying plaintiffs the use and enjoyment of all amenities to which homeowner members such as the plaintiffs are entitled under the rules and regulations of the HOA, and from seeking to collect or enforce payment of any fines or assessments imposed upon plaintiffs. This directive is extended until the first to occur of the filing of the undertaking or 60 days from the date hereof.

Upon the giving of the undertaking by the plaintiffs, the defendants are enjoined and prohibited from 1) enforcing against plaintiffs any rule or resolution regarding the bamboo infestation, 2) levying or seeking to collect on any fine previously imposed, including the assertion of a foreclosure, and 3) denying plaintiffs the use and enjoyment of all amenities to which they otherwise would be entitled, including but not limited to access to the Hamlet and parking by their Premises.

All parties shall appear at a preliminary conference at the Supreme Courthouse, 100 Supreme Court Drive, Mineola, NY, on January 15, 2014, at 9:00 a.m., lower level. No adjournments of this conference will be permitted absent the permission of or Order of this Court. All parties are forewarned that failure to attend the conference may result in Judgment by Default, the dismissal of pleadings (see 22 NYCRR 202.27) or monetary sanctions (22 NYCRR 130-2.1 et seq.).

This shall constitute the Decision and Order of this Court.