The better I get to know men, the more I find myself loving dogs. — Charles DeGaulle
Suits by the owners of two dogs in a residential condominium were recently dealt "double header" appellate blows on their claims for breach of fiduciary duty against the Board of Managers and for defamation against the managing agent.
Kenneth Gottlieb and Terry Gottlieb own a condominium unit located within the Fishkill Woods Condominium. The Board of Managers of the Condominium is an unincorporated condominium association created for the purpose of governing the affairs of the Condominium. Peter Galotti was the president of the Board.
In two separate incidents that occurred in 2014 and 2015, two dogs owned by the Gottliebs allegedly attacked two neighbors on Condominium property. In February 2016, the Board commenced an action against the Gottliebs alleging that because of the incidents and complaints from other homeowners, the Board gave the Gottliebs written notice to remove the dogs from the Condominium community, in accordance with the Condominium's declaration. The Board alleged that the Gottliebs failed to remove the dogs from the Condominium community and sought a judgment declaring that they were in violation of the declaration. The Board also sought an injunction compelling the Gottliebs to permanently remove the dogs from the Condominium community and an award of attorneys' fees.
Shortly thereafter, the Gottliebs commenced an action against the Condominium, Galotti, and the Board for declaratory and injunctive relief. The Gottliebs alleged that the Board unlawfully encumbered their condominium unit with a fine of $100 per day, which commenced on January 11, 2016, and unlawfully demanded the removal of the dogs. They sought declaratory and injunctive relief with respect to the Boards' allegedly unlawful actions, including a judgment declaring that the fine and the demand for the removal of the dogs were unenforceable, or, in the alternative, that the Board could only impose a fine of $100, not $100 per day.
In response to the Board's complaint, the Gottliebs interposed an answer with counterclaims that were identical to the causes of action alleged by them in their countersuit. In response to the Gottliebs' complaint, the Board interposed an answer with counterclaims that were identical to the causes of action alleged in the suit against the Gottliebs. The two actions were consolidated with the consent of the parties.
In September 2016, the Board moved for summary judgment with respect to the complaints and the counterclaims in the two actions. In support of the motion, the Board argued that the decision to demand the removal of the dogs and to fine the Gottliebs for their continued failure to remove the dogs was protected by the business judgment rule. The Board also argued that they were entitled to an award of attorneys' fees pursuant to Real Property Law § 339-j and the Condominium's bylaws. The Gottliebs opposed the Board's motion and cross-moved for summary judgment dismissing the Gottliebs' complaint and the counterclaims and for a judgment declaring that, pursuant to the declaration and the bylaws, the maximum fine that could be assessed against them for the failure to remove the dogs was $200.
Supreme Court granted those branches of the Boards' motion which were for summary judgment (1), in effect, declaring that the Gottliebs were in violation of the Condominium's declaration by failing to remove the dogs from the Condominium community, (2) on their cause of action and counterclaim for an injunction, compelling the Gottliebs to permanently remove the dogs from the Condominium community, (3) declaring that the fine imposed against the Gottliebs for their failure to remove the dogs was lawful and enforceable to the extent that the fine was in the sum of $200, (4) on their cause of action and counterclaim for an award of attorneys' fees in an amount to be determined at a hearing, and (5) dismissing the Gottliebs' cause of action and counterclaim for injunctive relief. The Gottliebs appealed.
The appeals court agreed with Supreme Court's determination that the Board properly directed the removal of the dogs. In reviewing a condominium board's actions, courts apply the business judgment rule. Under the business judgment rule, the court's inquiry was limited to whether the board acted within the scope of its authority under the bylaws (a necessary threshold inquiry) and whether the action was taken in good faith to further a legitimate interest of the Condominium. Absent a showing of fraud, self-dealing or unconscionability, the Court's inquiry was so limited and it would not inquire as to the wisdom or soundness of the business decision.
In this case, the Board established that its determination to direct the permanent removal of the dogs was within its authority, in good faith, and in furtherance of the Condominium's legitimate interest. The Condominium's declaration provided that "[t]he ability to keep a pet is a privilege, not a right. If, in the opinion of the [Board], any pet becomes a source of unreasonable annoyance to others, or the owner of the pet fails or refuses to comply with these restrictions, the owner, upon written notice, may be required to remove the pet [from] the Community."
Accordingly, the declaration allowed the Board to direct the removal of the dogs if, in its opinion, the dogs were an unreasonable annoyance. Based upon the 2014 and 2015 incidents, as well as a petition signed by nearly all of the unit owners in the Condominium community, the Board concluded that the dogs were an unreasonable annoyance. Further, the Board established that it acted in good faith by submitting evidence that it offered the Gottliebs an opportunity to describe their version of the 2014 and 2015 incidents at a meeting; however, they declined to attend.
In opposition, the Gottliebs failed to raise a triable issue of fact regarding the legitimacy of the Boards' exercise of authority, or their allegations of bad faith or other misconduct which l warranted further judicial inquiry.
Regarding Supreme Court's determination that the Board was entitled to an award of attorneys' fees in accordance with Real Property Law § 339-j and the Condominium's bylaws, the appeals court noted that, under the general rule, attorney's fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule.
Real Property Law § 339-j, entitled "Compliance with by-laws and rules and regulations," allows, a condominium board of managers on behalf of the unit owners to commence an action "to recover sums due, for damages or injunctive relief or both," in the event of a unit owner's failure to strictly comply, inter alia, with the condominium bylaws, rules, and regulations. That statute, which expressly governed compliance with condominium bylaws, rules, and regulations, necessarily implicated a review of such bylaws, rules, and regulations, and did not preclude a board of managers from seeking an award of reasonable attorneys' fees. Therefore, in determining whether the Supreme Court properly determined that the Board was entitled to an award of attorneys' fees, the appeals court was guided by the specific provisions contained in the Condominium's bylaws.
The Board established entitlement to an award of reasonable attorneys' fees under the bylaws, but only in connection with the causes of action and counterclaims for recovery of the unpaid fine imposed on the Gottliebs, which Supreme Court determined was limited to $200.
Specifically, Article VI, section 2(c) of the bylaws provided that in the event any homeowner failed to make a payment of his or her "Common Charge," the homeowner shall be obligated to pay "all expenses, including, without limitation, attorneys' fees paid or incurred by the [Board] . . . in any proceeding brought to collect such unpaid Common Charges." Pursuant to Article VIII, section 8(p) of the bylaws, a fine for an uncorrected violation "is to be considered as an additional common charge to the account of the violator and shall be treated as such regarding late penalties." Accordingly, the Board was entitled under the bylaws to recover from the Gottliebs the reasonable attorneys' fees paid or incurred in recovering the unpaid common charges.
But there is more...
Don't accept your dog's admiration as conclusive evidence that you are wonderful. — Ann Landers
The Condominium is managed by McGrath Management Services, Inc. with Christine A. Colonel was employed by McGrath as property manager.
The two dogs owned by the Gottliebs were the subject of a complaint filed with the Justice Court of the Town of Fishkill which resulted in an order that required that both dogs be adequately restrained and muzzled while outside the Gottliebs' residence. A subsequent order specifically continued the restrictions contained in the original order and also set forth additional conditions to be followed by Gottliebs. The second order further directed that the Justice Court action was "conditionally adjourned in contemplation of dismissal for a period of six (6) months from the date of this order."
The Gottliebs subsequently sued Colonel and McGrath for defamation, alleging that Colonel published a written statement to the Town Prosecutor of the Town of Fishkill, the Board of Managers and an individual member of the Board. In the statement, Colonel asserted that she observed Gottlieb "walking down the common lawn area with a dog . . . without a muzzle." Colonel and McGrath moved to dismiss the complaint.
Supreme Court granted those branches of the motion which were for summary judgment dismissing the complaint and for an award of reasonable attorneys' fees in the sum of $5,800. Gottlieb appealed.
The law provided an absolute privilege for communications made by individuals participating in a public function, such as executive, legislative, judicial or quasi-judicial proceedings. The privilege is accorded statements made at all stages of a judicial proceeding in communications among the parties, witnesses, counsel, and the court, provided that the statements may be considered in some way pertinent to the issue in the proceeding. The privilege applies to all statements made in or out of court and regardless of the motive for which they were made.
The evidence established that the written statement was a letter sent by Colonel to the Town Prosecutor. Contrary to Gottlieb's contention, the Justice Court action was still pending at the time Colonel's statement was sent to the Town Prosecutor. Specifically, the second order contained a six-month conditional adjournment in contemplation of dismissal. The case would be dismissed after six months, if Gottlieb complied with all the conditions in that order.
One of the conditions in the second order incorporated by reference the terms of the first order requiring the dogs to be muzzled while outside of Gottlieb's residence. Colonel's statement was provided to the Town Prosecutor well within the six-month adjournment period. Contrary to Gottlieb's further contention, the Justice Court action did not terminate upon the granting of the adjournment in contemplation of dismissal. The adjournment in contemplation of dismissal provided a procedural path for the criminal charges to be kept in a state of suspense for a period of six months, during which the subject's habitual behavior pattern can be tested by time.
Here, the evidence demonstrated that Colonel's statement was made in her capacity as the property manager for the Condominium based upon her personal observations and her knowledge of the conditions imposed by the Justice Court regarding the Gottliebs' dogs. The statement was pertinent to the issue in the pending Justice Court action and was made within the six-month adjournment period. Thus, Colonel's statement was protected by an absolute privilege. The proof also demonstrated that Colonel's statement had not been published to the Board or an individual Board member.
The appeals court agreed with Supreme Court's dismissal of the complaint.
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