Opinion
Index No. 152667/2022 Motion Seq. No. 003 NYSCEF Doc. No. 87
01-12-2024
ALON ORLITSKY, Plaintiff, v. 33 GREENWICH OWNERS CORP., THE BOARD OF DIRECTORS OF 33 GREENWICH OWNERS CORP., CENTURY MANAGEMENT SERVICES, INC., and LOYAL GC CORP., Defendants.
Unpublished Opinion
DECISION + ORDER ON MOTION
HON. VERNA L. SAUNDERS, JSC
The following e-filed documents, listed by NYSCEF document number (Motion 003) 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61,62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81,82, 83, 84, 85, 86 were read on this motion to/for DISMISSAL .
Plaintiff, cooperative tenant-shareholder, became owner of shares for unit 4F ("unit") in the cooperative building located at 33 Greenwich Avenue, New York, New York ("building") in 1992 pursuant to a proprietary lease. Plaintiff resides in California. The building is owned by 33 Greenwich Owners Corp, ("cooperative"), run by the Board of Directors of 33 Greenwich Owners Corp. ("Board"), and managed by Century Management Services, Inc. ("Century"). The cooperative engaged co-defendant, Loyal GC Corp. ("Loyal"), to perform work in connection with a building-wide gas line project in 2020-2021. Plaintiff alleges that since 1999, the cooperative has permitted long-term subleasing under the proprietary lease through which plaintiff has continually sublet his unit to the same subtenant with the cooperative's consent between 1999 and 2018. Plaintiff claims to have received a sublet letter from the cooperative dated December 13, 2017, wherein he was informed that any efforts to sublet his unit beyond August 31,2018, would not be permitted because he had not responded to several sublease renewal inquiries. Plaintiff disputes the allegation, arguing that neither he, nor the then sub-tenant, received any correspondence from the cooperative on June 26, 2017, July 15, 2017, or September 15, 2017, as claimed (NYSCEF Doc. No. 33, amended complaint, ¶28-34). Plaintiff alleges that the cooperative treated him unfairly by precluding him from further subletting after the sub-tenant vacated the unit, and further claims that the cooperative facilitated and allowed the continuous use and abuse of his vacant unit for months by agents and/or employees of Loyal, Century, and/or the cooperative, culminating in the illegal entry into and vandalization of the unit. This is so, according to plaintiff, because although Loyal and other agents of the cooperative entered his unit to make legitimate repairs between May 2021 and June 17, 2021, unauthorized persons entered the unit at least thirty (30) times, without permission from plaintiff, both prior and subsequent to the May 2021 and June 17, 2021 time period (id., at ¶58). The cooperative maintains keys for access to the units in the building via a passkey security system, KeyLink, which sends a shareholder an e-mail notification whenever his or her key is removed from or returned to the drawer where the keys are stored. Plaintiff sets forth that after having proscribed any further subleasing by him, the cooperative continuously and repeatedly exploited plaintiff s vacant unit by allowing construction workers from Loyal to use it essentially as a construction site, where Loyal workers could leave construction materials, eat, drink, and dump garbage. Plaintiff alleges he discovered widespread damage to the premises when he visited the unit in August 2021 with the intention of staying there for a short time. But he found the room filled with garbage, spoiled food, ladders, drills, other construction materials and equipment, workmen's clothing bearing Loyal's name and insignia, a "clogged kitchen sink with a faucet that spewed water", and a "damaged toilet bowl".
The Board is primarily charged with the delegation of all operational and management responsibilities of the cooperative and is a fiduciary to the shareholders of the cooperative.
On or about February 21, 2019. the cooperative commenced a holdover proceeding against plaintiff in New York City Civil Court. New York County by way of a Notice of Petition-Holdover Proceeding. However, plaintiff s subtenant vacated the apartment on May 24, 2019.
Plaintiff asserts the following claims in this action: trespass as against all defendants (first cause of action); breach of proprietary lease as against the cooperative (second cause of action); breach of the implied covenant of good faith and fair dealing as against the cooperative (third cause of action); breach of the implied warranty of habitability as against the cooperative (fourth cause of action); nuisance as against all defendants (fifth cause of action); unlawful entry as against all defendants (sixth cause of action); violation of Real Property Actions & Proceedings Law § 853 as against all defendants (seventh cause of action); constructive eviction/breach of the covenant of quiet enjoyment as against the cooperative (eighth cause of action); tortious interference with contract as against the cooperative and Century (ninth cause of action); tortious interference with prospective business relations as against the cooperative and Century (tenth cause of action); and breach of fiduciary duty as against the cooperative (eleventh cause of action).
Defendants move, pre-answer, to dismiss plaintiffs amended complaint pursuant to CPLR 3211 (a)(1), (5) and (a)(7), arguing that the second, third, ninth, tenth and eleventh causes of action, premised upon the notion that the cooperative acted wrongly by not permitting plaintiff to sublet his unit is either time-barred, belied by documentary evidence, and/or fails to state a claim for relief. Defendants contend that the statute of limitations applicable to challenging corporate action such as the cooperative's decision to not permit plaintiff to sublet his unit is four months, and such challenge must be made in the form of an Article 78 proceeding. Since plaintiff commenced this plenary action on May 19, 2022, nearly four and a half years later, the second, third, ninth, tenth and eleventh causes of action are beyond the statute of limitations (NYSCEF Doc. No. 56, defs' memo law, pg 15). Defendants articulate that the decision to proscribe plaintiff from subletting his unit constitutes a single wrong, not a continuing wrong, and plaintiff does not allege that he made any requests to sublet the unit after said decision. In furtherance of this argument, defendants contend that the second, third, ninth, tenth and eleventh causes of action are also barred by res judicata because plaintiff could have challenged the cooperative's decision in connection with the holdover proceeding in which the cooperative sued to evict plaintiff, terminating the proprietary lease when the sub-tenant remained in the unit after the sublet agreement expired. Defendants claim that contrary to plaintiff s argument that the cooperative breached the lease (second cause of action), the lease affords the cooperative the unfettered right to withhold consent to subletting.
Defendants likewise maintain that plaintiff failed to exercise his right to put the matter to a shareholder vote when the cooperative declined to consent to his further subletting renewal requests. Concerning plaintiffs third cause of action of breach of the implied covenant of good faith and fair dealing, defendants assert that the claim is duplicative of the breach of contract claim, and should be dismissed (id., at pg 17). The ninth and tenth causes of action for tortious interference with a contract and for tortious interference with prospective economic relations, respectively, should be dismissed, defendants assert, since plaintiff has no automatic right to sublet. They argue that since the lease specifically contemplates that the cooperative could opt not to approve a sublease renewal application, the decision to not permit renewal cannot form the basis of plaintiffs tortious interference claim. Further, they set forth that plaintiff fails to identify any prospective subtenant(s) with whom he would have entered into a sublease contract with at any future date; fails to demonstrate that the cooperative acted with the sole purpose of harming plaintiff or by using unlawful means, and therefore, the ninth and tenth causes of action must be dismissed.
Concerning the eleventh cause of action predicated upon the allegation that the cooperative's refusal to consent to sublease renewal constitutes a breach of fiduciary duty, defendants articulate that plaintiffs claim is without factual basis because plaintiff does not allege that other shareholders who had sublet continuously for nineteen years, like him, who habitually failed to respond to sublet notices or otherwise failed to obtain the requisite consent to renewal, and failed to pay required sublet fees, were allowed to renew subleases in 2017. In addition, defendants contend that the cooperative does not owe a fiduciary duty to the shareholders. Moreover, defendants maintain that plaintiffs unit was cleaned upon notice of any debris, and that any "damage" that plaintiff informed the cooperative about was not demonstrated to have been caused by Loyal or the cooperative, and most likely was caused by plaintiffs prior subtenant. In furtherance of this point, defendants furnish the affidavit of Erik Pavon, the resident manager for the building, in which he claims that Loyal cleaned plaintiffs unit between August 20, 2021 and August 25, 2021, and once completed, he took photographs of the cleaned unit on August 25, 2021 (NYSCEF Doc. No. 47, Pavon affidavit).
Similarly, plaintiff s allegation that the cooperative breached the implied warranty of habitability by severely damaging the unit should be dismissed, defendants posit, arguing that plaintiff did not live in the unit during the relevant time, and that the allegation is bereft of details regarding where the garbage was found and for how long it remained after plaintiff advised the cooperative of same (id., at pg 26). As such, defendants contend that they did not breach the implied warranty of habitability entitling plaintiff to an award of damages reflecting reimbursement of unspecified repairs or rent abatement. The fifth cause of action of nuisance should be found as lacking merit, defendants argue, because plaintiff does not allege that after the debris was cleared from the unit, the "vandalism" re-occurred, or its impact continued. Defendants assert that the sixth cause of action for "unlawful entry" does not appear to exist in New York and therefore, should be dismissed. Defendants likewise articulate that plaintiff is not entitled to relief under RPAPL § 853 because treble damages under this statute are not warranted where, as here, plaintiff was neither ejected nor were his keys taken away from him with a degree of force that would have caused plaintiff to apprehend a threat of personal injury.
Addressing the eighth cause of action of constructive eviction, the cooperative contends plaintiff does not allege that he was living in the unit and was forced to vacate same because of the "vandalism", and absent the required allegations of abandonment, the eighth cause of action must be dismissed. For the first, fifth, sixth, seventh, ninth and tenth causes of action as asserted against Century, defendants argue that they should be dismissed because Century is an agent of a disclosed principal, namely, the cooperative (id., at pg 31). Lastly, defendants set forth that plaintiff is not entitled to punitive damages as claimed because he has failed to allege any conduct rising to the level of culpability warranting same.
In opposition, plaintiff contends that the subletting claims are timely, since they are based on the cooperative's breach of the proprietary lease when they denied him the opportunity to sublet his unit. Plaintiff articulates that since he is not challenging the liberal corporate policy to allow subletting, his claims are not subject to an Article 78 proceeding and its resulting statute of limitations (NYSCEF Doc. No. 80, opposition, pg 16). Secondly, plaintiff posits that he could not have raised the subletting claims in the holdover proceeding because he is seeking damages and an action for damages is to be brought either in a separate part of the Civil Court or in the Supreme Court; hence, the New York City Civil Court which presided over the holdover proceeding did not have jurisdiction over the subletting claim. Furthermore, plaintiff asserts that since the settlement of the holdover proceeding was not a final determination on the merits, the subletting claim is not barred under the doctrine of res judicata. In addition, plaintiff asserts that the cooperative's course of conduct of routinely and continuously allowing him to sublet his unit without incident for nineteen years should control because it lends credence to his position that his right to sublet should not have been abrogated (id., at pg 20). Furthermore, plaintiff contends that the text of paragraph 15 of the lease is ambiguous because it does not specify which party should submit a case of the cooperative denying a shareholder the opportunity to sublet a unit to a vote.
In addition, contrary to defendants' contention, plaintiff asserts that the breach of implied covenant of good faith and fair dealing claim is viable because it concerns defendants' failure to negotiate a sublease with plaintiff in good faith. Additionally, concerning the cause of action for tortious interference, plaintiff asserts that his claim should withstand dismissal because he maintained a nineteen-year contractual relationship with his subtenant, that defendants had knowledge of that existing contractual relationship, that defendants interfered with and continues to interfere with by refusing to consent to renewal of the sublease, and as a direct and proximate result of these actions, plaintiff has been damaged. Furthermore, plaintiff disputes defendants' contention that his claim for breach of fiduciary duty has expired insofar as it was not asserted during the holdover proceeding (id., at pg 24). Regarding defendants' assertion that the cooperative is protected by the business judgment rule, plaintiff rebuts same, arguing that such claim is premature because whether or not the business judgment rule protects the actions of the cooperative is a question of fact. Also, plaintiff maintains that since he did not authorize third parties to enter his unit, nor consent to it being used as a staging area for work to be done in the building, such entry amounts to trespass, and that defendants are liable for the resulting damages.
Addressing defendants alleged breach of the of implied warranty of habitability, plaintiff argues that the fact that he did not live in the unit as his primary residence does not preclude his recovery for breach of the implied warranty of habitability or breach of the covenant of quiet enjoyment. Rather, as he was forced to abandon the unit and relocate to a hotel due to its conditions including trash, a broken kitchen counter, broken sink, and the destruction of furniture, he was deprived of the use and enjoyment of the unit (id., at pg 28). Plaintiff further asserts that the facts constituting the breach of implied warranty of habitability claim support his nuisance claim. Similarly, plaintiff argues that he has stated an unlawful entry and eviction claim pursuant to RPAPL § 853 because it is irrelevant whether there is a common law action for unlawful entry and defendants misstate that an eviction must be done by force for the statute to apply. Plaintiff further argues that whether Century's acts are shielded because it was allegedly acting on behalf of a disclosed principal turns on whether Century had complete and exclusive control of the building, which is yet to be determined. Lastly, plaintiff asserts that the cooperative has breached its fiduciary duty insofar as he was singled-out for uneven and discriminatory treatment by denying consent to renewal of his long-time subtenant and denying consent to all future sublease applications by plaintiff, while simultaneously maintaining a policy and/or practice of permitting long-term subleasing.
In reply, defendants reiterate arguments already proffered except to add that the lease contains a "no waiver" clause, which negates reliance on prior course of conduct, and that plaintiff was warned that should he fail to comply with the renewal process, his sublet privileges would be revoked (NYSCEF Doc. No. 86, reply, pg 10).
When considering defendants' motion to dismiss for failure to state a cause of action, pursuant to CPLR 3211(a)(7), the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory. (Leon v Martinez, 84 N.Y.2d 83, 87-88 [1994].) Normally, a court should not be concerned with the ultimate merits of the case. (See Anguita v Koch, 179 A.D.2d 454, 457 [1st Dept 1992].) A CPLR 3211(a)(1) motion to dismiss on the ground that the action is barred by documentary evidence may be appropriately granted only where the documentary evidence utterly refutes a plaintiffs factual allegations, conclusively establishing a defense as a matter of law (see Goshen v Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 [2002]). Under CPLR 3211(a) (5), "a party may move for judgment dismissing one or more causes of action on the ground that... the cause of action may not be maintained because of. . . res judicata." The doctrine of res judicata bars claims "where a judgment on the merits exists from a prior action between the same parties involving the same subject matter" (Martinez v Jrl Food Corp., 194 A.D.3d 488, 488 [1st Dept 2021]).
Here, plaintiffs claims are timely. Contrary to defendants' contention, plaintiffs subletting claim against the cooperative arises out of the alleged treatment meted out to him by defendants in terms of singling him out and denying him the right afforded all other shareholders to sublease their units, and not just the final decision to proscribe him from subletting his unit post 2016/2017. Insofar as the subletting claim sounds in breach of the cooperative's proprietary lease, specifically ¶l 5, it was timely commenced within the six years of the cooperative's notice to deny plaintiffs sublease renewal application (see Estate of Del Terzo v 33 Fifth Ave. Owners Corp., 136 A.D.3d 486, 488 [1st Dept 2016]). Furthermore, to the extent that the parties resolved the holdover proceeding among themselves, there was no final determination on the merits and hence, res judicata does not apply. The res judicata doctrine dictates that "as to the parties in a litigation and those in privity with them, a judgment on the merits by a court of competent jurisdiction is conclusive of the issues of fact and questions of law necessarily decided therein in any subsequent action" (UBS Sec. LLC v Highland Capital Mgt., L.P., 86 A.D.3d 469, 474 [1st Dept 2011]). There was no judgment on the merits here.
Concerning the trespass claim ("first cause of action"), it survives dismissal at this stage after according to plaintiff the benefit of every possible inference. "The essence of a trespass is intentional entry onto the property of another without justification or permission" (Schwartz v Hotel Carlyle Owners Corp., 132 A.D.3d 541, 542 [1st Dept 2015]). Here, plaintiff alleges that Loyal, as allowed by the cooperative, trashed and vandalized the unit by breaking the sink, the countertop, refrigerator, and damaging furniture, and used the unit essentially as a staging area for work to be done in the building at large. Plaintiffs assertion that Loyal was allowed access to the unit without his permission before and after the work in his unit was complete supports a claim of trespass. However, plaintiffs sixth cause of action for unlawful entry is dismissed as duplicative of the first cause of action as it is premised on the same facts and seek similar relief. Furthermore, plaintiff has not demonstrated that there is a standalone common law cause of action for unlawful entry in the State of New York.
Next, contrary to defendants' contention, plaintiffs second and third causes of action for breach of lease and breach of the implied covenant of good faith and fair dealing, respectively, do not arise out of the same facts and therefore, withstand dismissal (see Hong Leong Fin. Ltd. (Singapore) v Morgan Stanley, 131 A.D.3d 418, 419 [1st Dept 2015]). Ordinarily, the implied covenant of good faith and fair dealing are dismissed as duplicative of the breach-of-contract claim, where both claims arise from the same facts (see Amcan Holdings, Inc. v Canadian Imperial Bank of Commerce, 70 A.D.3d 423, 426 [1st Dept 2010]; Logan Advisors, LLC v Patriarch Partners, LLC, 63 A.D.3d 440, 443 [1st Dept 2010]). Plaintiffs breach of lease claim alleges that the cooperative breached the lease when it: (i) failed to follow the terms of the lease in denying him the opportunity to sublet the unit; and (ii) failed to keep the unit in good repair, in contravention of ¶87 of the lease. Here, the breach of the implied covenant of good faith and fair dealing claim concerns the cooperative's alleged failure to negotiate a sublease with plaintiff in good faith in that the cooperative allegedly sent renewal inquiries to the unit despite knowing that defendant resided in California and with knowledge that the subtenant suffered from some form of disability. Hence, given the procedural posture of this case, plaintiff has alleged sufficient facts to support his claim that the cooperative's actions defeated his right to receive the fruits of the contract, namely, his right to sublet the unit (see Demetre v HMS Holdings Corp., 127 A.D.3d 493, 494 [1st Dept 2015]).
Concerning the claim of breach of the implied warranty of habitability against the cooperative (fourth cause of action), plaintiff has not pleaded sufficient facts to sustain the claim. "Pursuant to Real Property Law 235-b, every residential lease contains an implied warranty of habitability which is limited by its terms to three covenants: (1) that the premises are 'fit for human habitation; (2) that the premises are fit for the uses reasonably intended by the parties; and (3) that the occupants will not be subjected to conditions that are 'dangerous, hazardous or detrimental to their life, health or safety'" (Solow v Wellner, 86 N.Y.2d 582, 587-588 [1995]; see also Musey v 425 E. 86 Apts. Corp., 154 A.D.3d 401,405 [1st Dept 2017]). Plaintiff admitted that he did not live in the unit after the subtenant vacated same. The alleged breach of the warranty of habitability cannot be sustained, where, as here, plaintiff only intended to visit the unit a few times per year (see Andreas v 186 Tenants Corp., 208 A.D.3d 406, 408 [1st Dept 2022], citing Genson v Sixty Sutton Corp., 74 A.D.3d 560, 560 [1st Dept 2010]).
However, plaintiff has stated a colorable constructive eviction/breach of the covenant of quiet enjoyment claim (eighth cause of action). To state a breach of the covenant of quiet enjoyment claim, a tenant must establish that the landlord's conduct substantially and materially deprived the tenant of the beneficial use and enjoyment of the premises, and there must be an actual ouster, either total or partial, or if the eviction is constructive, there must have been an abandonment of the premises by the tenant (see Jackson v Westminster House Owners Inc., 24 A.D.3d 249, 250 [1st Dept 2005]). "To establish constructive eviction, a tenant need not prove physical expulsion, but must prove wrongful acts by the landlord that 'substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises'" (Pacific Coast Silks, LLC v 247 Realty, LLC, 76 A.D.3d 167, 172 ). Plaintiff alleges that he was materially deprived of the beneficial use of his unit such that he relocated to a hotel since his unit was damaged. The record as presently developed supports a constructive eviction/breach of the covenant of quiet enjoyment cause of action (see Clarke v Fifth Ave. Dev. Co., LLC, 181 N.Y.S.3d 14, 16 [1st Dept 2022]; 127 Rest. Corp, v Rose Realty Group, LLC, 19 A.D.3d 172, 172 [1st Dept 2005]).
Addressing now the RPAPL § 853 claim (seventh cause of action), plaintiff has not alleged sufficient facts to withstand dismissal. ''RPAPL §853 provides a cause of action for unlawful eviction, which allows plaintiffs to recover treble damages, if defendant forcibly or unlawfully disseized, ejected, or removed plaintiffs from real property" (Mrishaj v Moore, 2023 NY Slip Op 23339 [U]**2 [Sup Ct, New York County 2023]). Here, while it is undisputed that Loyal entered the unit before and after the completion of the gas-line project, plaintiff does not allege that defendants deprived him of access to his unit. He still owned and had the right to access the unit. Instead, plaintiff left the unit and relocated to a hotel after he subjectively deemed the alleged vandalization/destruction in his unit intolerable. Plaintiff does not allege the locks to his door were changed or that any of his personal property was removed from the unit (see Hood v Koziej, 140 A.D.3d 563, 566 [1st Dept 2016]). Absent allegations of a physical, unlawful removal, plaintiff fails to state a claim for unlawful eviction. Furthermore, given the facts as alleged, plaintiff fails to cite caselaw in support of his position that the unlawful entry claim is actionable under RPAPL § 853. Therefore, plaintiffs seventh cause of action alleging entitlement to treble damages under RPAPL §853 is dismissed.
Concerning the fifth cause of action for nuisance, plaintiffs allegations cannot sustain the claim. To bring a cause of action for private nuisance, a plaintiff must demonstrate that defendants' interference was intentional. The elements of a common-law claim for a private nuisance are: "(1) an interference substantial in nature; (2) intentional in origin; (3) unreasonable in character; (4) with a person's property right to use and enjoy land; (5) caused by another's conduct in acting or failure to act" (Berenger v 261 W. LLC, 93 A.D.3d 175, 182 [1st Dept 2012]). Nuisance is characterized by a continuous invasion of rights-"a pattern of continuity or recurrence of objectionable conduct" (Domen Holding Co. v Aranovich, 1 N.Y.3d 117, 124 [2003], quoting Frank v Park Summit Realty Corp., 175 A.D.2d 33, 35 [1st Dept 1991], Here, the cause of action for nuisance fails insofar as any debris in the unit complained of was cleaned by defendants upon notification of same. There is no pattern of continuity or reoccurrence of vandalization attributed to defendants. Therefore, the fifth cause of action for nuisance is dismissed.
The first, fifth, sixth, seventh, ninth and tenth causes of action as asserted against Century are dismissed. A managing agent cannot be held liable where, as here, there was no allegation that it was in exclusive control of the building (see Brasseur v Speranza, 21 A.D.3d 297, 299 [1st Dept 2005]). Relevant portions of the Management Agreement between Century and the cooperative evince that Century did not have exclusive control of the building because, as its agent, it acted at the direction of the cooperative, a disclosed principal (NYSCEF Doc. No. 85, Management Agreement, Section II). Plaintiff has neither alleged nor demonstrated that Century intended to substitute or superadd its liability for, or to, that of the cooperative (see McMahon v Cobblestone Lofts Condominium, 161 A.D.3d 536, 537 [1st Dept 2018]). Hence, the first, fifth, sixth, seventh, ninth and tenth causes of action as asserted against Century are dismissed.
Addressing now the punitive damages sought in connection with the first, second, fourth, fifth, sixth and seventh through eleventh causes of action, the facts as alleged do not entitle plaintiff to any such award. "Punitive damages are available in a tort action where the wrongdoing is intentional or deliberate, presents circumstances of aggravation or outrage, evinces a fraudulent or evil motive, or is in such conscious disregard of the rights of another that it is deemed willful and wanton" (Bishop v 59 W. 12th St. Condo., 66 A.D.3d 401,402 [1st Dept 2009]). Plaintiff alleges in conclusive fashion that defendants' conduct evinces evil motive or that it was willful and wanton (Barnes v Hodge, 118 A.D.3d 633, 633 [1st Dept 2014]). Plaintiff s argument that the punitive damages demand should proceed because of outstanding discovery is without merit. It has been held that "[p]laintiff cannot maintain the punitive damages demand on the hope that discovery might someday provide a basis for if' (id).
Next, plaintiffs tortious interference with contract claim against the cooperative and Century (ninth cause of action) is dismissed. "To establish a cause of action for tortious interference with contractual relations, a plaintiff is required to allege: (1) the existence of a valid contract; (2) defendants' knowledge of that contract; (3) defendants' intentional procuring of the breach of that contract; and (4) damages. Specifically, the plaintiff must allege that the contract would not have been breached 'but for' the defendant's conduct" (Burrowes v Combs, 25 A.D.3d 370, 373 [1st Dept 2006]). Here, plaintiff was notified that he could not renew his sublease post 2016-2017 as the cooperative would not consent to any further sublet applications. The sublease term expired on August 31, 2018. Insofar as plaintiff does not allege that he renewed his sublease with a subtenant post 2016-2017, and that the cooperative and Century tortiously interfered with same, the claim does not lie and is therefore dismissed.
Additionally, plaintiff has not stated a colorable tortious interference with prospective business relations claim against the cooperative (tenth cause of action). "A claim for tortious interference with a prospective business relationship (i.e., an economic advantage) must allege: (1) the defendant's knowledge of a business relationship between the plaintiff and a third party; (2) the defendant's intentional interference with the relationship; (3) that the defendant acted by the use of wrongful means or with the sole purpose of malice; and (4) resulting injury to the business relationship" (534 E. 71 th St. Hous. Dev. Fund Corp, v Hendrick, 90 A.D.3d 541, 542 [1st Dept 2011]; see Thome v Alexander & Louisa Calder Foundation, 70 A.D.3d 88, 108 [1st Dept 2009]). Here, while plaintiff alleges that the cooperative decision disallowing the renewal of his sublease was motivated by malice, he fails to allege that the cooperative's decision could have been as a result of self-interest or other economic considerations (see Bradbury v Israel, 204 A.D.3d 563, 564-565 [1st Dept 2022], citing Shared Communications Services of ESR, Inc. v Goldman Sachs &Co., 23 A.D.3d 162, 163 [1st Dept 2005]). Therefore, the defendants' alleged conduct does not rise to the level of culpable conduct sufficient to support the claim (see Singer v de Blasio, 215 A.D.3d 440, 441 [1st Dept 2023]).
Nevertheless, plaintiff states a colorable breach of fiduciary duty claim against the cooperative board in that it breached its duty when it allegedly singled him out and treated him differently from the other shareholders by denying him the opportunity to sublet his unit for, among other things, given "the long-term nature" of his sublease. "The directors of the coop owe a fiduciary duty to plaintiffs - shareholders, requiring the directors to act solely in the best interests of the shareholders" (Bryan v West 81 Street Owners Corp., 186 A.D.2d 514, 515 [ I st Dept 1992]). The cooperative board relies on the business judgment rule, which provides that so long as the board acts for the purposes of the cooperative and Century, within the scope of their authority and in good faith, courts will not substitute their judgment for the board's (see Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 N.Y.2d 530, 538 [1990]). However, it has been held that "pre-discovery dismissal of pleadings in the name of the business judgment rule is inappropriate where those pleadings suggest that the directors did not act in good faith" (Bryan, 186 A.D.2d at 515). Therefore, the eleventh cause of action withstands dismissal. All other arguments have been considered and are either without merit or need not be addressed given the findings above. Accordingly, it is hereby
ORDERED that defendants' motion is granted solely to the extent that plaintiffs fourth, fifth, sixth, seventh, ninth and tenth causes of action are dismissed, and it is otherwise denied; and it is further
ORDERED that Century Management Services, Inc. is dismissed from this action; and it is further
ORDERED that, within twenty (20) days after this decision and order is uploaded to NYSCEF, counsel for plaintiff shall serve a copy of this decision and order, with notice of entry, upon defendants; and it is further
ORDERED that defendants shall interpose an answer within twenty (20) days after service of this decision and order with notice of entry; and it is further
ORDERED that parties are to appear for a remote preliminary conference on March 20, 2024, details shall be provided no later than March 18, 2024.
This constitutes the decision and order of the Court.