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Kaung v. Board of Managers of the Biltmore Towers Condominium Association

December 10, 2008

ROSE KAUNG, BILL KAUNG, ROBERT MARSHALL, CARLOS CACERES, STEPHEN DRAGO, MARTHA YEAGER, BONNIE ACKERMAN, AND THE BILTMORE TOWERS OWNERS COALITION, PLAINTIFFS,
v.
BOARD OF MANAGERS OF THE BILTMORE TOWERS CONDOMINIUM ASSOCIATION, WILLIAM PALMER, JR., HENRIETTE BROOKS, SCOTT KEENAN, BARBARA MCCULLOUGH, EDWARD RODRIGUEZ, CAROLYN ROBERTS, ELIZABETH THOMPSON, METROPCS NEW YORK, LLC AND VERIZON, INC., DEFENDANTS.



The opinion of the court was delivered by: Alan D. Scheinkman, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Plaintiffs Rose Kaung, Bill Kaung, Robert Marshall, Carlos Caceres, Stephen Drago, Martha Yeager, Bonnie Ackerman and the Biltmore Towers Owners Coalition ("Plaintiffs") move for a preliminary injunction enjoining the construction of wireless communication antennas ("cell towers") on the roof of a residential building located at 30 Lake Street, White Plains, New York, known as the "Biltmore Towers" (hereinafter "Condominium" or the "Premises"), by defendant MetroPCS New York LLC ("Metro")*fn1 during the pendency of this action (Sequence #1). Plaintiffs also move for partial summary judgment on their First Cause of Action for rescission*fn2 and/or their Seventh Cause of Action for a permanent injunction (Sequence #2).*fn3

Defendant Metro opposes Plaintiffs' motions and cross-moves for summary judgment dismissing Plaintiffs' Second, Third, Fourth and Seventh Causes of Action (Sequence #3). Defendant Board of Managers of the Biltmore Towers Condominium Association (the "Board"), and Individual Defendants William Palmer, Jr., Henriette Brooks, Scott Keenan, Barbara McCullough, Edward Rodriguez, Carolyn Roberts and Elizabeth Thompson (collectively the "Board Defendants") also oppose Plaintiffs' motion and cross-move for summary judgment (Sequence # 4) for an order: (1) declaring the Board had the authority to enter into the lease with Metro; (2) declaring that the individual Board Members are not individually liable; (3) dismissing Plaintiffs' claim of fraud; (4) dismissing Plaintiffs' request for the removal of Board Members because Plaintiffs failed to avail themselves of the procedures for such removal; and (5) dismissing Steven Drago and the Biltmore Towers Owners Coalition ("Owners' Coalition") for lack of standing.*fn4

FACTUAL AND PROCEDURAL HISTORY

This lawsuit is a classic case of NIMBY "Not in My Backyard." It is hardly uncommon for a proposed improvement that could benefit the public generally to be opposed by those in the neighborhood in which it is to be located. Indeed, the passion with which it is asserted that there is a public good to be served is sometimes directly proportionate to the distance between the proponent and location to be burdened. This case is more precisely a case of NOMR Not On My Roof. A quest for upgraded wireless communications in the City of White Plains is pitted against the concerns of condominium owners that the placement of cell towers on the roof of their condominium will cause ill health effects. While the use of cell phones is ubiquitous, and users are frustrated when their calls are dropped, relatively few users are all that interested in having a cell tower built on their property, or even nearby.

This action challenges a 25-year lease agreement entered between the Board and Metro on or about December 20, 2007 (effective December 8, 2008)*fn5 allowing Metro to erect and maintain eight cell towers on the roof of the subject building (the "Agreement") (Exhibit G to the Affidavit of Robert Marshall, sworn to September 18, 2008 ["Marshall Aff."]). The challengers are Unit Owners*fn6 in the 12-story, 131-unit Biltmore Towers Condominium.

On August 4, 2008, Plaintiffs moved to prevent Metro from proceeding with the construction of the cell towers. On that date, after hearing from both sides, the Court granted a temporary restraining order and, on August 22, 2008, continued that restraint pending determination of the preliminary injunction motion (see Affirmation of Joshua E. Kimmerling, Esq. ["Kimmerling Aff."], Exs. C, F). Because the Court perceived the decisive question to be one of law, the Court invited the parties to move for summary judgment, which they have.

Plaintiffs contend that, based on provisions found in the Offering Plan, Declaration and By-Laws (the "Governing Documents"), the Board was without authority to enter into the Agreement without the approval of a majority of the Unit Owners.*fn7 Plaintiffs argue that the Agreement involves a commercial use of the roof and thus violates the Governing Documents which maintain the residential character of the Condominium (except for one unit that was designated for office use). Not only do the By-Laws limit the units' use to residential uses, the Governing Documents provide that "the common elements shall be used only for the furnishing of services and facilities for which they are reasonably intended and which are incident to the use and occupancy of units" (Offering Plan, ¶ 17[b]; By-Laws, Article V, §12 [b]).

Plaintiffs cite to various studies which they contend show the substantial health hazards posed by cellular towers to support their claim of irreparable injury and that the equities weigh in their favor (see Marshall Aff., Exs. H-N). Plaintiffs also raise issues concerning actions taken subsequent to the entering into of the Agreement.*fn8

In opposition, Metro asserts that, in connection with its federal license to provide advanced wireless services to the public in the greater New York area (which includes the City of White Plains), it has invested millions of dollars and has plans to construct 10 rooftop wireless sites within the City of White Plains (see Affidavit of John Kossitch, sworn to August 20, 2008 ["Kossitch Aff."] at ¶ 2). Metro contends that the Premises' site is essential to providing the services Metro is obligated to provide and that it may "be the only viable location for MetroPCS' rooftop site as required to provide services to the public in this area of the City" (Kossitch Aff. at ¶ 3; see also Affidavit of Greg Sharpe, sworn to February 6, 2008, Kossitch Aff., Ex. A). Metro states that it "attempted but was unable to locate a site classified in a nonresidential zoning district" (see Letter from Vincent Xavier, HPC Development LLC to Daniel Laub, Esq. [Cuddy & Fedder] dated May 12, 2008, Kossitch Aff., Ex. 4). Further, Metro argues there will be no negative aesthetic impact as a result of the Agreement since the construction will consist of "small panel antennas ... [being] mounted to the existing roof and other equipment installed in rooftop common areas of the building" (id. at ¶ 3).

Metro submits a report from its expert which states that the proposed cell towers would comply with Federal Communications Commission regulations. The report concludes "[e]ven with the significant degree of conservatism incorporated in the calculations, the worst-case calculated result is still more than 280 times below the limit established as safe for continuous human exposure to RF emissions from antennas" (see Report of the Pinnacle Telecom Group dated January 28, 2008 at 4, Ex. C to Affirmation of Christopher B. Fisher, Esq. dated August 20, 2008). Metro claims that it would be irreparably injured if it is not allowed to proceed with the installation of the cell towers (which, according to Metro, could be readily removed at a later date by order of this Court). This is because, given the time it took to obtain zoning approvals and permits and to obtain the Agreement, Metro " would be unable to timely redesign the network and find, lease, zone and construct any alternative site(s) ...." in time for its intended launch in the first half of 2009 (id. at ¶ 5).

Metro also submits an affirmation from its counsel which attaches: (1) the minutes from the Board meeting held on December 6, 2007 at which the Board resolved that the proposed rooftop wireless facility was not an addition, alteration or improvement as defined in the By-Laws so that the Agreement could be entered into without the Unit Owners' consent; (2) various correspondence from Plaintiffs and their counsel to show that the equities do not weigh in Plaintiffs' favor given their delay from March 2008 to August 2008 in their seeking injunctive relief; and (3) the By-Laws and oral argument transcript from DiFabio v Omni Point Communications, Inc. (NYLJ, Feb. 7, 1998 at 32, col 1 [Sup Ct, Westchester County, Donovan, J.]), offered in support of Metro's claim that DiFabio is on "all fours" with the present case.*fn9

On the issue of the Board's authority to enter into the Agreement, Metro argues that the "most specific" provision of the By-Laws regarding the use of the common elements does not limit their use to residential purposes only, but instead states that they "shall be used only for those purposes for which they are reasonably suited and capable" (Metro Mem. of Law at 3, citing By-Laws Article V, § 15). In terms of contract construction, Metro argues that since it is the more specific provision, it should control. And Metro maintains that given its language, there can be no argument "that the roof is [not] reasonably suited and capable' of being used exactly as proposed pursuant to the MetroPCS Lease Agreement" (id. at 3-4). Furthermore, Metro argues that a construction of the By-Laws at issue to include a provision mandating that the common elements be used only for residential purposes would render this section of the By-Laws superfluous. Thus, according to Metro, the only issue for this Court to determine is whether "wireless services are incident to' residential uses of units" (id. at 4). In answering the question posed, Metro responds by stating that they are as incidental to the residential use of the units as are land lines, cable services, and internet services,*fn10 and the fact that the wireless services would be used by people other than the residents is not dispositive since "there is no exclusivity limitation in any of the relevant provisions of the Governing Documents related to the general use of the common elements, such as the roof" (id. at 5).*fn11 Metro also sets forth its interpretation of the meaning of "incident to" as "a minor use that is subordinate to, but not necessarily the same as, the principal use, i.e., use as a residence" (id. at 9). And Metro points to prior precedent for placing equipment on the Condominium's roof for use by non-residents (i.e., the satellite radio receiving facility the Board agreed to have placed on the roof) (id. at 6).*fn12 This prior course of dealing, Metro argues, should be determinative of the meaning to be ascribed to the provisions of the By-Laws because under the doctrine of practical construction, the parties' conduct is the best evidence of the correct interpretation of the reasonable expectations of the parties (id. at 14). Accordingly, Metro requests that the Court grant it summary judgment dismissing the Second and Fourth through Seventh Causes of Action. Finally, Metro requests that the Court dismiss the conspiracy to commit a tort (Third Cause of Action) on the grounds that New York does not recognize such a cause of action (id. at 17).

The Board Members separately oppose Plaintiffs' motions and cross-move for summary judgment. According to the Board Defendants, the Plaintiffs' opposition is "based on their subjective belief that cellular antennas pose a health risk, a belief which is completely unsupported by accepted scientific evidence" (Affirmation of Kimberly Connick, Esq. dated October 2, 2008 at ¶ 10). The Board Defendants also submit an Affidavit from William Palmer, President of the Board, sworn to August 20, 2008 ("Palmer Aff."). Palmer avers that based on his 11 years of experience on the Board, the Board was within its rights to enter into the Agreement since the Board has previously entered into leases involving the common elements of the Premises which generate revenue (i.e., leases for the washers and dryers, the agreement with XM Satellite Radio for antennas to be placed on the roof, and its agreement with Verizon FIOS for equipment to be installed in common areas) (Palmer Aff. at ¶¶ 3-5). He also attests that the Board members will not receive any direct benefit from the Agreement, other than the benefit they will receive along with all other unit owners when the funds received from Metro are used to offset future operating costs (id. at ¶¶ 9-10).

The Board Defendants argue that the Board had the authority to enter into the Agreement and its action is governed by the Business Judgment Rule. Because the Board is empowered to administer the affairs of the Condominium, including the management and control of the common elements, it was within the Board's province to determine, pursuant to the By-Laws Section 12(a)(b), whether the placement of the cellular towers was "reasonably suited and ... incident to the use and occupancy of units" (Board Defendants' Mem. of Law at 4). According to the Board Defendants, the cellular antennas were reasonably suited for placement on the roof since the roof currently houses similar items (e.g., air conditioner towers, roof antenna, elevator equipment room, roof fans), is not used for any residential purposes (e.g., no gardens, decks or walking areas), and the residents are not even permitted on the roof (id. at 4-5). The Board Defendants go so far as to argue that the Condominium's house rule 7 specifically addresses the authority of the Board to approve the placement of the cellular tower on the roof since it provides "No ... radio or television aerial shall be attached or hung from the exterior of the Building ... except as shall have been approved in writing by the Board of Managers or the managing agent or the manager, which approval shall not be unreasonably withheld ...." (id. at 5, n.1). To support their decision that the Agreement would be incident to the residential use of the buildings, the Board Defendants maintain that because there would be in excess of $270,000 in revenues generated by the Agreement during its initial term, which funds would be used to reduce each unit owner's obligation to pay for the maintenance of the common elements (e.g., reduce the common charges), the Agreement should be "deemed to be incident to the use and occupancy of the building" (id. at 5-6).

To counter Plaintiffs' claims of health hazards caused by cell towers, the Board Defendants argue that the studies attached to Plaintiffs' moving papers are inadmissible "junk science" under the holding of Frye v United States (293 F 1013 [DC Cir 1923]) since they are not based on scientific principles, procedures or theories that have gained general acceptance in the relevant scientific field. Further, the Board Defendants argue that Plaintiffs' assertions of negative health effects are pre-empted by Federal Law which provides that

"[n]o State or local government or instrumentality thereof may regulate the placement, construction, and modification of personal wireless service facilities on the basis of the environmental effects of radio frequency emissions to the extent that such facilities comply with the Commission's regulations concerning such emissions" (Board Defendants' Mem. of Law in Opp. to Preliminary Injunction Motion at 13, quoting 47 USCA §322 [c][7][iv]).

With regard to the individual liability of the Board members, the Board Defendants argue that the complaint is devoid of any factual allegations that they acted in their individual capacities and, therefore, the Business Judgment Rule protects the Board Members from individual liability if they acted in a manner reasonably related to the exercise of their duty. Accordingly, as the Complaint does not allege that the Individual Defendants "were ever acting outside the scope of their authority, that their actions did not legitimately further the corporate purpose, or that they acted in bad faith" (id. at 11), the Complaint against the Individual Defendants should be dismissed. The Board Defendants further argue that Plaintiffs' claim in their moving papers that they acted in bad faith is without merit and cannot sustain Plaintiffs' claims against the Individual Defendants since (1) bad faith is not alleged in the complaint, and (2) in any event, it is without merit, since bad faith requires a showing that the plaintiff was singled out for unfair treatment. And there is no basis to pierce the corporate veil because there are no allegations that the Individual Defendants abused the corporate form.

The Board Defendants also seek dismissal of Plaintiffs' claim or allegations of fraud based on their failure to plead fraud with the requisite particularity (CPLR 3016). And they seek dismissal of the Plaintiffs' request that the Individual Defendants be removed as members of the Board on the grounds that Plaintiffs have not availed themselves of the procedure set forth in the Condominium's By-Laws to remove Board members by a vote of the majority of the Unit Owners (id. at 17), nor have they shown the efforts they made to secure such a result or that the demand would be futile.

Plaintiffs reply that: (1) because the Governing Documents were created in 1977, long before the advent of cellular communications, Defendants may not rely on the fact that the erection of cellular towers was not expressly precluded by Governing Documents; (2) the impact of the Agreement is much more far-reaching than what Defendants portray (i.e., a few antennas being placed on the roof) because the Agreement allows the installation of equipment throughout the premises and further, Metro is given unfettered access (without escorts) to the Premises 24/7 to make repairs, etc.; and (3) DiFabio is distinguishable.

THE BOARD'S AUTHORITY TO ENTER INTO THE AGREEMENT

Matter of Levandusky v One Fifth Ave. Apt. Corp. (75 NY2d 530, 539-540 [1990]) addresses the standard of review to be applied to decisions made by cooperative boards*fn13 which seeks to minimize judicial interference with decisions arising out of common ownership*fn14 found in condominium and cooperative living arrangements:

[a]s this case exemplifies, board decisions concerning what residents may or may not do with their living space may be highly charged and emotional. A ... condominium is by nature a myriad of often competing views regarding personal living space, and decisions taken to benefit the collective interest may be unpalatable to one resident or another, creating the prospect that board decisions will be subjected to undue court involvement and judicial second-guessing. Allowing an owner who is simply dissatisfied with particular board action a second opportunity to reopen the matter completely before a court, which generally without knowing the property may or may not agree with the reasonableness of the board's determination, threatens the stability of the common living arrangement" (Matter of Levandusky, 75 NY2d at 539-540).

Balancing these competing interests, the Court ruled that:

[s]o long as the board acts for the purposes of the [condominium], within the scope of its authority and in good faith, courts will not substitute their judgment for the board's. Stated somewhat differently, unless a resident challenging the board's action is able to demonstrate a breach of this duty, judicial review is not available (Levandusky, 75 NY2d at 538 [emphasis added]).

However, a Court may review "improper decisions, as when the challenger demonstrates that the board's action had no legitimate relationship to the welfare of the [development], deliberately singles out individuals for harmful treatment, is taken without notice or consideration of the relevant facts, or is beyond the scope of the board's authority" (id. at 540). Thus, "[b]efore reviewing a condominium board's exercise of power under the business judgment standard ... the Court must first make a determination as to whether the Board in fact possessed the power it purported to exercise" (Blumberg v Albicocco, 12 Misc 3d 1045, 1048 [Sup Ct Nassau County 2006]). And "[t]he power claimed by the Board must either be granted by statute or derived from the Declaration or By-Laws of the Condominium" (id.).

Consequently, the central issue is whether the Board had the authority to enter into the Agreement. This issue, as discussed below, is a question of law properly resolvable on summary judgment.

THE SUMMARY JUDGMENT STANDARD

The proponent of a motion for summary judgment carries the initial burden of production of evidence as well as the burden of persuasion (Alvarez v Prospect Hosp., 68 NY2d 320 [1986]). The moving party must tender sufficient evidence to demonstrate as a matter of law the absence of a material issue of fact.*fn15 Failure to make that initial showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v New York University Med. Center, 64 NY2d 851, 643-644 [1985]; St. Luke's-Roosevelt Hosp. v American Tr. Ins. Co., 274 AD2d 511 [2d Dept 2000]; Greenberg v Manlon Realty, Inc., 43 AD2d 968 [2d Dept 1974]). Once the moving party has made a prima facie showing of entitlement of summary judgment, the burden of production shifts to the opponent, who must now go forward and produce sufficient evidence in admissible form to establish the existence of a triable issue ...


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