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Batsidis v. Wallack Management Co.

July 2, 2009


Plaintiff appeals from an order of the Supreme Court, New York County (Michael D. Stallman, J.), entered May 13, 2008, which, to the extent appealed from as limited by the brief, denied his motion to allow him to resume renovation of the subject premises without paying certain engineering and legal fees as set forth in the alteration agreement between the parties.

The opinion of the court was delivered by: Saxe, J.P.

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 Official Reports.

David B. Saxe, J.P., John T. Buckley, James M. McGuire, Karla Moskowitz Rolando T. Acosta, JJ.

Index 603606/07

This dispute concerns the scope of a cost-shifting provision in a standard alteration agreement between the proprietary lessee of a co-op apartment and the cooperative corporation and its management company. We hold that the cost-shifting provision is proper, clear, unambiguous and enforceable as written; we reject plaintiff's contention that the provision may be applied only where the cooperative corporation is determined to be the prevailing party and the fees it incurred in relation to its oversight of the proposed alterations are determined to be reasonable. However, as a procedural matter, since defendants stipulated to allow plaintiff to recommence the work upon his completion of stated conditions, and the court so-ordered that stipulation by way of resolving plaintiff's motion for an order authorizing him to resume work, defendants must be precluded at this juncture from using plaintiff's obligation to pay those costs as an impediment to his resumption of the agreed-upon renovation work.

Defendant 225 East 57th Street Owners, Inc. is the owner of the residential cooperative located at 225 East 57th Street; defendant Wallack Management Company is its managing agent. Plaintiff is the nonresident proprietary lessee of apartment 9C.

Plaintiff sought to renovate the kitchen and one bathroom in apartment 9C and to perform minor work in the rest of the apartment. He submitted a proposal, which was reviewed by the co-op's engineer and approved. The parties entered into an alteration agreement dated June 15, 2007.

Paragraph 7 of the agreement entitles the co-op to charge the unit owner for costs it incurs with respect to the renovation work: "If the Corporation is required, or deems it wise, to seek legal, engineering, electrical, architectural or other advice relating to the work or this Alteration Agreement, at any time and from time to time prior to or after granting permission for the work to be performed, the Shareholder hereby agrees to reimburse on demand all fees and disbursements incurred by the Corporation with respect to the same, whether or not the Corporation grants permission for the performance of the work. The Shareholder agrees to reimburse the Corporation for all such expenses promptly upon receipt of the Corporation's bill for the same, and if permission is granted, then all fees incurred prior to commencement of the work shall be reimbursed to the Corporation prior to such commencement" (emphasis added). Paragraph 32 provides that all expenses and fees required to be paid by the shareholder will be considered additional rent under the lease.

Plaintiff began work on the premises. On October 2, 2007, the resident superintendent, Larry McCool, went to the apartment in response to a complaint of excessive noise, and observed that severe cuts had been made into a structural column, which damaged the column, and that the work undertaken exceeded the scope of the work set forth in plaintiff's renovation proposal. McCool shut down the job pursuant to paragraph 30 of the alteration agreement, which provides that upon a breach of the alteration agreement the co-op corporation has the right to suspend all work and to prevent workers from entering the building and the apartment, and to revoke its permission for performance of the work.

Plaintiff commenced this action on October 30, 2007, seeking damages for breach of contract and a mandatory injunction compelling defendants to permit him to resume work on the premises. Defendants counterclaimed for attorneys' and engineers' fees, and asserted that plaintiff's proposed renovations were not undertaken in accordance with the proposal and therefore that plaintiff was in default of his obligations under both the alteration agreement and the proprietary lease.

Plaintiff moved for preliminary injunctive relief, and on November 15, 2007, the motion's return date, it was resolved by so-ordered stipulation. The parties agreed that plaintiff would retain a licensed home improvement contractor and submit required documentation and proof of insurance, that plaintiff's own electrical contracting firm would perform electrical work only, that any channeling and other invasive work would require advance written approval, and that repairs to the column previously channeled by plaintiff would be performed in accordance with the requirements of defendants' engineer. The stipulation allowed plaintiff to proceed with the work once those conditions were satisfied: "As soon as P[laintiff] provides the material in the immediately preceding [paragraph], P[laintiff] may complete the renovation; however[,] the channeling repair and the HVAC work may proceed before such time, i.e., w/o delay[,] in accordance with Blum's directives."

Despite this so-ordered resolution of plaintiff's application to be allowed to recommence the work, when he sought to proceed with the work in compliance with those terms, defendants would not permit its resumption until plaintiff paid the fees they claimed they incurred for the services of legal counsel and the engineer they consulted.

After an exchange of letters, plaintiff, relying on the terms of the so-ordered stipulation, brought another motion, requesting an order compelling defendants to allow the resumption of the renovations. Defendants argued that the stipulation was always subject to the alteration agreement and contained no waiver of defendants' rights ...

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