A Co-op cannot evict two shareholders over unpaid maintenance and electric bills because the co-op could not show how the building’s maintenance charges were determined, a Manhattan housing court judge ruled.
Judge Jack Stoller (See Profile) ruled Thursday that the Upper East Side Co-op’s summary proceeding against the shareholders, Frieda and Howard Dropkin, must be dismissed because the co-op, 300 East 85th Housing Corp., had offered no evidence of how its maintenance charges, or the Dropkins’ share of them, were calculated.
According to the Dropkins’ attorney, Andrew Wagner of Rosen Livingston & Cholst, the case is significant for its holding that merely showing a proprietary lease and a rent ledger is not enough to show that a co-op shareholder owes a certain amount.
The case also “illustrates a common improper practice by landlords, whereby ledgers are physically annexed to rent demands, even though certain categories of charges are not rent at all.”
The co-op brought the summary eviction action last year, alleging that the Dropkins had paid only $90,000 of a total of $103,000 in maintenance payments owed since 2012, leaving a balance of about $13,000. It also alleged that they had failed to pay electric bills, as required by their proprietary lease.
As evidence, the co-op produced the Dropkins’ proprietary lease, which stated that the Dropkins must pay a rent equal to their share of the co-op’s maintenance costs, as well as electric costs. They also produced minutes of a meeting in which the co-op board approved a 0.84 percent increase.
Stoller ruled in 300 East 85th St. v. Dropkin, 84231/13, that the co-op’s evidence succeeded only in establishing the existence of a contract between it and the Dropkins.
“However, mere proof of the existence of a contract is not sufficient for petitioner to obtain relief on its cause of action for non-payment of rent,” he wrote.
“In order to establish a prima facie case for a judgment, petitioner bears the burden of proving, at trial, not only the existence of a contract, but the terms of the contract … and the specific facts entitling it to relief,” he continued, citing Bazak Intern. Co. v. Mast Industries, 73 N.Y.2d 113 (1989).
To do that, he said, the co-op would have had to have introduced evidence about exactly how the maintenance was calculated and how it was allocated among shareholders.
“Petitioner did not introduce any evidence probative of aggregate cash requirements of petitioner, any evidence of respondent’s proportionate share of the total shares held by petitioner, or any evidence of the maintenance on a per-share basis, either before or after the 0.84 percent increase,” Stoller wrote.
The judge also rejected the co-op’s argument that the amount of the rent owed should be established by voluntary payment doctrine. The co-op argued that rent payments made voluntarily by the Dropkins could establish a correct lease amount.
Stoller, however, said that the very fact that the Dropkins’ rent payments were inconsistent made this impossible, noting that the payments varied from about $4,200 in one month to over $24,000 in another.
Stoller also declined to order the Dropkins to pay electric costs, finding that he could not reach that issue while their rent liability was unknown.
Finally, he rejected a claim by the co-op to charge the Dropkins for the legal costs of combining two units to create their unit in 1992, finding that it should have pursued that claim in a different action.
The co-op is represented by Fran Lawless, a partner at Kagan Lubic Lepper Finkelstein & Gold.
“We’re reviewing [the decision] with our clients,” she said. “Once we’ve reviewed it we can take appropriate measures.”