Opinion
No. 2024-51572 Index No. 450665/2023
11-14-2024
Department of Environmental Protection of the City of New York and THE NEW YORK CITY WATER BOARD, Plaintiffs, v. Board of Managers of the Cassa NY Condominium, WATERSCAPE RESORT II, LLC, CASSA PROPERTIES LLC, PING XIE, XI LIN, ENIGME CAPITAL C.V. LLC, 29C CORP., Z.H. TANG LLC, DEPTH CAPITAL LLC, NY 45, LLC, O A MANHATTAN LLC, LI PAN, YAN XU, CASSA 45 LLC, CASSA 46 LLC, and CASSA 28 LLC, Defendants.
Wilson, Elser, Moskowitz, Edelman & Dicker LLP, White Plains, NY (William J. Cortellessa of counsel), Special Assistant Corporation Counsel for the City of New York, for plaintiffs. Law Office of Robert M. Kaplan, White Plains, NY (Robert M. Kaplan of counsel), for defendants Cassa Properties LLC, Enigme Capital C.V. LLC, Cassa 45 LLC, Cassa 46 LLC, and Cassa 28 LLC. Fox Horan & Camerini LLP, New York, NY (Eric Lindquist of counsel), for defendant 29C Corp. DGW Kramer LLP, New York, NY (Jacob Chen) of counsel, for defendant Z.H. Tang LLC.
Unpublished Opinion
Wilson, Elser, Moskowitz, Edelman & Dicker LLP, White Plains, NY (William J. Cortellessa of counsel), Special Assistant Corporation Counsel for the City of New York, for plaintiffs.
Law Office of Robert M. Kaplan, White Plains, NY (Robert M. Kaplan of counsel), for defendants Cassa Properties LLC, Enigme Capital C.V. LLC, Cassa 45 LLC, Cassa 46 LLC, and Cassa 28 LLC.
Fox Horan & Camerini LLP, New York, NY (Eric Lindquist of counsel), for defendant 29C Corp.
DGW Kramer LLP, New York, NY (Jacob Chen) of counsel, for defendant Z.H. Tang LLC.
Gerald Lebovits, J.
These motions arise from an action brought by plaintiffs, the Department of Environmental Protection of the City of New York and the New York City Water Board, to collect on an unpaid water bill, for which plaintiffs seek to hold liable the board of managers and unit owners of a condominium building located in midtown Manhattan.
On motion sequence 001, this court granted the motion to dismiss for failure to state a cause of action of unit-owner defendants Cassa Properties LLC, Enigme Capital C.V. LLC, Cassa 45 LLC, Cassa 46 LLC, and Cassa 28 LLC. (See Department of Env. Protection of the City of NY v Board of Mgrs. of the Cassa NY Condominium, 2024 NY Slip Op 50490[U], at *2-5 [Sup Ct, NY County 2024].) For that reason, the court also denied plaintiffs' default-judgment motion (mot seq 002) against several other unit-owner defendants. (See id. at *5.)
Movants also sought dismissal under CPLR 3211 (a) (5) of plaintiffs' claims, arguing that the claims are untimely. This court did not reach this asserted ground for dismissal given its conclusion that plaintiffs had failed to state a cause of action. (See Cassa NY Condominium, 2024 NY Slip Op 50490[U], at *5.)
Plaintiffs now suggest that because their default-judgment motion was unopposed, this court acted improperly in denying that motion. (See NYSCEF No. 91 at 3 n 2.) This suggestion is groundless. As this court explained in its prior decision (see 2024 NY Slip Op 50490[U], at *5), decades of precedent teach that even on default, the court retains the obligation to exercise its judgment to "determine whether the applicant has met the burden of stating a prima facie cause of action." (Matter of Dyno v Rose, 260 A.D.2d 694, 698 [3d Dept 1999]; see also Wine Antiques, Inc. v St. Paul Fire & Mar. Ins. Co., 40 A.D.2d 657, 658 [1st Dept 1972].) The "lack of opposition does not negate this judicial function." (Matter of Dyno, 260 A.D.2d at 698.)
On motion sequences 003 and 004, other unit-owner defendants move to dismiss plaintiffs' claims as asserted against them. On motion sequence 005, plaintiffs move under CPLR 2221 for leave to renew and reargue this court's order granting that motion to dismiss. (See NYSCEF No. 90 [notice of motion].) Plaintiffs' request for leave to reargue is granted. On reargument, this court adheres to its decision on motion sequence 001. The motions to dismiss asserted by the other unit-owner defendants are granted.
DISCUSSION
This court addresses plaintiffs' reargument motion first, because the resolution of that motion will affect the outcome on the unit-owners' motions to dismiss.
I. Plaintiffs' Motion for Leave to Reargue (Mot Seq 005)
CPLR 2221 (d) provides that a motion for leave to reargue "shall be based upon matters of fact or law allegedly overlooked or misapprehended by the court in determining the prior motion." A movant seeking reargument is therefore required to identify issues of fact or law that the court overlooked or misapprehended in the decision at issue-not merely "argue once again the very questions previously decided." (Foley v Roche, 68 A.D.2d 558, 567 [1st Dept 1979].)
Plaintiffs argue principally that they should have the opportunity to reargue because this court's decision gave weight to Jerdonek v 41 W. 72 LLC (143 A.D.3d 43 [1st Dept 2016]), which was not cited by movants on motion sequence 001 and as a result was not briefed by plaintiffs. (See NYSCEF No. 91 at ¶¶ 15-20.) The court agrees that plaintiffs should have the opportunity to contest Jerdonek 's applicability to this action. Leave to reargue is therefore granted. On reargument, this court adheres to its prior decision.
For clarity, though, plaintiffs are incorrect in asserting that the court's decision on motion sequence 001 was "based upon the legal arguments presented in 29C Corp.['s] MTD" (mot seq 003), prior to full briefing on that motion. The court did not look at the papers on motion sequence 003 while considering motion sequence 001. Instead, the court's own research located Jerdonek, in the course of evaluating movants' argument that plaintiffs should not be able to hold individual unit-owner defendants responsible for the building-wide water bill, but should instead "be required to apportion any amount found to be owed among all of the defendants according to their ownership interests, if any, in the Property." (NYSCEF No. 26 at 6.)
A. Plaintiffs' Arguments for Distinguishing Jerdonek
This court's ruling on motion sequence 001 was based in part on the rule articulated in Jerdonek that "'a statute imposing obligations or liabilities upon the 'owner' of real property does not give rise to a claim against the owners of individual condominium units where the claim arises from the common elements or concerns a duty not connected with any individual unit.'" (Cassa NY Condominium, 2024 NY Slip Op 50490[U], at *3, quoting Jerdonek, 143 A.D.3d at 48 [collecting cases].) Plaintiffs now put forward two arguments why Jerdonek is distinguishable. (See NYSCEF No. 92 at 5-8.) Neither is persuasive.
Plaintiffs argue that Jerdonek involved a personal-injury claim related to a condominium common element (the building's boiler) "which was exclusively under control of the condominium's board," whereas the claims here seek "to recover unpaid water and sewage services that were provided to both the condominium and to the individual deeded unit owners." (Id. at 5.) But plaintiffs' claims against the individual unit owners do not seek to recover the value of the water/sewage services that it provided to them, in particular (whether assessed in terms of the actual water/sewage usage, the unit owners' fractional interest in the building's common elements, or otherwise). Rather, plaintiffs are seeking to hold each individual unit owner liable for the water/sewage services that plaintiffs provided to the entire building as a whole. And as this court noted in its prior decision, plaintiffs themselves represented in opposing the motion to dismiss that responsibility for paying the building-wide water/sewage charges rested with the condominium board, not individual unit owners. (See Cassa NY Condominium, 2024 NY Slip Op 50490[U], at *3-4, quoting NYSCEF No. 33 at ¶¶ 25-26.) Thus, just as in Jerdonek, plaintiffs' claims "concern[] a duty not connected with any individual unit," but one borne by (and not discharged by) the board. (143 A.D.3d at 48.)
Plaintiffs also suggest that the obligations at issue here differ from those in Jerdonek because "unpaid water and sewage services ha[ve] the same legal status as unpaid real estate taxes" and therefore, unlike building-wide tort liabilities, "are Defendants' obligation to pay as property owners." (NYSCEF No. 92 at 6.) Plaintiffs do not, however, attempt to rebut this court's conclusion on the prior motion that plaintiffs may not bootstrap their arguments about the nature of the legal obligations at issue, if owed, into a showing that defendants owe those obligations in the first place. (See 2024 NY Slip Op 50490, at *4.) Nor do plaintiffs address the point that real-estate taxes on condominiums are typically assessed under the Condominium Act on a unit-by-unit basis, precisely to avoid making one unit owner liable for tax bills that are, properly speaking, the responsibility of other unit owners-as plaintiffs effectively seek to do here. (See id. at * 4 n 5.)
Plaintiffs also argue that their claims come within a potential exception identified in Jerdonek that might apply if "the condominium in [the] case did not have a functioning and adequately capitalized board of managers" at the time the claim accrued. (Jerdonek, 143 A.D.3d at 50; see NYSCEF No. 91 at ¶¶ 30-33; NYSCEF No. 92 at 6-7.) In particular, plaintiffs contend, this exception applies because the "Cassa NY Condominium has not demonstrated that it has a fully functioning or capitalized Board of Managers," that it has "a policy of insurance that will fully cover the Plaintiffs' claim," or, more broadly, that it has "the necessary financial resources to fully satisfy any judgment rendered in the Plaintiffs' favor." (NYSCEF No. 92 at 6.) This contention misplaces the applicable burden of proof.
If a fact goes to one of the "essential elements that must be proven in order to sustain the particular cause of action at issue," it must be alleged in the complaint. (US Bank N.A. v Nelson, 169 A.D.3d 110, 113 [2d Dept 2019].) If, on the other hand, a factual contention "goes beyond the essential elements of the cause of action"- i.e., it relates to "'matters that are not the plaintiff's burden to prove as part of the cause of action'"-it must be pleaded (and ultimately proven) as a defense. (Id., quoting Siegel & Connors, NY Prac § 223 [6th ed & Dec. 2018 update] [alteration omitted].) In other words, it is plaintiff's burden to plead and prove those facts without which no claim will lie. It is defendant's burden to plead and prove those facts needed to defeat a claim that otherwise would lie.
For present purposes, therefore, the question is whether the rule under Jerdonek is that plaintiffs may not hold individual unit owners jointly and severally liable unless the condominium board is nonfunctioning or inadequately capitalized; or that plaintiffs may hold individual unit owners jointly and severally liable unless the board is operational and adequately capitalized. In the former scenario, the burden of pleading and proof is on plaintiffs. In the latter scenario, the burden is on defendants. Jerdonek makes clear that the former scenario applies. That is, Jerdonek treats the lack of a functioning/capitalized board of managers as an exception to the general principle of nonliability of individual unit owners-not the other way around. (See 143 A.D.3d at 48-50, 51.) The burden to show the absence of a functioning/capitalized board is thus on plaintiffs; and their contrary arguments on this motion miss the mark. Indeed, Jerdonek notes, twice, that the plaintiffs in that case did not contend that the condominium lacked "a functioning and adequately capitalized board of managers at the time of plaintiff's accident." (See id. at 49, 51.)
Plaintiffs do not adequately allege, or otherwise establish on this motion, that the Cassa NY condominium board is nonfunctioning or lacks the financial resources to pay a judgment. Instead, they provide only speculative and unsupported assertions of counsel. (See NYSCEF No. 91 at ¶¶ 33-35; NYSCEF No. 92 at 6-7.) That is not enough.
B. Plaintiffs' Argument that Their Statutory Interpretation is Entitled to Deference
Plaintiffs also argue that this court erred in dismissing their claims as contrary to the applicable statutory language, and that this court should revisit this aspect of its prior order. (NYSCEF No. 92 at 4-5.) Plaintiffs' argument is both procedurally and substantively flawed.
On motion sequence 001, this court held that plaintiffs' claims against the moving defendants, which seek to hold them jointly and severally liable for building-wide water bills, are not supported by the language of the statute on which plaintiffs' complaint relies, Public Authority Law § 1045-j (5). (See Cassa NY Condominium, 2024 NY Slip Op 50490[U], at *3.) Section 1045-j (5) provides that unpaid water rents "shall constitute a lien upon the premises served and a charge against the owners thereof" that can give rise to an action for the unpaid amounts. This court concluded that the of § 1045-j (5) language did not support claims against individual condominium unit owners based on a building-wide water bill, because individual unit owners do not own the building as a whole-only their own units and a fractional proportionate interest in the building's common elements. (See 2024 NY Slip Op 50490[U], at *3.)
Plaintiffs now contend that as municipal agencies, they may reasonably interpret "owner" in § 1045-j (5) "in the broadest sense possible" to "ensure that all customers who receive water and sewage service within the City of New York are held responsible for paying those charges." (NYSCEF No. 92 at 4-5.) In other words, plaintiffs say, "owner" of the "premises served," when the premises are a condominium building, may reasonably be read to encompass all individuals and entities that have an ownership interest in units within the condominium. Therefore, plaintiffs contend, this court (putatively) erred in interpreting "owner" more narrowly, and should correct that error now. Plaintiffs' contention fails for four independent reasons.
1. As a procedural matter, plaintiffs' contention about the permissible construction of "owner" is not properly before the court on this motion. Plaintiff did not raise this argument on motion sequence 001-notwithstanding that the grounds for dismissal raised on that motion foregrounded the question of the proper scope of "owner" in § 1045-j (5). And a motion for reargument under CPLR 2221 "is not designed to afford the unsuccessful party successive opportunities... to present arguments different from those originally asserted." (William P. Pahl Equp. Corp. v Kassis, 182 A.D.2d 22, 27 [1st Dept 1992].)
Unlike the issues relating to application of Jerdonek, plaintiffs do not argue that they were unable to have anticipated that this court's consideration of motion sequence 001 would entail interpreting the scope of "owner" in § 1045-j (5).
Even if the court were to overlook this procedural defect, plaintiffs' interpretive argument would fail on its merits. Plaintiffs' argument is grounded in doctrines of agency deference. That is, because plaintiffs' administrative "area of expertise is the provision of water and sewage services throughout the entire City of New York," this court assertedly must defer to their broad construction of "owner" in § 1045-j (5). (NYSCEF No. 92 at 4.) For the reasons set forth below, this court is not persuaded that deference would be required here.
2. Plaintiffs do not identify any prior instance in which they have accorded that broad scope to "owner" in the statute-whether in a prior regulation, administrative adjudication, guidance document, opinion letter, or otherwise. On this record, plaintiffs' appear to have adopted their proffered statutory interpretation to ward off dismissal in the current action. And an agency's "litigation posture, rather than its rulemaking authority," is not entitled to the benefit of "the rule of due deference" to agency interpretations. (Jiggetts v Perales, 202 A.D.2d 341, 342-343 [1st Dept 1994].)
3. Additionally, deference to reasonable agency of interpretations is called for when the "statute employs technical terms within the agency's expertise," such that the "agency has a greater competence in interpreting the statute than the courts." (Matter of Judd v Constantine, 153 A.D.2d 270, 272-273 [3d Dept 1990], citing Kurcsics v Merchants Mut. Ins. Co., 49 N.Y.2d 451, 459 [1980].) But "owner" in § 1045-j (5) is not a specialized technical term, such that its interpretation entails "knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom." (Matter of Lighthouse Pointe Prop. Assoc. LLC v New York State Dept. of Envtl. Conservation, 14 N.Y.3d 161, 176 [2010] [internal quotation marks omitted].) Instead, its interpretation is "one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent," without deference to the agency. (Matter of Smith v Donovan, 61 A.D.3d 505, 508 [1st Dept 2009] [internal quotation marks omitted].) And plaintiffs do not identify any reason why "owner" here should somehow be treated as a technical term in this context, such that agency deference would be appropriate.
Plaintiffs also misplace their reliance on the principle that courts are limited to "ascertain[ing] whether there is a rational basis for the [agency] action in question or whether it is arbitrary and capricious." (NYSCEF No. 92 at 4.) That principle, governing judicial review of case-specific administrative determinations (see CPLR 7803 [3]), is inapposite here.
4. Moreover, an agency interpretation that "runs counter to the clear wording of a statutory provision... should not be accorded any weight." (Kurcsics, 49 N.Y.2d at 459.) Here, plaintiffs are contending that when the premises receiving water/sewage services is a condominium building as a whole, each individual unit owner may be deemed a 100% owner of the condominium building (and thus be jointly and severally liable for building-wide water rents). (See NYSCEF No. 91 at ¶ 26.) But the Condominium Act provides that a condominium "unit" is "a part of the property," not the whole. (Real Property Law (RPL) § 339-e [14] [emphasis added].) A unit owner is "entitled to the exclusive ownership and possession of his unit" (id. § 339-h), coupled with an appurtenant "common interest as expressed in the [condominium] declaration" (id. § 339- i)- i.e., a "a proportionate, undivided interest" in the building's "common elements," calculated based on the terms of the declaration and formulae set out in the statute (id. § 339-e [5] [emphasis added]; see also id. § 339- i [1]). Thus, the "condominium regime consists of (a) individual fee ownership of 'units,' and (b) common ownership of 'common elements' by unit owners"-as distinct from an ownership structure in which "the entire parcel is... owned in common." (Jerdonek, 143 A.D.3d at 51 [internal quotation marks omitted].)
Plaintiffs' interpretation of "owner" in Public Authority Law § 1045-j (5) thus runs counter to the fundamental nature of condominium ownership-as defined and delimited by statute. This conflict is underscored by the Appellate Division's repeated conclusion that other statutes and municipal ordinances imposing obligations or liabilities on the "owner" of real property do not support claims against individual unit owners arising from the condominium's common elements or building-wide responsibilities. (See e.g. Jerdonek, 143 A.D.3d at 48-49 [Labor Law §§ 240 [1], 241 [6]]; Lewis v Lester's of NY, Inc., 205 A.D.3d 796, 798 [2d Dept 2022] [Labor Law § 240 [1]]; Ortiz v Times Plaza Dev. Corp., 138 A.D.3d 704, 705 [2d Dept 2016] [Administrative Code of the City of New York § 7-210]; Araujo v Mercer Sq. Owners Corp., 95 A.D.3d 624, 624 [1st Dept 2012] [same]; Pekelnaya v Allyn, 25 A.D.3d 111, 114-115 [1st Dept 2005] [Multiple Dwelling Law § 78].)
In short, plaintiffs' belated argument that this court owes deference to their broad interpretation of "owner" in Public Authority Law § 1045-j (5) is foreclosed by the requirements of CPLR 2221. And even if the argument were not foreclosed, it would fail on its merits. This court adheres to its decision on motion sequence 001, granting the motion to dismiss filed by several of the unit-owner defendants.
II. The Unit-Owners' Motions to Dismiss (Mot Seqs 003 and 004)
On motion sequence 003, unit-owner defendant 29C Corp. moves under CPLR 3211 (a) (7) to dismiss the claims against it. On motion sequence 004, unit-owner defendant Z.H. Tang LLC moves under CPLR 3211 (a) (7) to dismiss the claims against it. The arguments raised by these defendants in favor of dismissal, and the arguments raised by plaintiffs in opposition to each motion, heavily overlap. This court therefore considers the two motions together. For the same reasons set forth above and in this court's decision on motion sequence 001, this court concludes that the motions to dismiss should be granted for failure to state a cause of action.
Given this conclusion, the court does not reach Z.H. Tang LLC's constitutional arguments for dismissal raised on motion sequence 004. (See NYSCEF No. 78 at 4-6.)
Accordingly, it is
ORDERED that plaintiffs' motion for leave to reargue this court's order entered April 30, 2024, is granted, and on reargument this court adheres to its determination in that order granting the motion to dismiss on motion sequence 001; and it is further
ORDERED that defendant 29C Corp.'s motion to dismiss is granted, and plaintiffs' claims are dismissed as against 29C Corp., with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that defendant Z.H. Tang LLC's motion to dismiss is granted, and plaintiffs' claims are dismissed as against Z.H. Tang LLC, with costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that the balance of the claims in the action are severed and shall continue; and it is further
ORDERED that plaintiffs serve a copy of this order with notice of its entry on all parties appearing in the action by e-filing on NYSCEF; on all nonappearing parties by certified mail, return receipt requested, directed to their respective last-known addresses; and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.