Opinion
116511/04.
Decided August 12, 2005.
This special proceeding was commenced by petitioner, Linda Chapman ("Chapman"), by Notice of Petition, dated November 19, 2004 against Respondents, 2 King Street Apartments Corp., a New York Corporation, (the "Coop"), owner of the cooperative Apartment building located at 2 King Street, New York, NY, and the five individual directors of the coop (the "Directors," and collectively the "Board"), pursuant to Article 78 of the Civil Practice Law and Rules ("CPLR") to challenge a denial by the Coop of Chapman's request to transfer to her the shares (the "Shares") and the proprietary lease (the "Lease") representing the ownership interest in apartment 2-C (the "Apartment") located in the cooperative apartment building owned and operated by the Coop, which her mother, Rita Chapman ("Rita"), had owned prior to her death. After appropriate stipulations of extension of time to respond, the Coop answered and cross-moved to dismiss Chapman's Petition on March 11, 2005. Thereafter, after further stipulations of adjournment, Chapman, on April 15, 2005, cross-moved for leave, pursuant to CPLR §§ 408, 2301 and 3107, to depose the Directors of the Coop and Leonard Fox ("Fox"), a non-party, and to demand, pursuant to CPLR §§ 2301, 3111 and 3120, certain documents from the Coop, the Directors and Fox.
FACTS
The Lease and Shares were issued in 1996 to Rita, a primary resident of Columbus, Ohio, who remained the sole owner until her death on February 4, 1999. At the time of Rita's purchase, Chapman was authorized to be an occupant of the Apartment, and she continues to reside therein.
The Coop and Directors claim (and Chapman does not dispute) that the Coop and the Directors did not become aware of Rita's death until "late 2003," when in making inquiry into late payments of maintenance, they also discovered that Rita had died. By letter dated November 28, 2003, the Coop advised Chapman of their knowledge of this fact, and requested that Rita's estate act to seek a transfer the Apartment to Chapman as provided in the by-laws and Proprietary Lease.
By an Assignment of Proprietary Lease and a Stock Power, dated February 3, 1999, (the "1999 Assignment") the day before Rita's death, Chapman, acting pursuant to a power of attorney executed by Rita in Chapman's favor on January 10, 1996, purported to transfer the Apartment to herself. The Coop first became aware of the 1999 Assignment in January 2004 when Fox, who worked for Cornerstone Management System, the managing agent of the Coop (the "Managing Agent"), was copied on a letter, written by Chapman to Merrill Lynch, the mortgagee of the Apartment, which letter enclosed a copy of the 1999 Assignment. Promptly thereafter, on January 30, 2004, counsel for the Coop advised Chapman and Merrill Lynch in writing that the 1999 Assignment was void as no transfer of the Apartment could be made without application to, and the approval of, the Board, and suggesting to Chapman that she seek counsel.
Following the resolution of Rita's estate (during which period the Coop took no action against Chapman), Chapman, on June 21, 2004, submitted an application (the "Application") to the Board for the approval of transfer of the Lease and Shares to herself as Rita's daughter, as an estate beneficiary, pursuant to Article 16(b) of the Lease (hereafter "Article 16(b)") which provides:
"Consents: on Death of Lessee
(b) If the Lessee shall die, consent shall not be unreasonably withheld to an assignment of the lease and shares to a financially responsible member of the Lessee's family (other than the Lessee's spouse, adult siblings or parents as to whom no consent is required.)"
Pursuant to the Board's requirements, Chapman submitted copies of her prior three years tax returns and her current balance sheet, and certified the truth of the facts in her Application. In the Application, Chapman recited that the Apartment was "bequeathed to me by my late mother."
Chapman's tax returns disclosed that her adjusted gross income was $41,479.56 in 2000, $4,860 in 2001 and $28,798 in 2002. Other than her interest in the Apartment, Chapman's balance sheet dated June 16, 2004, disclosed net personal assets of $20,195.68. The balance of the Merrill Lynch loan on the Apartment was $50,300. Chapman reported her then current "base salary" was $12,082 per year, from Social Security. The Application also disclosed that although she characterized herself as semi-retired, Chapman expected "to be assigned as an adjunct professor (part time) for CUNY at BMCC" in "August 2004." The Application also disclosed that, effective August 1, 2004, Chapman's monthly expense for apartment maintenance and mortgage payments was $735.55, or $8,826.60 per year.
The Board obtained (with her consent) Chapman's credit report which showed her discharge as a bankrupt on October 15, 2002 under Chapter 7 of the Federal Bankruptcy Law, following her bankruptcy filing of December 16, 1999. The report also showed sizeable student loans, which the credit report noted were disputed by Chapman.
The report did not indicate further the nature of the dispute or Chapman's position on the matter or whether these loans were discharged by the bankruptcy. Chapman submitted no explanation of the dispute to the Board.
On July 27, 2004 the Directors considered the Application, and rejected it unanimously, and the minutes so reflect. The minutes do not explain or otherwise recite any findings relating to the Application. Chapman was informed of the rejection by letter from the Managing Agent dated July 29, 2004, which gave no reason for the denial, but Chapman acknowledges that she was told, through counsel, that the denial was based on her financial situation.
Chapman's petition recites that she was diagnosed with chronic and permanent depression "after her brother's death in 2001" and has thereafter been on Social Security Disability. On June 30, 2004, her Certified Social Worker advised in a confidential letter to the Directors, that Chapman was under emotional stress and the actions of the Managing Agent "purportedly endorsed by the Board of Directors negatively affected her emotional state." The letter asked the Directors to take this "into consideration" in considering the Application. Chapman's verified petition also recites that she is "transitioning back into the work force" and is "currently employed as a 'salaried professor' at the University of Phoenix," earning $1000 per 5 week course. Her Petition further recites that she teaches two classes and expects to be given the opportunity to teach additional courses and alleges that the Directors in fact did not hold a meeting on July 27, 2004.
THE PLEADINGS
Chapman's First Cause of Action alleges that the Coop (1)unreasonably failed to consent to the transfer, (2) failed to interview her or otherwise give her an opportunity to explain her financial history as required by Section 10 of its By Laws, (3) failed to convene the Admissions Committee as required by Section 10 of its By Laws, and (4) failed to hold the board meeting or to have the requisite number of votes for such meeting.
Chapman's Second Cause of Action alleges that the denial of the Application "was unreasonable, and thus in violation of the lease" because she had already demonstrated her responsibility by regularly paying the maintenance and mortgage in the past, that she has no consumer debt, and that the Coop failed to give due consideration to her disability.
Chapman's Third Cause of Action asserts that the denial of the Application violates Section 6 of the Federal Fair Housing Amendments Act of 1990 (42 USC § 3406 et seq.), Section 301 of the Americans with Disabilities Act of 1990 ( 42 USC § 12101, et seq.) New York State and City Anti-Discrimination Laws (NY Exec. Law § 296 et seq. and NYC Administrative Code § 8-107 et seq.), by discriminating against her by reason of her disability, and by failing to make a reasonable accommodation to her.
Chapman's Fourth Cause of Action alleges that the Coop retaliated against her on the advice of the Managing Agent to retaliate against her "among other things" because of a dispute over insurance claims.
Chapman's Fifth Cause of Action alleges a violation, of Paragraph 48 of the Lease which prohibits the Board from discriminating against any person on any ground proscribed by law.
Chapman's Sixth Cause of Action alleges the Directors breached their fiduciary duty under Business Corp. Law ("BCL") § 717, by their alleged failure to give her an opportunity to explain her financial situation, event though they knew she was disabled and by unreasonably withholding their consent, and by doing so failed to exercise the duty of care which an ordinary person would do under the circumstances.
The respondents in their answer, also cross-moved to dismiss Chapman's First, Second, Fourth, Fifth and Sixth causes of action for lack of standing and to dismiss all six causes of Action for failure to state a claim
In her subsequent cross-motion, Chapman sought leave to depose each of the Directors and Fox, a non-party, and to demand production of documents from the Coop, the Directors and Fox.
DISCUSSION
New York cooperatives are distinguished in myth, song, press reports and legal decisions by stories of the difficulty purchasers face in obtaining board approval for their entry into the exalted status of tenant cooperator. Absent proof of violation of anti-discrimination statutes, the courts have regularly upheld the virtually unfettered discretion of boards to make this decision.
See e.g. Weisner v. 791 Park Ave. Corp., 6NY2d 426 (1959); Pober v. Columbia 160 Apartments Corp., 266 AD2d 6 (1st Dept. 1999); Woo v. Irving Tenants Corp., 276 AD2d 380 (1st Dept. 2000); Aridas v. 244 East 60th St. Owners Corp., 292 AD2d 325 (1st Dept. 2000). While the decisions show some variation on how wide that discretion is, it is unnecessary in this case to address such issue.
This case, however, is not concerned with such issue, as it deals, instead, with the succession of a family member to the ownership of a coop, pursuant to an express provision of a proprietary lease which limits the otherwise broad discretion of a board to determine who may pass the velvet rope for admission to the "club."
A proprietary lease for a cooperative apartment is not only an indicia of ownership of the apartment but is also a contract, enforceable under general rules of New York contract law. Here, Article 16(b) contains express terms relating to intra-family transfers following the death of a tenant cooperator providing that the Apartment may be transferred to the shareholder's spouse, parent or adult siblings without board consent, and further, that the otherwise required board consent, may not be unreasonably withheld if the transfer is "to a financially responsible member of the Lessee's family." Thus, Chapman, as Rita's child, has different and more favorable rights to acquire the Apartment than an unrelated purchaser who would have to run the usual gauntlet of Board approval.
It is clear that the parties to the Lease understood that the benefit of Article 16(b) was to be for the benefit of a family member. Because such benefit could well arise after the tenant's demise, the parties to the Lease must be presumed to have contemplated that Article 16(b) would be enforceable by the tenant's estate or heir. Accordingly, under the usual rules of New York contract law, Chapman has standing to enforce Article 16(b) as a third party beneficiary. Whatever a "member of the Lessee's family (other than the Lessee's spouse, adult siblings or parents)" may mean, Chapman as Rita's daughter, is clearly within such class, and the actions of the Coop confirm that they have never disputed the applicability of Article 16(b) to her. Thus, respondents' cross-motion to dismiss Chapman's petition on the grounds of standing must be denied.
See Woo v. Irving Tenants Corp., supra, where the First Department, in rejecting Woo's claim, resided that he was not a third party beneficiary of a proprietary lease impliedly recognized that a third party beneficiary of a proprietary lease had standing to sue.
To resolve this dispute, the Court must first construe the contract. Parsing Article 16(b), two separate issues need be addressed.
The first is what is a "financially responsible" person? Under the context, a financially responsible person is one whose past actions show an acceptable pattern of meeting obligations when they arise in a prompt and fair manner and whose present financial position and future earnings and expectations indicate that such person will be able to meet reasonably expected future obligations in the same manner.
The second relates to the role of the Board in determining whether the proposed applicant is financially responsible. Under the agreement, it is clear that, for a transfer to a relative, application must first be made to the Board. Thereafter, under the contract language the parties have agreed that the although the Board must still give its consent for transfer, it may not unreasonably withhold consent.
Construing these two provisions together leads unambiguously to a process which contemplates three possibilities in considering the issue of financial responsibility. Under the first, the applicant is so financially responsible that the Board's refusal on such grounds would be unreasonable. Under the second, the applicant is so financially irresponsible that the Board's refusal would be automatic. Under the third, the financial responsibility of the applicant would not be clear, in which event, the proprietary of the Board's decision would be whether the Board acted reasonably in making its determination.
Of course the Board would also be reasonable, if for example, it refused consent to a financially responsible family member who was also a notorious drug dealer. However, in this case, where the only basis claimed by the Board for its disapproval is financial responsibility, this three-part analysis is appropriate and need not be complicated further.
Where Chapman fits in this continuum of financial responsibility is a matter of fact, to be established by the ordinary rules of litigation, which also include the rules relating to summary judgments, and in this case also CPLR Article 78.
Thus, the underlying dispute is whether Chapman (who was clearly a member of Rita's family), was financially responsible, not financially responsible, or, if such issue is not clear from the record, whether the Board unreasonably withheld its consent.
In her support, Chapman cites two cases where courts have considered clauses in cooperative leases which imposed "reasonableness" standards on a lease transfer, ie: Stowe v. 19 East 88th St., Inc., 257 AD2d 355 (1st Dept. 1999) and ( Estate of Castleman, 10/2/97 NYLJ 34, col. 1 (West. Co. Surr. Ct. 1997)).
In Stowe, the proposed assignee, brought a declaratory action as to his rights to become the transferee of the proprietary lease for his recently deceased brother's apartment pursuant to a clause in the lease similar to Article 16(b). The First Department reversed a dismissal by the Supreme Court of Stowe's first and fourth causes of action respectively, finding that the issue of reasonableness was one of fact, notwithstanding the cooperatives' reliance on the so-called business judgment rule. "That defense does not preclude material issues of fact from being tried against the standards of reasonableness called for in this Lease." Stowe at 356. The First Department noted that the only reasons cited for refusal were Stowe's "chronic arrears" of maintenance over a 22-month period (during which period his checks were held uncashed by the cooperative managing agent), his alleged untimely submission of an earlier application for consent, occupancy without consent, (although the coop had provided him with keys) and an allegation that he did not pay utility bills. Although unstated by the First Department, none of the stated reasons, except perhaps the "chronic arrears" (a specious reason, in light of the coop's declination to cash Stowe's checks) had anything to do with Stowe's financial responsibility. Further, Stowe, a physician, had a net worth of $900,000 at the time he applied for the transfer over three times the value of the apartment, apparently had an expectancy of at least $235,000 from his mother's estate and also earned substantial income.
Castleman, involved a summary judgment motion in a plenary action before the Westchester County Surrogate. Although the lease contained a clause similar to Article 16(b) the proposed buyer was not a relative of the deceased owner and the case involved the construction of a wholly different lease provision which provided that Board consent to an assignment to anyone could not be unreasonably withheld "but shall take into consideration the welfare of the property as a whole." In Castleman, the court denied a summary judgment motion to dismiss and set down the matter for an evidentiary trial.
The decisions in Stowe and Castleman are helpful to understand the procedural issues of this petition. In both cases, the Court addressed the contract standard of reasonableness, as one of fact which might be ascertained on an evidentiary hearing. In Stowe, by reversing the First Department, the Court found that Stowe had stated a cause of action and in Castleman, that summary judgment was not indicated. Both cases involved plenary actions. Here, however, Chapman did not being a plenary action but instead challenged a determination of the Board under CPLR Article 78, claiming that the Board erred as a matter of law.
An Article 78 action is similar to (but not identical) a motion for summary judgment. For a Summary Judgment the moving party must establish, by admissible evidence, generally through affidavits submitted by persons having personal knowledge of the facts and/or documentary exhibits in admissible form which provide that no genuine issues of fact exist requiring a trial ( GTF Marketing v. Colonial Albums Sales, 66 NY2d 965 (1985). If the responding party properly raises material issues of fact which create a fact dispute, no summary judgment is allowable, although in an Article 78 proceeding the Court may hold an evidentiary hearing to resolve these issues.
And in certain instances, in the discretion of the court, permit discovery to raise or refute issues. See infra.
In Stowe, Stowe had commenced a plenary action for inter alia a declaratory action. The Supreme Court dismissed the complaint. The First Department reversed, reinstating the cause of action for a declaratory judgment. In Castleman, the Westchester Surrogate denied a motion for summary judgment brought by the estate against the coop board and set it down for a fact finding on " inter alia, the reasonableness" of the Board's action. Although these decisions do not articulate the three possibility analysis set forth above, they are fully consistent with such analysis, given the procedural issues address by such decisions.
Thus, as Chapman's petition and the respondent's cross motion effectively asks the court to grant Summary Judgment, respectively, to the parties, this court will proceed to consider these motions.
Chapman's motion seeks review on the grounds that the determination of the Board was "affected by an error in law." The respondent's cross motion to dismiss, under CPLR § 3211, is based on their theory that documentary evidence conclusively establishes a defense to the asserted claims as a matter of law.
As this is an Article 78 proceeding and as Chapman seeks review of the action of the Board, the facts on which the Board acted were those before the Board and are the only facts relevant to this proceeding.
A review of the submissions of both parties, indicates that all evidence necessary for a summary determination of the issues before the Court has been presented and the Court may proceed to decision.
Chapman submitted her Application with full knowledge that the Board was to consider her financial responsibility. The Application also gave her a full opportunity to present material to the Board to advocate for her position. Except for the credit report there were no other facts as to her financial responsibility before the Board when it made its decision. Therefore, as Chapman has elected to seek review by this Court of the action of the Board under CPLR Article 78, this Court may only consider the facts before the Board, i.e. the Application and the credit report, in determining whether she was financially responsible or whether the Board acted unreasonably in so finding her on the facts before it.
The Board also had her therapist's letter.
While the Lease required the Board not to unreasonably withhold consent if Chapman was financially responsible, Chapman had an implied and concomitant obligation under the Lease to make known to the Board those facts which would support her financial responsibility. As such facts were particularly within her knowledge, and as the Board had no general obligation to collect her financial data, the only reasonable construction of the contract is that it was Chapman's obligation to provide in her Application the information reasonably required by the Board so that they could determine whether she was financially responsible. As the Board had no procedure for, nor did she request an interview when submitting the Application, she cannot now be heard to challenge the Board's decision on her Application on the grounds that there was no interview or opportunity to supplement her Application. Not only is it not reasonable to expect that the Coop would have to do for Chapman what she should have done for herself, but there is no inherent right of an applicant for an approval of a transfer of a cooperative apartment to have, absent a provision in the Lease by-law or certificate of incorporation, an interview.
Chapman's Application did not claim that she was disabled or request any accommodation for a disability. While she noted she was "semi retired," she also asserted she might be hired at BMCC in the fall. While her therapist's letter indicated that he had been treating her for five years for emotional stress and advised the Board that she was upset at the actions of the Board in requiring her to adhere to Coop procedures for the transfer of the Apartment, Chapman's Application disclosed that she was employed for a substantial portion of a five year period. The letter provided neither a notice of a claimed disability nor a request for an accommodation.
On the basis of the facts before the Board, this Court finds that Chapman's claim that the Board erred as a matter of law in not finding her financially responsible has no merit. Such facts show Chapman to be of dubious financial responsibility to be a tenant of a New York cooperative. Her Application claims her to be semi-retired and her current annual "salary" to be $12,082 from Social Security with an annual maintenance plus mortgage loan payment obligation of $8,826.60 per year, or over 73% of her income. Her assets (other than her interest in the Apartment) were under $21,000, and where the Application invited her to indicate "what other income [she wishes] the Board to consider," she referred to a "one shot" income in a prior year and her Social Security income. Her application shows no expectation of assets or income from other family members or other sources. Her only other relevant statement in the Application was that she expected "to be assigned as an adjunct professor (part-time) at BMCC," without any indicia of salary. Adjunct faculty and especially part time adjunct faculty, are well known to be paid poorly and in any event, the Directors, with nothing more, could reasonably ignore speculative statements of future jobs. Coops must worry about the future ability of their cooperators to pay maintenance, as their failure or delay to do so jeopardizes the entire enterprise. Creditors of the Coop, especially lenders, do not wait for their taxes and mortgages. A shortfall or delay becomes the responsibility of other tenants, whose interests the Directors must, as fiduciaries, consider. Finding Chapman not financially responsible for the purpose of becoming a tenant shareholder at the Coop on the facts presented by her was not a violation of law. Allowing Chapman to become a tenant shareholder of the Coop on such facts might even open the Directors to liability under BCL § 717 for having breached their fiduciary duties to the other tenant shareholders of the Coop. In short, under the three possibility analysis, this Court would issue a summary judgment that she is not financially responsible and accordingly, no inquiry need be made further as to whether the Board acted reasonably. In any event, even if the threshold were passed so that the facts brought Chapman's Application to the level where inquiry is to be made whether the Board acted unreasonably, the Court would find that Chapman has not met her burden of proof that they did not.
A traditional rule of thumb used to be that housing costs should not exceed 25% of income. "Section 8" Federal subsidies, for example, consider 30% of income of a low income person the maximum such person should pay. Other Government programs which define "affordable' housing use various formulas but housing costs of 73% of income are far above the level that any program would deem affordable for anyone at Chapman's income level.
As Article 16(b) uses the term "financially responsible member of the family." Chapman must show both that her past performance and expectations of her future performance support such standard.
Chapman's assertion that she has paid her bills regularly in the past even if wholly true, are insufficient to meet this burden. While such proof of prompt payment (during periods when she was working or had received funds from her brother's estate) might address her past performance, it does not address her future ability to meet her financial obligations. Her net worth and earnings shown in the Application do not support her contention that she is financially responsible. Her bankruptcy filing, as disclosed by her credit report in addition is further not reassuring as to past performance.
The record indicates that at some point in the past maintenance payments were delinquent. As Chapman does not dispute the respondent's statement that the Coop only discovered that her mother had died when there was a payment of maintenance problem, for the purpose of this proceeding, it has been established that maintenance was not being paid promptly in 2003.
Accordingly, the Coop's Cross Motion to dismiss Chapman's First Cause of Action, the first part of her Second Cause of Action, alleging her entitlement to the transfer because of a positive history of payment of maintenance and that portion of her Sixth Cause of Action alleging the Directors' liability to her by reason of their failing to consent to the transfer of the apartment to her in violation of the terms of the Lease, must be granted.
The remaining three parts of Chapman's First Cause of action claim procedural flaws in Board procedures.
The alleged failures, relating to Section 10 of the Coop By Laws are without merit as such Section only authorizes but does not require the Board to establish an admissions committee. While such committee, if it existed, must interview applicants and report to the Board, no such committee was established. Thus no violation of Section 10 can exist. As the Board reserved for itself the functions of such a committee, it was not bound by what such a committee, if established, might have been required to do. Chapman also objects in this Cause of Action that she was not given an opportunity to explain her financial condition to the Board. Such objection is also without merit. Not only did the Application form expressly invites her to provide additional financial information, but it is also usual for applicants for approval of a cooperative apartment transfer to submit additional material with their applications to buttress any weaknesses in their application, and there is no evidence she did so. Absent a charter or by-law provision to the contrary, a cooperative board has no inherent obligation to conduct interviews in connection with an apartment transfer.
Chapman also asserts that all Directors may not have been present at the Board meeting which considered her Application. The minutes, however, reflect the unanimous decision of the Board to reject her Application and recite the attendance of all directors. As corporate directors may, under New York law, participate and be present in meetings by telephone, Chapman needs more than mere allegations as to the location of directors to challenge the decision of the Board on this ground. Mere speculation as to the physical presence of board members is insufficient to overcome the presumption of regularity especially, as a practical matter it is clear from the position in this proceeding that the Board opposes Chapman's Application and would ratify by unanimous consent its rejection to the extent there was any technical problem.
DISCRIMINATION CLAIMS
Chapman's Second, Third, Fifth and Sixth Causes of Action essentially allege discrimination as a basis to challenge the Board's rejection of her application.In these claims Chapman both claims that she was discriminated against because she was disabled and that the Board failed to make an accommodation to her disability. Because in this CPLR Article 78 proceeding Chapman may only challenge the Board's action, this Court may inquire only whether the Board's decision was in violation of law based what was before the Board at the time they made such decision. Thus, to prevail on her claims of discrimination Chapman must prove the Board illegally discriminated against her by reason of her disability. To do so, she must establish not only that she had a disability, as recognized by law, but that the Board was aware of her disability at the time they rejected the Application for such reason, and that the alleged discrimination claimed was proscribed by law. Further, to establish that the Board improperly failed to accommodate to her disability, Chapman must establish that accommodation to her disability was required by law, the Board had been requested to make such accommodation, and had failed to so, and that the accommodation sought was reasonable.
Non accommodation is not the same thing as discrimination. Accommodation, where required by law, requires differential and perhaps preferential treatment to be accorded to a disabled person. See the discussion in US Airways, Inc. V. Barnett, 535 US 391 (2002) (A 4-3 decision with four separate opinions).
State, Federal and local statutes proscribing discrimination by reason of disability or reasonable accommodation to a disability have never been read to require landlords, building owners or cooperative boards to take into account unknown disabilities and to act at their peril in acting without "accommodating" to a disabled person when unasked. Coop boards, are composed of tenants, not clinicians or clairvoyants. Chapman's Application and the material before the Board are devoid of any statement that Chapman was disabled or was seeking any accommodation for her disability. There is no other evidence presented that the Board was aware of her disability or request for an accommodation. For this reason alone, Chapman cannot prevail on her discrimination or accommodation causes of action.
Chapman, in claiming discrimination and non accommodation, invokes a litany of Federal, State and City statutes addressing discrimination which she claims were violated. These statutes, adopted over time, address problems of discrimination in ways specific to each statutory scheme, and therefore need to be separately analyzed to ascertain whether they apply.
The Federal Fair Housing Amendments Act of 1988 (P.L. § 100-430, 102 Stat. 1636) ("FHAA") amended the Federal Fair Housing Act (P.L. § 90284 105 Stat 1636) to extend its coverage against discrimination to persons with disabilities, and to require certain accommodations to be made to afford a disabled person full enjoyment housing subject to such act. These accommodations include physical accommodations and reasonable accommodations in "rules, practices, or services, when said accommodation may be necessary to afford such person equal opportunity to use and enjoy a dwelling." 42 USCA § 3604(f)(3)(B). As Chapman has alleged that her disability is not physical, the sole possible required "accommodation" under FHAA would be in "rules, policies, practices or procedures" of the Coop, and in which case, such accommodation would have to be "reasonable to be required.
Even assuming that Chapman was disabled and that the Board knew it, the would have similarly rejected her as not financially responsible if, for example, she were a non-disabled person fully employed at a minimum wage job. Chapman presented no evidence that the Coop has discriminated against her by reason of her disability or would not have approved the transfer to her had she been financially responsible. Chapman has been an approved resident of the Apartment since Rita bought it in 1996. The record contains no evidence to believe the respondents made any objection to her presence or prevented her from the use of the apartment over the past nine years or that the Board based its decision to deny the Application on anything other than her financial situation.
The allegations of retaliatory action, as the "sole" basis for her rejection, set forth in her Fourth Cause of Action are unsubstantiated beyond their allegation. As a petition in an Article 78 proceeding is similar to a request for summary judgment, unsupported allegations are insufficient to establish a basis for relief. In any event, retaliation for alleged acts not involving her disabilities, whether or not actionable, do not constitute "discrimination."
Not everyone can afford to live in an expensive apartment or in an expensive area of a city. Landlords or Coops (who in this case have similar interests), do not have to "accommodate" to a lack of income under the Act. See e.g. Salute v. Stratford Greens Garden Apartments, 136 F.3d 293 (2d Cir. 1998).
Chapman's reliance on Giebelec v. MB Associates, 343 F.3d 1143 (9th Cir. 2003) is unavailing. In Giebelec it was clear that although Giebelec, being disabled, had inadequate income for a tenant, his mother who had adequate income was willing to co-sign the lease. The owner had a general policy of not permitting co-signed leases. The Court found that the FHAA applied to supercede this policy in Giebelec's case. While Giebelec and Salute may differ in their analysis of the ambit of FHAA, neither case would help Chapman here. Salute would exclude economic results of her disability and Giebelec would only require an accommodation which effectively made no material economic difference to the building.
The Board asserts that the decision of Gievelec by the Ninth Circuit was incorrectly decided and is in conflict with the decisions of other circuits in that it entertained a claim that the FHAA reached issues arising out of the impact of a disability on the ability of the disabled person to earn money. Because the result here is the same, this Court has not addressed the questions as to whether Salute or Giebelec represents the proper construction of the FHAA.
Chapman also invokes Section 504 of the Federal Rehabilitation Act of 1993 ( 29 USC § 794 et seq.) ("FRA") which prohibits exclusion from the benefits of "any program or activity receiving federal financial assistance or under any program or activity conducted by any executive agency or by the United States postal service." As the record shows no basis that the Coop is such a "program or activity," Chapman cannot establish a claim thereunder the FRA.
Chapman next asserts that Section 301 of the Americans with Disabilities Act of 1990 ( 42 USCA § 12101) ("ADA") creates a basis for relief. The ADA applies to discrimination in employment, transportation facilities, government programs, or activity, and in places of public accommodation. While places of public accommodation include hotels, inns and similar facilities, they do not include apartment houses. The record contains no basis to find the Coop a government program or activity. Accordingly, the ADA cannot provide a basis for relief.
Chapman also seeks relief under the New York Human Rights Law (NY Executive Law § 296, et seq) (the "HRL"). Unlike the FHAA, FRA and ADA, which define a disability as a "physical or mental impairment that substantially limits one or more major life activities of such individual" ( 42 USCA § 12102(2)(a)), the HRL which proscribes discrimination by reason of disability in certain cases, defines disability as "a physical, mental or medical impairment resulting from anatomical, physiological, genetic or neurological conditions which prevents the exercise of major bodily function or is demonstrated by medically accepted clinical or laboratory diagnostic techniques" (HRL § 292(21)). As Chapman claims no physical disability, her only basis for coverage by the HRL would be if her mental impairment resulted from a genetic or neurological condition demonstrated by medically accepted clinical or laboratory diagnostic techniques. Chapman submitted no such demonstration, either to the Board at the time of her application or to this Court in her factual submission. In any event, the HRL, by its terms, only acts to proscribe owners or an owner's agent from discriminating against a disabled person in the sale or rental of such accommodation. Exec. Law § 296(5)(a)(I). The approval of a transfer of a cooperative apartment by a Board, being neither an owner or an owner's agent, is not covered by such proscription. Instead, anti-discrimination provisions in New York law applicable to the process of Board approval of cooperative transfers are set forth in Civil Rights Law § 19-a which does not include discrimination by reason of disability (however defined) as a proscribed discrimination. Thus, Chapman can make no claim for relief under the HRL.
Chapman further seeks relief under New York City Administrative Code (the "Code") § 8-107 et seq.Such Section, inter alia, similar to the HRL, however, proscribes discrimination by reason of disability. Such section unlike the HRL, extends the prohibition against discrimination to persons "having the right to . . . approve the sale . . . of a housing accommodation." Thus, under this Section, the Board is included within the class of persons who may not discriminate on the grounds of disability. While under Code § 8-107, the Board cannot discriminate against Chapman by reason of her disability, the mandate to make reasonable accommodation for a disability is only required under the Code for employers, and not with respect to housing accommodations. Thus, even if Chapman could have established that the Board discriminated against her by reason of her disability, the Code does not support any claim for a failure to accommodate. As the Court found that the Board appropriately rejected her by reason of her financial responsibility, no claim can be established under the Code.
Chapman never told the Board that she was disabled and unable to work. On the contrary her assertion in her Application that she was expected to be employed by BMCC and her sworn statement in her petition that she is now employed by the University of Phoenix belies her assertion that her mental state constituted a permanent disability which prevented her from working.
Thus, Chapman is entitled to no relief with respect to her discrimination claims, and/or her claims for a failure to accommodate to her alleged disability. Accordingly, there is no basis to depart from the contract analysis set forth above in deciding this case.
RETALIATION CLAIM
Chapman's Fourth Cause of Action alleges, on information and belief, that the Board singled her out "for harmful treatment by denying her Application solely on the advice of Cornerstone, which so advised the board in order to retaliate against Petition." As Chapman's lack of financial responsibility was a suitable basis for denial of her application and the reason given for it, this cause of action, relying on the denial of the Application being "solely" based on retaliation cannot stand. Further, because this is an Article 78 proceeding, Chapman is required to present evidence of facts from a person with personal knowledge of this claim, or documentary evidence to support the claim. Information and belief allegations are insufficient.
Thus, the Fourth Cause of Action must be dismissed.
THE DISCOVERY CROSS MOTION
While the CPLR permits discovery in an Article 78 proceedings, discovery in such proceedings is discouraged and is permitted only at the discretion of the court. Here, Chapman sought leave pursuant to CPLR §§ 408, 2301 and 3107 for oral discovery under CPLR §§ 2301, 3111, 3120 to demand certain documents for the first time almost five months after she commenced this proceeding. While CPLR §§ 2301, 3107, 3111 and 3120 relate to the types of discovery which may be had, only CPLR § 408 relates to whether discovery may be had, and such section generally limits discovery in a special proceeding to those cases when the court has granted leave. The purpose of this limitation is to "preserve the summary nature of a special proceeding." CPLR § 408 Practice Commentaries C408:1 (McLaughlin).
Here, Chapman claims her need for discovery is to ascertain what information the Board relied on in making its decision. In their responding papers, the Board has asserted that Chapman was advised in the Summer of 2004 that the sole reason the Board turned Chapman down was her financial situation. Chapman does not dispute that she was so advised at that time. As the Board neither asserted nor relied on any other basis for their act, the Court may proceed to resolve this matter on whether such basis was sufficient or whether it was not. Chapman's last minute scramble for discovery to prevent a timely resolution of this proceeding is an additional reason why this Court should not exercise any discretion to allow a discovery request at this time. The record contains the Application and the credit report which the Board asserts were the materials it had. Chapman asserts the Board was wrong to turn her down on such material. There is a sufficient record for the Court to proceed.
While a Court might have a strong reason to exercise its discretion to permit discovery in an Article 78 proceeding where there was no other way a litigant could ascertain facts, such is not the case here. Chapman elected to commence this action under CPLR Article 78, although procedurally she could have commenced an action for a declaratory judgment instead, as was recognized by the First Department in Stowe, supra, where discovery was as of right.
Chapman's petition is dismissed, Respondent's cross petition is granted to the extent described in this decision and order, and Chapman's cross motion for leave to conduct discovery is denied.
This is the Decision and Order of the Court.