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Condo Board Gets Owned For Labor Law §240 Claim

August 3, 2016

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New York’s Labor Law §240 imposes strict liability as to property owners with respect to elevation related injuries. In <em><a href="http://blog.wcmlaw.com/wp-content/uploads/2016/08/Jerdonek-v-41-W_-72-LLC.pdf">Jerdonek v 41 W_ 72 LLC</a></em>, the First Department grappled with how to define an owner of the common elements in a condominium building.
In <em>Jerdonek</em>, the plaintiff was injured in a fall from a scaffold while working in the boiler room of a residential apartment building on the Upper West Side of Manhattan.  Plaintiff fell from an improperly constructed scaffold and the evidence on the record demonstrated that plaintiff was not provided with proper safety equipment.  The appellate panel agreed that the plaintiff was entitled to summary judgment under Labor Law §240, and the appellate court majority ruled that liability applied to the condominium’s Board of Managers.
The issue was whether the plaintiff could also maintain a Labor Law claim against the development sponsor who retained ownership interest in some units in the building at the time of the injury when control of the building’s common elements had passed to the Board of Managers some six years prior. In determining that plaintiff’s valid labor law claims should not stand against the condominium’s sponsor or the individual unit owners, the majority opinion held that the conversion of the building to a condominium placed its common elements “solely under the control of the [condominium's] board of managers” pursuant to the Condominium Act, which “recogni[zes] that the board exercises exclusive control over the common elements.” Under these circumstances, the First Department granted summary judgment in favor of the sponsor, 41 West 72 LLC and dismissed the claims under Labor Law §§ 240(1) and 241(6) as against it.
At the same time, because the record established that the board of managers was the proper party to be sued as owner of the building’s common elements, the court went one step further and granted plaintiff summary judgment as to liability on his claim under § 240(1) as against the board upon a search of the record.  The court felt that the decision was sound despite the fact that 41 West 72 LLC had retained ownership of some units in the building since its conversion to a condominium.
Each unit owner — including the sponsor of the condominium conversion— owns an undivided fractional interest in the real property comprising the condominium's common elements. However, a unit owner's ownership interest in the condominium's common elements does not give rise to liability, whether for common-law negligence or under the Labor Law, because the condominium declaration transfers complete and exclusive control of the common elements to the Board of Managers. In essence, the unit owners, though they collectively own the common elements, are divested of the powers and responsibilities of ownership with respect to those elements.
The majority reasoned that barring the claim against the sponsor also protects and maintains the expectations of the individual unit owners of condominiums.  “If the sponsor of condominium conversion could be sued on a post-conversion cause of action arising from the common elements based on the sponsor's continued ownership of unsold units, it would follow that each individual unit owner could be sued on exactly the same ground.”
Even if the sponsor, at the time the claim arose, continued to own a sufficient number of units to enable it to control the condominium's Board of Managers, the majority’s analysis would not change.  According to the opinion, which relied on a previous decision of the same court, plaintiff cannot sue all of the individual unit owners on the ground that the owners collectively control the board of managers, absent a showing that the condo lacked a functioning and adequately capitalized Board of Managers at the time of plaintiff's accident.
Ultimately, the majority found that the board is the proper owner for labor law purposes on a claim arising from an accident in an area that was under the exclusive control of the board of managers, despite the fact that the only deed recorded evinces the condo’s sponsor as the only titled owner of the building.  In dismissing the statutory claims against the titled owner, the majority claimed that the dissent’s argument was “sharply at odds with the expectations of buyers of condominium units, who are led to believe that risks and liabilities arising from the common elements will be handled on their behalf by the board of managers.”
Thanks to Vincent Terrasi for his contribution.
For more information, contact Denise Fontana Ricci at <a href="mailto:dricci@wcmlaw.com"><u>dricci@wcmlaw.com</u></a>.

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