We are pleased to inform you of a significant legal victory today in the Appellate Division, First Department (AD1), which ruled in favor of our co-op board client, its managing agent (Douglas Elliman Property Management), and its reviewing architect in a dispute brought by a shareholder regarding an unsuccessful apartment alteration project.
In this unanimous decision, the Court upheld the dismissal of all claims against our clients. It enforced the alteration and indemnification agreements in favor of the co-op board, affirming that the shareholder could not hold the co-op responsible for defective housing conditions caused by the shareholder’s own contractors during the renovation. Additionally, the Court rejected the shareholder’s claims of breach of fiduciary duty and violation of the Multiple Dwelling Law, highlighting that the shareholder had contractually assumed responsibility for the renovation project.
Key Highlights of the Decision
- The Court affirmed that the shareholder’s contractors caused the damages, and the shareholder could not charge the co-op for repairs or MDL violations.
- It held that the managing agent did not breach any fiduciary duty owed to the shareholder where the shareholder retained her own contractors, the managing agent had limited oversight over the renovation work, and the proprietary lease and the alteration agreement made the shareholder solely responsible for the renovation work.
- It dismissed claims of negligence against the co-op’s architect, noting the lack of a direct relationship or duty of care owed to the shareholder.
This is a strong decision for co-op boards and managing agents dealing with apartment alteration disputes, affirming their right to enforce alteration agreements and limiting their liability for issues stemming from shareholder-hired contractors.
For a copy of the decision, click here: Mandracchia v Renovate-Create, et al_AD1_decision_09122024.
Contact Us
If you have any questions regarding this decision or how it impacts your situation, please reach out to your BBG attorney of record.