40 West 67th Street v. Pullman

[consigliere]

The Associated Press story below, by Mark Johnson, appeared in the May 14, 2003 online edition of Newsday:
 
Court: Ousted tenants have to show bad faith by co-ops
 
The state's highest court ruled Tuesday that cooperative apartment buildings can evict problem tenants, and courts will defer to their judgment, unless tenants can show co-ops are acting in bad faith.
 
The state Court of Appeals, in an opinion written by Judge Albert Rosenblatt, said that a co-op's relationship with its apartment owners is different from that of a landlord and tenant. In a cooperative building where co-op members have agreed, residents can be evicted for "objectionable" conduct and the co-op's findings will generally be taken as sufficient evidence to justify the eviction, the court held.
 
Under state law, landlords are required to go to court for evictions based on "objectionable" conduct by residents.
 
"It's an important ruling for cooperative apartment owners," said John Van Der Tuin, a lawyer representing the 40 West 67th Street co-op in Manhattan. "It enhances the value of cooperative living and assures apartment owners that they have a remedy at hand when they have an out-of-control neighbor."
 
The 7-0 ruling came in a case in which a cooperative voted in June 2000 to evict a tenant after he exhibited what they decided was "objectionable" conduct.
 
In 1998 the defendant in the case, David Pullman, bought into the cooperative and soon began seeking changes to the building, including the installation of video surveillance and 24-hour door service, according to court papers. The suggestions were deemed unfeasible by the co-op board and rejected.
 
Pullman complained about his elderly neighbors upstairs, a retired college professor and his wife, accusing the couple of playing their stereo and TV at high volumes late at night. He eventually got into a "physical altercation" with the man and accused the couple of storing toxic chemicals in their home and running an illegal bookbinding business.
 
Pullman also distributed flyers to fellow residents in which he referred to the retired professor as a possible "psychopath in our midst."
 
The cooperative said Pullman made alterations to his apartment without building approval, had construction done on his apartment on weekends in violation of building rules and filed lawsuits against the couple upstairs, the president of the co-op, and the cooperative management.
 
With more than 75 percent of the apartment owners present, the cooperative voted 2,048 shares to zero to terminate Pullman's lease, according to the ruling.
 
Jeffrey Turkel, a lawyer for Pullman, said his client argued that the cooperative board should have been forced to prove its case before a judge.
 
"There were many questions of fact as to what happened and whether Mr. Pullman was rational in his reaction to being ignored by the co-op and mistreated by one or more of his fellow shareholders," Turkel said.
 
Pullman has continued to live in the apartment as the case has been argued. Turkel said no decision has been made on further appeals.
 

[consigliere]

Below is the full text of the decision of the New York Court of Appeals in 40 W. 67th St. Corp. v Pullman, 2003 NYSlipOp 14001:
 
Decided on May 13, 2003
 
No. 55
 
40 West 67th Street Corporation, Respondent,
 
v
 
David Pullman, Appellant.
 
Gary M. Rosenberg, for appellant.
John T. Van Der Tuin, for respondent.
 
ROSENBLATT, J.:
 
In Levandusky v One Fifth Ave Corp. (75 NY2d 530 [1990]) we held that the business judgment rule is the proper standard of judicial review when evaluating decisions made by residential cooperative corporations. In the case before us, defendant is a shareholder-tenant in the plaintiff cooperative building. The relationship between defendant and the cooperative, including the conditions under which a shareholder's tenancy may be terminated, is governed by the shareholder's lease agreement. The cooperative terminated defendant's tenancy in accordance with a provision in the lease that authorized it to do so based on a tenant's "objectionable" conduct.
 
Defendant has challenged the cooperative's action and asserts, in essence, that his tenancy may not be terminated by the court based on a review of the facts under the standard articulated in Levandusky. He argues that termination may rest only upon a court's independent evaluation of the reasonableness of the cooperative's action. We disagree. In reviewing the cooperative's actions, the business judgment standard governs a cooperative's decision to terminate a tenancy in accordance with the terms of the parties' agreement.
 
I.
 
Plaintiff cooperative owns the building located at 40 West 67th Street in Manhattan, which contains 38 apartments. In 1998, defendant bought into the cooperative and acquired 80 shares of stock appurtenant to his proprietary lease for Apartment 7B.
 
Soon after moving in, defendant engaged in a course of behavior that, in the view of the cooperative, began as demanding, grew increasingly disruptive and ultimately became intolerable. After several points of friction between defendant and the cooperative, [FN 1] defendant started complaining about his elderly upstairs neighbors, a retired college professor and his wife who had occupied apartment 8B for over two decades. In a stream of vituperative letters to the cooperative — 16 letters in the month of October 1999 alone — he accused the couple of playing their television set and stereo at high volumes late into the night, and alleged that they were running a loud and illegal bookbinding business in their apartment.
 
Defendant further charged that the couple stored toxic chemicals in their apartment for use in their "dangerous and illegal" business. Upon investigation, the cooperative's Board determined that the couple did not possess a television set or stereo and that there was no evidence of a bookbinding business or any other commercial enterprise in their apartment.
 
Hostilities escalated, resulting in a physical altercation between defendant and the retired professor [FN 2]. Following the altercation, defendant distributed flyers to the cooperative residents in which he referred to the professor, by name, as a potential "psychopath in our midst" and accused him of cutting defendant's telephone lines. In another flyer, defendant described the professor's wife and the wife of the Board president as having "close intimate personal relations." Defendant also claimed that the previous occupants of his apartment revealed that the upstairs couple have "historically made excessive noise." The former occupants, however, submitted an affidavit that denied making any complaints about noise from the upstairs apartment and proclaimed that defendant's assertions to the contrary were "completely false."
 
Furthermore, defendant made alterations to his apartment without Board approval, had construction work performed on the weekend in violation of house rules, and would not respond to Board requests to correct these conditions or to allow a mutual inspection of his apartment and the upstairs apartment belonging to the elderly couple. Finally, defendant commenced four lawsuits against the upstairs couple, the president of the cooperative and the cooperative management, and tried to commence three more.
 
In reaction to defendant's behavior, the cooperative called a special meeting pursuant to Article III, section (1) (f) of the lease agreement, which provides for termination of the tenancy if the cooperative by a two-thirds vote determines that "because of objectionable conduct on the part of the Lessee * * * the tenancy of the Lessee is undesirable * * * ." [FN 3] The cooperative informed the shareholders that the purpose of the meeting was to determine whether defendant "engaged in repeated actions inimical to cooperative living and objectionable to the Corporation and its stockholders that make his continued tenancy undesirable * * *."
 
Timely notice of the meeting was sent to all shareholders in the cooperative, including defendant. At the ensuing meeting, held in June 2000, owners of more than 75% of the outstanding shares in the cooperative were present.
 
Defendant chose not attend. By a vote of 2,048 shares to zero, the shareholders in attendance passed a resolution declaring defendant's conduct "objectionable" and directing the Board to terminate his proprietary lease and cancel his shares.
 
The resolution contained the findings upon which the shareholders concluded that defendant's behavior was inimical to cooperative living. Pursuant to the resolution, the Board sent defendant a Notice of Termination requiring him to vacate his apartment by August 31, 2000. Ignoring the notice, defendant remained in the apartment, prompting the cooperative to bring this suit for possession and ejectment, a declaratory judgment cancelling defendant's stock, and a money judgment for use and occupancy, along with attorneys' fees and costs.
 
Supreme Court denied the cooperative's motion for summary judgment and dismissed its cause of action that premised ejectment solely on the shareholders' vote and the Notice of Termination. The court declined to apply the business judgment rule to sustain the shareholders' vote and the Board's issuance of the Notice of Termination. Instead, the court invoked RPAPL 711 (1) and held that to terminate a tenancy, a cooperative must prove its claim of objectionable conduct by competent evidence to the satisfaction of the court.
 
Disagreeing with Supreme Court, a divided Appellate Division granted the cooperative summary judgment on its causes of action for ejectment and the cancellation of defendant's stock. It modified Supreme Court's order accordingly and remanded the case for a hearing on use and occupancy, legal fees and costs. The majority held that Levandusky prohibited judicial scrutiny of actions of cooperative boards "taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes" (296 AD2d 120, 124 [quoting Auerbach v Bennett, 47 NY2d 619, 629 (1979)]). The two dissenting Justices would have required the cooperative to prove defendant's objectionable conduct to the satisfaction of the court. Defendant appealed to this Court as of right pursuant to CPLR 5601 (a). We agree with the Appellate Division majority that the business judgment rule applies and therefore affirm.
 
II. The Levandusky Business Judgment Rule
 
The heart of this dispute is the parties' disagreement over the proper standard of review to be applied when a cooperative exercises its agreed-upon right to terminate a tenancy based on a shareholder-tenant's objectionable conduct. In the agreement establishing the rights and duties of the parties, the cooperative reserved to itself the authority to determine whether a member's conduct was objectionable and to terminate the tenancy on that basis. The cooperative argues that its decision to do so should be reviewed in accordance with Levandusky's business judgment rule. Defendant contends that the business judgment rule has no application under these circumstances and that RPAPL 711 requires a court to make its own evaluation of the Board's conduct based on a judicial standard of reasonableness.
 
Levandusky established a standard of review analogous to the corporate business judgment rule for a shareholder-tenant challenge to a decision of a residential cooperative corporation.
 
The business judgment rule is a common law doctrine by which courts exercise restraint and defer to good faith decisions made by boards of directors in business settings (see generally Davis, Jr., Once More, the Business Judgment Rule, 2000 Wis L Rev 573 [2000]). The rule has been long recognized in New York (see e.g. Flynn v Brooklyn City R.R. Co., 158 NY 493, 507 [1899]; Pollitz v Wabash R.R. Co., 207 NY 113, 124 [1912]). In Levandusky, the cooperative board issued a stop work order for a shareholder-tenant's renovations that violated the proprietary lease. The shareholder-tenant brought a CPLR article 78 proceeding to set aside the stop work order. The Court upheld the Board's action, and concluded that the business judgment rule "best balances the individual and collective interests at stake" in the residential cooperative setting (Levandusky, 75 NY2d at 537).
 
In the context of cooperative dwellings, the business judgment rule provides that a court should defer to a cooperative board's determination "[s]o long as the board acts for the purposes of the cooperative, within the scope of its authority and in good faith" (id. at 538) [FN 4]. In adopting this rule, we recognized that a cooperative board's broad powers could lead to abuse through arbitrary or malicious decisionmaking, unlawful discrimination or the like.
 
However, we also aimed to avoid impairing "the purposes for which the residential community and its governing structures were formed: protection of the interest of the entire community of residents in an environment managed by the board for the common benefit" (id. at 537). The Court concluded that the business judgment rule best balances these competing interests and also noted that the limited judicial review afforded by the rule protects the cooperative's decisions against "undue court involvement and judicial second-guessing" (id. at 540).
 
Although we applied the business judgment rule in Levandusky, we did not attempt to fix its boundaries, recognizing that this corporate concept may not necessarily comport with every situation encountered by a cooperative and its shareholder-tenants. Defendant argues that when it comes to terminations the business judgment rule conflicts with RPAPL 711 (1) and is therefore inoperative [FN 5]. We see no such conflict. In the realm of cooperative governance and in the lease provision before us, the cooperative's determination as to the tenant's objectionable behavior stands as competent evidence necessary to sustain the cooperative's determination. If that were not so, the contract provision for termination of the lease — to which defendant agreed — would be meaningless.
 
We reject the cooperative's argument that RPAPL 711 (1) is irrelevant to these proceedings, but conclude that the business judgment rule may be applied consistently with the statute. Procedurally, the business judgment standard will be applied across the cases, but the manner in which it presents itself varies with the form of the lawsuit. Levandusky, for example, was framed as a CPLR article 78 proceeding, but we applied the business judgment rule as a concurrent form of "rationality" and "reasonableness" to determine whether the decision was "arbitrary and capricious" pursuant to CPLR 7803 (3) (see id. at 541 n *).
 
Similarly, the procedural vehicle driving this case is RPAPL 711 (1), which requires "competent evidence" to show that a tenant is objectionable. Thus, in this context, the competent evidence that is the basis for the shareholder vote will be reviewed under the business judgment rule, which means courts will normally defer to that vote and the shareholders' stated findings as competent evidence that the tenant is indeed objectionable under the statute. As we stated in Levandusky, a single standard of review for cooperatives is preferable, and "we see no purpose in allowing the form of the action to dictate the substance of the standard by which the legitimacy of corporate action is to be measured" (id. at 541).
 
In addition, RPAPL 711 was derived from former Civil Practice Act § 1410 (6), which was enacted in 1920 (L 1920, ch 133). Before that, a landlord could evict a tenant based on the landlord's sole and unfettered determination that the tenant was objectionable (see e.g. Manhattan Life Ins. Co. v Gosford, 3 Misc 509 [1893]; Waitt Constr. Co. v Loraine, 109 Misc 527 [1919]). By enacting former CPA 1410 (6), the legislature imposed on the landlord the burden of proving that the tenant was objectionable. While RPAPL 711 (1) applies to the termination before us, we are satisfied that the relationships among shareholders in cooperatives are sufficiently distinct from traditional landlord-tenant relationships that the statute's "competent evidence" standard is satisfied by the application of the business judgment rule.
 
Despite this deferential standard, there are instances when courts should undertake review of board decisions. In order to trigger further judicial scrutiny, an aggrieved shareholder-tenant must make a showing that the Board acted (1) outside the scope of its authority, (2) in a way that did not legitimately further the corporate purpose or (3) in bad faith. We next consider the lack of these elements.
 
III.
 
A. The Cooperative's Scope of Authority
 
Pursuant to its bylaws, the cooperative was authorized (through its Board) to adopt a form of proprietary lease to be used for all shareholder-tenants. Based on this authorization, defendant and other members of the cooperative voluntarily entered into lease agreements containing the termination provision before us. The cooperative does not contend that it has the power to terminate the lease absent the termination provision. Indeed, it recognizes, correctly, that if there were no such provision, termination could proceed only pursuant to RPAPL 711 (1).
 
The cooperative unfailingly followed the procedures contained in the lease when acting to terminate defendant's tenancy. In accordance with the bylaws, the Board called a special meeting, and notified all shareholder-tenants of its time, place and purpose. Defendant thus had notice and the opportunity to be heard. In accordance with the agreement, the cooperative acted on a supermajority vote after properly fashioning the issue and the question to be addressed by resolution. The resolution specified the basis for the action, setting forth a list of specific findings as to defendant's objectionable behavior. By not appearing or presenting evidence personally or by counsel, defendant failed to challenge the findings and has not otherwise satisfied us that the Board has in any way acted ultra vires. In all, defendant has failed to demonstrate that the cooperative acted outside the scope of its authority in terminating the tenancy.
 
B. Furthering the Corporate Purpose
 
Levandusky also recognizes that the business judgment rule prohibits judicial inquiry into Board actions that, presupposing good faith, are taken in legitimate furtherance of corporate purposes. Specifically, there must be a legitimate relationship between the Board's action and the welfare of the cooperative. Here, by the unanimous vote of everyone present at the meeting, the cooperative resoundingly expressed its collective will, directing the Board to terminate defendant's tenancy after finding that his behavior was more than its shareholders could bear. The Board was under a fiduciary duty to further the collective interests of the cooperative. By terminating the tenancy, the Board's action thus bore an obvious and legitimate relation to the cooperative's avowed ends.  
There is, however, an additional dimension to corporate purpose that Levandusky contemplates, notably, the legitimacy of purpose — a feature closely related to good faith. Put differently, all the shareholders of a cooperative may agree on an objective, and the Board may pursue that objective zealously, but that does not necessarily mean that the objective is lawful or legitimate.
 
Defendant, however, has not shown that the Board's purpose was anything other than furthering the overall welfare of a cooperative that found it could no longer abide defendant's behavior [FN 6].
 
C. Good Faith, in the Exercise of Honest Judgment
 
Finally, defendant has not shown the slightest indication of any bad faith, arbitrariness, favoritism, discrimination or malice on the cooperative's part, and the record reveals none. Though defendant contends that he raised sufficient facts in this regard, we agree with the Appellate Division majority that defendant has provided no factual support for his conclusory assertions that he was evicted based upon illegal or impermissible considerations. Moreover, as the Appellate Division noted, "the cooperative emphasized that upon the sale of the apartment it will turn over to the defendant all proceeds after deduction of unpaid use and occupancy, costs of sale and litigation expense incurred in this dispute" (Pullman, 296 AD2d at 127). Defendant does not contend otherwise.
 
Levandusky cautions that the broad powers of cooperative governance carry the potential for abuse when a Board singles out a person for harmful treatment or engages in unlawful discrimination, vendetta, arbitrary decisionmaking or favoritism. We reaffirm that admonition and stress that those types of abuses are incompatible with good faith and the exercise of honest judgment. While deferential, the Levandusky standard should not serve as a rubber stamp for cooperative board actions, particularly those involving tenancy terminations. We note that since Levandusky was decided, the lower courts have in most instances deferred to the business judgment of cooperative boards (see e.g. Hochman v 35 Park West Corp., 293 AD2d 650 [2nd Dept 2002]; Sirianni v Rafaloff, 284 AD2d 447 [2nd Dept 2001]; Cooper v 6 West 20th St. Tenants Corp., 258 AD2d 362 [1st Dept 1999]). In a number of cases, however, courts have withheld deference in the face of evidence that the board acted illegitimately. [FN 7]
 
The very concept of cooperative living entails a voluntary, shared control over rules, maintenance and the composition of the community. Indeed, as we observed in Levandusky, a shareholder-tenant voluntarily agrees to submit to the authority of a cooperative board, and consequently the board "may significantly restrict the bundle of rights a property owner normally enjoys" (id. at 536). When dealing, however, with termination, courts must exercise a heightened vigilance in examining whether the Board's action meets the Levandusky test.
 
We have considered defendant's remaining contentions, and find them without merit. Accordingly, the order of the Appellate Division should be affirmed, with costs.
 
* * * * * * * * * * * * * * * * *
 
Order affirmed, with costs. Opinion by Judge Rosenblatt. Chief Judge Kaye and Judges Smith, Ciparick, Wesley, Graffeo and Read concur.
 
Decided May 13, 2003
 
 
Footnotes
 
FN 1: Initially, defendant sought changes in the building services, such as the installation of video surveillance, 24-hour door service and replacement of the lobby mailboxes. After investigation, the Board deemed these proposed changes inadvisable or infeasible.
 
FN 2: Defendant brought charges against the professor which resulted in the professor's arrest. Eventually, the charges were adjourned in contemplation of dismissal.
 
FN 3: The full provision authorizes termination "if at any time the Lessor shall determine, upon the affirmative vote of the holders of the record of at least two-thirds of that part of its capital stock which is then owned by Lessees under proprietary leases then in force, at a meeting of such stockholders duly called to take action on the subject, that because of objectionable conduct on the part of the Lessee, or of a person dwelling in or visiting the apartment, the tenancy of the Lessee is undesirable * * *."
 
FN 4: See generally Franzese, Common Interest Communities: Standards of Review and Review of Standards, 3 Wash U J of L & Pol'y 663, 667 (2000); Hyatt, Common Interest Communities: Evolution and Reinvention, 31 J Marshall L Rev 303, 343 (1998); Kim, Involuntary Sale: Banishing an Owner From the Cooperative Community, 31 J Marshall L Rev 429, 438 (1998); Kress, Beyond Nahrstedt: Reviewing Restrictions Governing Life in a Property Owner Association, 42 UCLA L Rev 837, 863 (1995).
 
FN 5: RPAPL 711 (1), in pertinent part, states: " * * * A proceeding seeking to recover possession of real property by reason of the termination of the term fixed in the lease pursuant to a provision contained therein giving the landlord the right to terminate the time fixed for occupancy under such agreement if he deem the tenant objectionable, shall not be maintainable unless the landlord shall by competent evidence establish to the satisfaction of the court that the tenant is objectionable."
 
FN 6: Indeed, the Appellate Division majority stated that in its own evaluation of defendant's conduct, the record amply supported the Board's determination, where defendant's actions had a negative effect on all of the other 37 leaseholders including making them responsible for the payment of thousands of dollars in unnecessary legal fees.
 
FN 7: See e.g. Abrons Found. Inc. v 29 East 64th St. Corp. (297 AD2d 258 [1st Dept 2002] [tenant raised genuine issues of material fact as to whether board acted in bad faith in imposing sublet fee meant solely to impact one tenant]); Greenberg v Bd. of Mgrs. of Parkridge Condominiums (294 AD2d 467 [2nd Dept 2002] [affirming injunction against board because it acted outside scope of authority in prohibiting tenant from erecting a Succah on balcony]); Dinicu v Groff Studios Corp. (257 AD2d 218 [1st Dept 1999] [business judgment rule does not protect cooperative board from its own breach of contract]); Matter of Vacca v Bd. of Mgrs. of Primrose Lane Condominium (251 AD2d 674 [2nd Dept 1998] [board acted in bad faith in prohibiting tenant from displaying religious statute in yard]); Johar v 82-04 Lefferts Tenants Corp. (234 AD2d 516 [2nd Dept 1996] [board vote amending bylaws to declare plaintiff-tenant ineligible to sit on cooperative board not shielded by business judgment rule]). While we do not undertake to address the correctness of the rulings in all of these cases, we list them as illustrative.
 

[consigliere]

The story below, by Lois Weiss, appeared in the real estate section of the May 14, 2003 online edition of the New York Post:
 
BOWIE BOND-ER GETS CO-OP BOOT
 
Financier David Pullman just got pulled back to earth by a New York court in a case that sets a strong legal precedent for co-op shareholders who can't stand their neighbors.
 
The state Court of Appeals ruled unanimously yesterday morning that Pullman, who created so-called Bowie Bonds to allow musicians to cash in against their future royalties, will now likely have to give up his million-dollar co-op at 40 W. 67th St., near Central Park, because of his "objectionable conduct."
 
Broadly, the court's 16-page decision said that judicial review is not needed to evict a shareholder as long as the ouster meets all required co-op bylaws and was done in good faith.
 
Shareholder-tenants "voluntarily" agree to submit to the authority of a cooperative board, the court ruled.
 
"I felt I was fortunate enough to fight for the rights of everyone, but that's the way it goes," said Pullman yesterday.
 
He added that he thought it was ironic that the high court ended up giving heavy-handed boards even more power to control their buildings. Pullman said he will continue to fight any legal fees awarded.
 
Pullman has several cases pending in Supreme Court against his neighbors and the building's board, which now intends to cancel his shares and evict him.
 
"This decision should help with the other matters," said Robert Braverman, who is defending the building.
 
"For co-ops, it's an incredibly powerful decision," said one of Pullman's lawyers, Eduardo Fajardo. "It puts a lot of power in the co-op boards."
 
According to court records, Pullman made a nuisance of himself by, among other things, asking for video surveillance cameras and new mailbox fronts and complaining about noise and toxic chemicals emanating from elderly neighbors upstairs.
 
After a physical altercation with a neighbor - a professor who was then arrested - Pullman sent out fliers to the 36 other shareholders that "described the professor's wife and the wife of the board president as having 'close intimate personal relations,' " the court wrote.
 
Eventually, the co-op board followed procedures set out in its proprietary lease by calling a meeting of shareholders. Those who attended unanimously voted Pullman out.
 
"Instead of having this case decided in a court of law it was decided in the laundry room," said Jeffrey Turkel of Rosenberg & Estis, which represented Pullman.
 
"The option of moving and resolving this dispute has always been an option," said John van der Tuin, who represented the board. "He chose to litigate to the end."
 

<small>[ May 14, 2003, 05:47 PM: Message edited by: consigliere ]</small>

[consigliere]

The story below, by staff writer Christian Murray, appeared in the May 14, 2003 online edition of Newsday:
 
Co-Op Eviction Upheld - Board can dump unruly shareholders without court OK
 
New York state's highest court ruled yesterday that cooperative boards, when acting in good faith, can evict problem shareholders without the need for court approval.
 
The case was the first of its type to reach the Court of Appeals, upholding the powers of a co-op board to get rid of shareholders for "objectionable conduct" without the court approval required in landlord-tenant situations.
 
In explaining the 7-0 decision, Judge Albert Rosenblatt wrote a co-op's members could evict a problem shareholder, as long as they acted in "good faith" - meaning they did not conspire against the shareholder or engage in unlawful discrimination.
 
"There had been very few decisions on this matter before," said John Van Der Tuin, a partner with Balber, Pickard, Battistoni, Maldonado & Van Der Tuin in Manhattan, who represented the co-op board.
 
The case stemmed from a dispute that David Pullman, 41, had with his upstairs neighbors at a 40 W. 67st St. co-op in Manhattan, whom he claimed kept their television and stereo sets blaring into the night, according to the court record. Pullman, supposedly, sent 16 letters of complaint to his co-op board in just one month.
 
But Pullman's problems with his 69-year-old neighbor got worse after Pullman was allegedly attacked physically by him. Pullman then started distributing fliers throughout the building describing his neighbor as a "psychopath in our midst."
 
Despite Pullman's phone calls and letters stating he was the wronged party, the co-op board, which had conducted an investigation, viewed him as a nuisance and decided in June 2000 to throw him out. Under provisions of his co-op agreement, the board can evict shareholders for objectionable behavior based on a two-thirds vote. Pullman, voted out by more than 75 percent of the shares, claimed the board had no right.
 
The State Supreme Court sided with Pullman but upon the co-op board's appeal, the Appellate Division decided, 3-2, the board should be able to throw out problem shareholders without court intervention.
 
Still, Jeffrey Turkel, partner at Rosenberg & Estis who represented Pullman, said the ruling has troubling ramifications, especially for shareholders who make enemies in the building. But Van Der Tuin said the decision "gives co-op boards control over their living environment - and there is a remedy for the co-op board and shareholders to deal with an out-of-control neighbor."
 

[consigliere]

And here is another story, also by staff writer Christian Murray, from the May 14, 2003 online edition of Newsday:
  
Co-op Evictions of Shareholder Upheld - Co-ops gain right to remove shareholder without court OK
 
New York state's highest court ruled yesterday that cooperative boards, when acting in good faith, can evict problem shareholders without the need for court approval.
 
The case was the first of its type to reach the Court of Appeals, upholding the powers of a co-op board to get rid of shareholders for "objectionable conduct" without the court approval required in landlord-tenant situations.
 
In explaining the 7-0 decision, Judge Albert Rosenblatt wrote that a co-op's members could evict a problem shareholder as long as they acted in "good faith" - meaning that they did not conspire against the shareholder or engage in unlawful discrimination.
 
"There had been very few decisions on this matter before," said John Van Der Tuin, a partner with Balber, Pickard, Battistoni, Maldonado & Van Der Tuin in Manhattan, who represented the co-op board.
 
The case stemmed from a dispute that David Pullman, 41, had with his upstairs neighbors at a 40 West 67st St. co-op in Manhattan.
 
Pullman claimed that his older neighbors kept their television and stereo sets blaring at high volumes into the night, according to the court record. Pullman, supposedly, sent 16 letters of complaint to his co-op board in just one month.
 
But Pullman's problems with his 69-year-old neighbor, a professor, got worse after Pullman was allegedly attacked physically by him. Pullman then started distributing fliers throughout the building describing his neighbor as a "psychopath in our midst."
 
Despite Pullman's phone calls and letters stating that he was the wronged party, the co-op board, which had conducted an investigation, viewed him as a nuisance and decided to throw him out. Under provisions of his co-op agreement, the co-op board is able to evict shareholders for objectionable behavior based on a two-thirds vote. He was voted out in June 2000 by more than 75 percent of the shares. Pullman claimed the board had no right to throw him out, arguing that a court should decide the issue.
 
The State Supreme Court sided with Pullman, but upon the co-op board's appeal the Appellate Division decided 3-2 the board should be able to throw out problem shareholders without court intervention.
 
Still, Jeffrey Turkel, partner at Rosenberg & Estis, who represented Pullman, said the ruling has troubling ramifications. "There is a danger that an eccentric or an unpopular person could face eviction - since boards will determine what's objectionable behavior."
 
But Van Der Tuin said the decision "gives co-op boards control over their living environment - and there is a remedy for the co-op board and shareholders to deal with an out-of-control neighbor."
 
Most co-ops' contracts include a provision that allows them to throw a shareholder out for objectionable behavior. However, Robert Braverman, an attorney with Braverman & Associates, said co-op boards would have to show a very strong record of objectionable conduct.
 

[consigliere]

The following item appeared in BOLDFACE NAMES, by James Barron, in The New York Times, on May 29, 2002, in the Late Edition - Final, Section B, Page 2, Column 3:
 
State Supreme Court Appellate Division upholds decision by Manhattan cooperative to evict David Pullman for objectionable conduct  
 
Don't Ask for a Cup of Sugar
 
DAVID PULLMAN, who has packaged investment bonds to raise millions for such singers as DAVID BOWIE and JAMES BROWN, has lost round No. 2 of a court fight involving the couple in the apartment upstairs, the co-op board and the rest of the building, which voted two years ago to evict him for "objectionable" conduct. But Mr. Pullman's lawyer said yesterday that the papers had already been filed for round No. 3. And Mr. Pullman is staying put.
 
"Why would I move?" he countered when he was asked it would not be easier to sell his apartment on West 67th Street between Central Park West and Columbus Avenue. "This is the landmark case that's going to stop the abusive power of co-op boards."
 

[consigliere]

The story below, by Jennifer Gould, appeared in the May 18, 2003 online edition of the New York Post:
 
MEGA-BROKER'S BIG CO-OP FEUD

In the heady days of May 1998, David Pullman - the Wharton-graduated financier who created so-called "Bowie Bonds," a financial-debt issue that raised $55 million based on David Bowie's future royalties - bought a co-op apartment on the Upper West Side.

But last week, a judge ruled that Pullman could be evicted by the building's board because they consider him a terror of a tenant.
 
The judge's ruling was the end of a five-year drama at 40 W. 67th St.
 
Back in 1998, Pullman, then 36, sat before the co-op board, which included the wife of the neighbor he soon fought with, and was unanimously approved to buy his apartment.
  
Once in, he began complaining that his upstairs neighbor, Norman Indictor, was making a lot of noise. Indictor put in carpeting.
 
Then Pullman asked for building repairs and improvements - doormen on duty for longer hours, better mailboxes and more security cameras.
 
The co-op board refused, Pullman said. He claims the then-board president was pals with Indictor and that the two men's wives were lovers.
 
"This guy attacked me on three occasions because I changed his life and he had to have carpeting," Pullman said.
 
Indictor refused to comment. His lawyer, Scott Himes, said Pullman's claims "were unfounded."
 
The co-op board's lawyer, John Van Der Tuin, also declined comment.
 
The disputes got uglier. Pullman claimed the Indictors had a bookbinding business that emanated nasty fumes. Neighbors interviewed by The Post said this was not true.
 
One morning at around 3 a.m., Pullman complained that Indictor was playing music or TV too loud. Pullman called the cops, who put Indictor in the slammer for a night and slapped him with a restraining order.
 
About six months later, Pullman and Indictor were in the elevator together and another fight ensued.
 
Ex-superintendent Joe Lekocevic testified that the co-op board told him to "watch out" for Pullman and that he was "dangerous."
 
In June 2000, the board voted to evict Pullman.
 
Said one neighbor: "He was a great menace and cost us a lot of money. He's a troubled man."
 
Now, the co-op board can sell Pullman's apartment, pay some of the legal fees and give the rest to Pullman, Himes said.
 
Adam Leitman Bailey, Pullman's new lawyer, said Pullman will cooperate.
 
Even now, it's hard to determine what happened. "I live in the building and I'll never know," one neighbor said. "I don't know what's right anymore."
 

[consigliere]

The article below, by Jay Romano, appears in the real estate section of the May 25, 2003 online edition of The New York Times:
 
Court Ruling Broadens Co-op Power
 
A recent ruling by New York's highest court has proved to be a pleasant surprise for co-op boards and the lawyers who represent them.
 
The ruling emphatically ratified a co-op's power to control its own affairs. It did so by affirming a lower court decision that allowed a Manhattan co-op to evict a tenant shareholder for objectionable conduct without first taking the matter to court.
 
The earlier ruling was binding only on courts in Manhattan and the Bronx, and it was, some lawyers said, such a raw extension of a co-op's power that many predicted it would be overturned. But the recent ruling now has statewide application, and it bolsters co-op housing corporations' control over tenant-shareholders.
 
"Without a doubt, the landscape of co-op law in New York has dramatically changed," said Ed Fajardo, a Manhattan real estate litigator. "In short, a co-op board's decision to terminate a proprietary lease is protected by the business judgment rule. And the business judgment rule is almost impossible to get around unless fraud or self dealing can be proven."
 
On May 13, the New York State Court of Appeals unanimously affirmed an earlier ruling by the Appellate Division, First Department, that allowed a 38-unit Manhattan co-op to evict a tenant-shareholder without going through the standard landlord-tenant eviction process.
 
According to the decision written by Judge Albert M. Rosenblatt, the co-op at 40 West 67th Street terminated the tenancy of David Pullman, a tenant-shareholder, in accordance with a provision in the proprietary lease that authorized such action if a tenant engaged in "objectionable" conduct.
 
Judge Rosenblatt wrote that soon after moving into the building in 1998, Mr. Pullman, "in the view of the cooperative," engaged in a course of behavior that "began as demanding, grew increasingly disruptive and ultimately became intolerable." In addition to making numerous requests to change the services in the building, Mr. Pullman asked that lobby mailboxes be replaced and that 24-hour door attendants be hired.
 
Moreover, Judge Rosenblatt wrote, Mr. Pullman complained about his upstairs neighbors and "in a stream of vituperative letters to the cooperative — 16 letters in the month of October 1999 alone — he accused the couple of playing their television set and stereo at high volumes late into the night, and alleged that they were running a loud and illegal bookbinding business in their apartment."
 
In addition, Judge Rosenblatt pointed out, Mr. Pullman made alterations to his apartment in violation of house rules, would not respond to board requests to correct these conditions, would not allow an inspection of the apartment and, finally, filed a series of lawsuits against the couple upstairs, the president of the co-op and the co-op's management.
 
In June 2000, in accordance with the co-op's proprietary lease, the shareholders held a special meeting to determine whether Mr. Pullman's tenancy should be terminated because of "objectionable" behavior. Although Mr. Pullman had been given notice and an opportunity to appear, he did not attend the meeting. The shareholders voted 2,048 shares to 0 in favor of directing the board to terminate Mr. Pullman's tenancy; 542 shares, including Mr. Pullman's, were not voted.
 
A State Supreme Court judge ruled it was the court's job to determine whether or not objectionable conduct had occurred, but the appellate division reversed that ruling and said the co-op's decision was protected by the business judgment rule and was not subject to review by the courts. It was this ruling that was affirmed by the Court of Appeals.
 
When the appellate court decision was rendered, many co-op lawyers believed that the decision — while welcome — applied the business judgment rule so broadly that it was likely to be overturned.
 
"My fear was that the Court of Appeals would decide that the business judgment rule doesn't go this far," said Stuart M. Saft, a Manhattan lawyer who is chairman of the Council of New York Cooperatives and Condominiums. Mr. Saft pointed out that under the terms of the co-op's proprietary lease, a two-thirds vote of the shareholders was necessary to terminate Mr. Pullman's tenancy because of objectionable conduct. There was some question, he said, as to whether the business judgment rule — which protects corporate boards from judicial second-guessing — would apply to shareholder actions as well.
 
In fact, however, the shareholder vote seems to have played a significant role in the court's reasoning, and some lawyers wonder whether a board acting without a shareholder vote would be given as much discretion.
 
Arthur I. Weinstein, another Manhattan lawyer and vice president of the council, said that while the court seems to acknowledge that co-ops should be treated differently than rental buildings when dealing with tenancy matters — the court pointed out that co-op shareholders agree to be bound by the co-op's rules — it is not absolutely clear whether the court's ruling would be the same if Mr. Pullman's tenancy had been terminated by the board rather than the shareholders.
 
"In most proprietary leases, termination of a tenancy for objectionable conduct can be made by vote of two-thirds of the board of directors," Mr. Weinstein said. "And since this case included a vote of the shareholders, it is not absolutely certain that the court would rule the same way if it was only a vote of the board of directors."
 
John T. Van Der Tuin, a Manhattan lawyer who represented 40 West 67th Street, does not see any uncertainty. He said that since the court specifically based its opinion on the business judgment rule, it was clearly indicating the same result would have occurred if the proprietary lease had provided for action directly by the board.
 
"The fact that there was a unanimous shareholder vote is significant," Mr. Van Der Tuin said. "But the decision does not require a shareholder vote, it only requires compliance with the terms of the proprietary lease."
 
In fact, he said, the Court of Appeals articulated the conditions under which a co-op board's action to terminate a tenancy would not be protected by the business judgment rule and would be subject to judicial review.
 
If the board was acting in bad faith, or outside the scope of its authority and in a way that did not legitimately further the purposes of the co-op, the board's actions would be subject to judicial scrutiny.
 
Mr. Van Der Tuin added that he believes that the ruling is clearly beneficial to those who live in co-ops. "You're going to have fewer problems with out-of-control neighbors," he said. "And rather than have long and drawn-out battles in landlord-tenant court, it will be up to the co-op to decide whether someone is engaged in objectionable behavior."
 
Jeffrey Turkel, a Manhattan landlord-tenant lawyer who represented Mr. Pullman, had a different reaction.
 
"This is a potentially dangerous decision," Mr. Turkel said. "I think the court viewed co-ops as being these objective, benevolent entities. But that's not strictly true. Co-ops are made up of people, and people have faults and axes to grind."
 
Indeed, Mr. Turkel said, instead of making co-op living more secure, the ruling could have the opposite effect.
 
"What the case says is that when there is a battle between the entrenched shareholders and a newcomer, the entrenched shareholders win," he said. Mr. Weinstein, the co-op lawyer, disagreed.
 
"I think the court did an excellent job balancing the interests of co-op boards and individual shareholders," he said. "The court recognized the difference between the economically adversarial battle between landlords and tenants and the voluntary relationship between a co-op shareholder and the cooperative."
 
Mr. Weinstein pointed out that the court explicitly recognized "that the broad powers of cooperative governance carry the potential for abuse."
 
The decision, he said, "shifts the burden from the co-op having to prove objectionable conduct on the part of the shareholder, to the shareholder having to prove that the board's action was, in the words of the court, the product of `unlawful conduct, discrimination, vendetta, arbitrary decision-making or favoritism.´ "  
 

[consigliere]

The story below, by Dan Barry, appeared in the June 7, 2003 online edition of The New York Times:
 
Sleepless, and Litigious, in the Apartment Below
 
A bond salesman named David Pullman has recently joined the ranks of people looking for an apartment in Manhattan. He is not married, has no pets, does not smoke, and would prefer to live on the Upper West Side because he likes to run in Central Park. All in all, he appears to have the makings of a model tenant.
 
There is one thing, though. His current neighbors consider him to be so objectionable that a couple of years ago they gathered in the laundry room of their co-op building and voted overwhelmingly to throw him out. It was a watershed moment in an unusually bitter dispute over the most routine of tenant squabbles: noisy upstairs neighbors.
 
Last month, after years of contentious, almost comical litigation — including the time one of Mr. Pullman's many lawyers advised another lawyer not to get his "panties in a bunch" — the Court of Appeals, the state's highest court, weighed in. It ruled that Mr. Pullman's co-op at 40 West 67th Street had the right to force him to sell his shares to the building and move out.
 
Beyond the debate it has triggered about tenants' rights and power-mad co-op boards, the Pullman case serves as a reminder of how one person can affect dozens of lives simply by becoming a neighbor — and of how compromise is so essential to existence in this thin-skinned city of eight million.
 
Compromise is especially necessary in co-op buildings, where residents own shares of a corporation rather than individual apartments, according to Michael H. Schill, a professor of law and urban planning at New York University. "Any successful cooperative is going to have residents who are willing to pitch in and give their own time and effort for the common good," he said. Mr. Pullman disagreed. Co-ops, he said, are "an oxymoron."
 
The 1998 courtship of David Pullman and 40 West 67th Street seemed like a perfect match. He was 37, a graduate of the University of Pennsylvania and a successful architect of so-called Bowie bonds, in which entertainers like the rock singer David Bowie sell bonds backed by their song royalties.
 
The handsome prewar building had nine stories with a penthouse, about 40 units, and a tantalizing proximity to Central Park, where Mr. Pullman liked to race against others. "I'm very competitive," he said during a recent interview. "I try not to let anyone pass me when I'm running."
 
Mr. Pullman paid about $650,000 for 7B, the old Berkowitz apartment, and moved in during the last weeks of 1998. For a few months the only conflict was the co-op board's rejection of his request for increased security and improved mailboxes.
 
Then, in the late spring of 1999, Mr. Pullman began complaining about the late-night noise emanating from 8B, the apartment directly above him. The property manager, Jeff Brown, gave Mr. Pullman what he later called a "mini-lecture on `cooperative living,´ " and Mr. Brown suggested that Mr. Pullman go upstairs and work things out with his fellow shareholder.
 
After arguing that it was not his job to work things out, Mr. Pullman finally went upstairs to discuss his concerns about noise with the tenants: Norman Indictor, a retired chemistry professor, and his wife, Rina, both in their mid-60's at the time. They collect rare books, they have lived in 8B since 1967, and they decline to discuss anything having to do what became known as "the Pullman matter."
 
Scott Himes, one of the Indictors' lawyers, said the couple believed that they were in compliance with co-op rules about carpeting by having large area rugs cover the floors of their bedrooms. The Berkowitzes had never complained, he said, but after hearing Mr. Pullman, the Indictors installed wall-to-wall carpeting in one of their two bedrooms.
 
"They went beyond what was required to accommodate him," Mr. Himes said. Mr. Pullman, though, remained annoyed with the property manager and the co-op board because, he said, "I made a complaint and they turned it on me." He notified the co-op board that he was owed $12,000 for two months' mortgage and maintenance, and $8,000 for two months of lost sleep.
 
He said the other day he wanted to send the message that the building's failure to heed his complaints would cost the co-op board money — "and it did, in terms of legal fees." Asked how he had calculated a monetary amount for lost sleep, Mr. Pullman said, "I have a pretty good mathematical mind."
 
A few weeks later, Mr. Pullman charged that his "heavy-footed" neighbors upstairs had not carpeted both bedrooms and were illegally operating a bookbinding business out of their apartment, an allegation they denied.
 
Late one night in September 1999, Mr. Pullman said, he was forced to go upstairs to demand that Mr. Indictor stop playing music, including show tunes, at an extremely high volume. Exactly what happened after Mr. Pullman knocked on his neighbor's door is under dispute, although it became the signal event in the crisis at 40 West 67th Street.
 
Mr. Pullman said his neighbor opened the door and "hit me a number of times." Mr. Indictor denies this, according to another of his lawyers, Paul Shechtman, who said his client claims to be "too old to be pushing anybody."
 
Mr. Pullman called the police. Mr. Indictor spent the night in a police station lockup, charged for the first time in his life with a crime: assault.
 
That his alleged attacker was nearly 30 years his elder is irrelevant, Mr. Pullman said; Sean Connery, he said, is in his 70's.
 
Arrests are not common at 40 West 67th Street. Nor are fliers like the "Attack Crime" leaflet that Mr. Pullman quickly began circulating, which said the rare-book collector who lived above him had not only attacked him, but had also managed to shut off Mr. Pullman's telephone. Mr. Indictor, he wrote, had "the makings of a psychopath" and should be evicted immediately.
 
The co-op's board of directors responded with a flier that seemed to blame Mr. Pullman. It recounted Mr. Pullman's nine months of prodigious complaints, and reminded tenants that the Indictors' behavior had never been questioned before Mr. Pullman moved in.
 
The flier angered Mr. Pullman because, he said, he was being cast as villain rather than as victim. He detected a conflict of interest because the co-op board president, Brian Pusch, who is a lawyer, was friendly with the Indictors.
 
So he issued another flier that added new accusations: that the Indictors were using "toxic and flammable materials" in their bookbinding business, and that the wives of two principals in the quarrel were "of intimate personal relations."
 
In court papers, the women and their husbands emphatically denied the assertion. So how did Mr. Pullman come up with this? He said during a deposition a couple of years ago that he based it on "a consensus in the building" and something that Mario the super had told him. He added, "They say all rumors are true."
 
Cooperation went out the co-op door. Mr. Pullman stepped up his demands that the Indictors be thrown out. The co-op board accused Mr. Pullman of not having carpeting in his apartment. The Indictors moved out of their apartment for a few weeks to avoid violating the restraining order obtained by Mr. Pullman; Mr. Indictor also had to promise in court to behave for several months, after which his assault case would be dismissed.
 
There were so many lawsuits and countersuits that they had to be labeled Pullman I through Pullman VII. Before, a typical topic of conversation at 40 West 67th Street might be about how one of the washers vibrated too much. Now, the only subject seemed to be Pullman: Pullman, Pullman, Pullman.
 
One night in June 2000, many of the co-op's shareholders met in the laundry room, the usual place for gatherings. After a couple of hours of emotional discussion, the group voted to terminate Mr. Pullman's shares, saying, among other things, that he had caused Mr. Indictor's arrest and circulated "derogatory and defamatory" fliers.
 
"A lot of people were really emotional, saddened by the whole thing, but thought it was really the only thing to do." said a shareholder, one of several of Mr. Pullman's neighbors to request anonymity. Mr. Pullman did not attend the meeting, which he dismissed as a "kangaroo court."
 
The tensions at 40 West 67th Street did not die down; tenants took to peering through the small elevator window before boarding, to see who might be inside. Meanwhile, the taking of depositions became so acrimonious that a court referee had to be assigned to the case. In his lawsuits, Mr. Pullman argued that the building was discriminatory: that it put up Christmas decorations, but no menorahs, and that a tenant on the first floor — "whose self-imposed dress code is that of a fascist" — had a large painting of Hitler hanging near his front door.
 
The tenant simply preferred black attire, neighbors say. And the painting, which depicts Hitler glowering over the bodies of Holocaust victims, actually makes a powerful anti-Nazi statement.
 
Hitler lingered in the dispute, though, so much so that at one point one of Mr. Pullman's lawyers felt the need to ask Mr. Indictor: "Are you a fan of Adolf Hitler?" Mr. Indictor said he was not.
 
According to court records, Mr. Pullman estimated that the damages he had incurred in this protracted dispute totaled more than $14 million, a figure that included more than $1 million for loss of sleep that affected "work and income."
 
After four years of squabbles, "the Pullman matter" drew to a close with last month's ruling by the Court of Appeals. There are still some matters to resolve: the defamation suits, the legal fees, the specific day of departure. But Mr. Pullman will soon be packing up and leaving 40 West 67th Street.
 
He seems ready to move on, saying that he was proud of the fight he fought for tenants everywhere, and that he was looking for another apartment in Manhattan.
 

[mjr203]

There is no coop board in the city that would accept him now.

[jot0n0]

Today's NY Times ran an article regard this landmark case.

Co-ops Weigh Who's Nasty or Nice

Pointerout, don't feel too sorry for Mr. Pullman, according to the article,

And what are the prospects for Mr. Pullman? He says he has almost signed a deal to sell his two-bedroom on 67th Street for close to $1 million. "I'm deciding right now whether to buy or rent," he said. If he buys, though, it won't be in a co-op. Co-ops, he said, are "like high school."

<small>[ June 12, 2003, 01:03 PM: Message edited by: John ]</small>

[mjr203]

yeah, he'll find a nice condo instead.

[consigliere]

Here's the full article, by Motoko Rich, from the June 12, 2003 online edition of The New York Times:
 
Co-ops Weigh Who's Nasty or Nice
 
For most New Yorkers, the now notorious case of David Pullman, a cantankerous co-op tenant whose neighbors voted to throw him out of an Upper West Side building, sounds like just another case of outlandish, only-in-New York behavior.
 
But for others, the tortuous four-year story of litigation, emotional laundry-room meetings and bitter accusations among neighbors brings shivers of recognition. Some may fantasize about finally being able to take action against the obnoxious man upstairs with the loud parties or the couple with the out-of-control barking dog.  
 
Adam Leitman Bailey, a lawyer representing Mr. Pullman on some outstanding lawsuits and the sale of his West 67th Street apartment, said other co-op boards have asked him about moving against residents accused of, for example, subletting apartments without permission or running a bed-and-breakfast out of an apartment and advertising it on the Internet. One co-op wants to evict a resident who, among other things, harassed her neighbors, added a kitchen and a bathroom without permission and held parties at which guests had sex on the roof.
 
Last month, the New York State Court of Appeals ruled that a co-op had the right to force Mr. Pullman, a 41-year-old bond salesman, to sell his shares in the building and move out. Legal experts said the decision expanded the powers of co-ops, which are owned by shareholders and governed by resident boards, because it allows them to determine that a tenant's behavior is objectionable without having to prove the case in court.
 
"If co-ops are supposed to be small communities of democracy," said Andrea Roschelle, a co-op lawyer in New York, "it makes a lot more sense to do a lot more self-governing and appeal to the courts less."
 
Co-op board members across the city broadly welcomed the decision. David Grayson, the president of the co-op board at 1125 Park Avenue, a 72-unit luxury building, said, "Co-op boards should be able to dictate, in extreme circumstances, who can and cannot live within the building."
 
About a million New Yorkers live in co-ops, where maintenance costs and voting strength are distributed according to a formula. Shareholders elect boards empowered to reject applications from buyers, to manage building finances and to make decisions about anything from what color to paint the lobby to the legality of certain-size pets.
 
Virtually every building in New York has had, at one time or another, problems with neighbors complaining about one another's noise, kitchen smells, aggressive pets and any number of other issues that arise with communal living. Most co-op residents are happy to bend your ear with tales of the man in 2C who decorated the lobby with his castoff furniture or the couple in 12B who "discuss" their differences near an open window. In most cases, though, boards won't evict someone for irritating behavior.
 
"I think co-op boards would only exercise that judgment in the most egregious cases," said Joel S. Hirschtritt, president of the co-op board at 1185 Park Avenue, a 176-unit building on the Upper East Side.
 
Paul R. Gottsegen, director of the Halstead Management Company, a unit of Terra Holdings, which manages more than 140 buildings around the city, said it is rare for a board even to consider evicting a tenant.
 
But some co-op boards are wondering if their right to reject prospective tenants shouldn't extend to people who have already moved in.
 
Co-ops are the only place "where you can choose who your neighbors are going to be and not have to give a reason for rejecting them," said Phyllis Stinson, a co-op board member at 65 Nassau Street, a 28-unit building in downtown Manhattan.  
 
"If you're going to give someone that much power when a resident is coming into the building, it seems natural that you should be able to evict someone."
 
Before the Pullman case, boards wanting to get rid of a tenant typically took their cases to housing court. Judges often resolved such disputes by ordering the tenant to change his ways. Co-op boards often came away frustrated by the bureaucracy and by tenants who reverted to the behavior that first landed them in court.
 
The Pullman ruling said that a co-op itself may determine whether a tenant's behavior merits eviction. Most buildings have governing leases that permit expulsion either by a vote of the board or by all the shareholders — which is what happened in the Pullman case.
 
Wendy Gold, the newly elected president of an Upper East Side co-op, said she was relieved to hear that co-op boards were now more empowered to govern themselves. The recent ruling, she said, allows co-ops "to act in-house."
 
Still, the Pullman precedent is unlikely to unleash a wave of evictions across the city. For starters, the competing accusations were unusual. Mr. Pullman was described as having circulated leaflets suggesting that a neighbor had the makings of a "psychopath," and he filed numerous lawsuits against the board.  
 
But the case has clearly provoked discussion. Robert Braverman, one of the lawyers who represented the co-op board in the Pullman case, said a number of other co-ops have asked if the decision might apply to their predicaments.
 
A family in an Upper West Side building wanted to know if the board in its building could take action against a neighbor who regularly banged on its wall. In another case, a board wanted to know if it could get rid of a tenant who had installed an air-conditioner without board permission, sued the board after being ordered to remove it and then rejected a settlement.
 
"I've been advising them to think long and hard about what went into the Pullman case — how emotional it was for everybody, how unique the objectionable behavior was, and the expense," which Mr. Braverman said went "well into the six figures."
 
Bruce Cholst, another real estate lawyer in New York, said he got calls from four co-op board presidents this week asking him if the Pullman precedent could apply to their disputes. "People are asking, `Can we do it too?´ " he said.
 
In one case, Mr. Cholst said, a co-op board asked him if a tenant who had filed a number of nuisance lawsuits that drained the building's reserves could finally be cut loose. In another, he said, a tenant had vandalized the building. Other lawyers say that pending cases now will move more smoothly.
 
Before the Pullman ruling, co-op boards would have to prove to the court that certain behavior had actually taken place and that it was in fact objectionable. Now, said Mr. Bailey, one of Mr. Pullman's lawyers, boards have to prove only that they "are evicting in good faith and in the best interests of the shareholders, which is so much easier."
 
The image of easy evictions has spooked some in the real estate community. "The more I thought about it, the more it became very scary," said Michele Kleier, president of Gumley Haft Kleier, a Manhattan real estate firm, and a resident in a Park Avenue building. "You could get somebody on the board who just takes a dislike to somebody in the building and can really influence other people who don't even know this person. There could be a witch hunt."
 
Tenants can still take their cases to court if they feel they have been treated unfairly. Courts will step in when tenants can prove the board has acted in bad faith or out of self-interest. If "the board did it to get your apartment for the board president," said Richard Siegler, a real estate lawyer in Manhattan, "that would be illegal."
 
Nor does the Pullman case represent a rubber stamp for co-op boards that pass arbitrary rules. In another case this year, a co-op board was so eager to prevent one tenant from standing for board election that it amended the building's bylaws to require that candidates have a bachelor's degree and that residents who had sued the board could not run. The board tried to invoke a lower court's ruling on the Pullman case, but the court rejected the board's claim.
 
The case may still have a deterrent effect on some troublesome tenants. "It will make shareholders more cautious about their behavior because they will realize that they can in fact be evicted," Daniela Kunen, a broker at Douglas Elliman's Upper East Side office predicted. She said she had already spoken to a resident in a Park Avenue building who said a neighbor's children had stopped playing basketball in the living room since news media coverage of the Pullman case.
 
Most co-op boards will continue to wrangle over day-to-day disputes without getting close to eviction. At Ms. Stinson's downtown building, for example, one tenant recently complained about paint colors in the hallways and lobby. After a lot of back and forth by e-mail, Ms. Stinson said, the board reminded the tenant that "you voted for us to make these kinds of decisions."
 
And what are the prospects for Mr. Pullman? He says he has almost signed a deal to sell his two-bedroom on 67th Street for close to $1 million. "I'm deciding right now whether to buy or rent," he said. If he buys, though, it won't be in a co-op. Co-ops, he said, are "like high school."
 

[consigliere]

I don't think there are many landlords of rental buildings in Manhattan who would accept David Pullman as a tenant.
 
His best bet would be to look to purchase a town house, brownstone, or mansion.
 
Pullman might also be able to purchase a condo. Most condos legally can't prevent a sale, but, in theory, are allowed to match the selling price and buy the apartment. However, financing the purchase price can be a major problem, because condos are generally not allowed to borrow money.
 

[consigliere]

The Federation of New York Housing Cooperatives and Condominiums ran the article below about the decision of the Court of Appeals:
 
COURT OF APPEALS RULING GRANTS CO-OP BOARDS RIGHT TO EVICT SHAREHOLDERS
 
By Albert F. Pennisi,
Pennisi Daniels Norelli, LLP
 
A cooperative board's power to terminate a tenant-shareholder's tenancy and evict the tenant-shareholder has been upheld by New York State's highest court, the Court of Appeals.
 
In May 2003, the Court of Appeal's decision held that the business judgment rule, applies to the termination of a tenant-shareholder's tenancy. In addition, the Court stated that while a competent standard applies, courts should generally defer to the findings of the shareholders in the termination of the tenant-shareholder's tenancy.
 
The case in point, 40 West 67th Street Corporation vs. Pullman ("Pullman"), strikes a balance between protecting the collective rights of shareholders and shielding unpopular residents from the wrath of neighbors.
 
In the Pullman case, Mr. Pullman was characterized in the decision as demanding, disruptive and ultimately intolerable. Mr. Pullman complained that the elderly upstairs neighbors played a television and stereo too loud, ran an illegal and loud bookbinding business and were storing toxic chemicals in their apartment. The board determined that the couple did not possess a stereo or television and that there was no evidence of a bookbinding business or other commercial enterprise in their apartment.
 
Hostilities thereafter escalated between Mr. Pullman and his elderly neighbor into a physical altercation. Following the altercation, Mr. Pullman distributed flyers to the cooperative residents in which he referred to the elderly neighbor as a "potential psychopath" and accused him of cutting his telephone lines. In another flyer, Mr. Pullman described one of the elderly neighbors as having " close intimate personal relations with the board president." Mr. Pullman's complaint against his elderly upstairs neighbors resulted in a stream of vituperative letters to the cooperative, sixteen (16) letters in the month of October 1999 alone.
 
Mr. Pullman commenced four lawsuits against the upstairs elderly neighbor, the president of the cooperative and the cooperative management and attempted to commence three additional lawsuits thereafter.
 
The proprietary lease contained a provision providing for the termination of the tenancy of a tenant-shareholder if the cooperative shareholders, by a two-thirds vote, determined that "Because of objectionable conduct on the part of the Lessee…the tenancy of the Lessee is undesirable."
 
The cooperative board of directors convened a special meeting pursuant to the provision of the proprietary lease and gave timely notice to Mr. Pullman of said meeting. At this special meeting the owners of more than seventy-five (75%) percent of the outstanding shares of the cooperative were present and voted, unanimously, to declare Mr. Pullman's conduct objectionable.
 
The Court of Appeals applied the business judgment of the tenant-shareholders of the cooperative applying the rule of a previous court decision known as Levandusky vs. One Fifth Avenue Corp. ("Levandusky"), a 1990 case which held that there would be no judicial scrutiny of actions of cooperative board's "taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes."
 
Mr. Pullman argued that the Levandusky rule should not be applied in this case but that the court should apply Civil Practice Law and Rules, Section 711, which requires a court to make its own evaluation of the board's conduct based on a judicial standard of reasonableness.
 
The court ruled that the business judgment rule is consistent with Section 711 in that the shareholder's vote, in finding Mr. Pullman objectionable, is consistent with the statute in that it was competent evidence of the tenant being objectionable. In addition if the proprietary lease did not contain a termination provision for objectionable conduct, Section 711 would apply and proof would have to be presented to the court of objectionable conduct by competent evidence.
 
The court in the Pullman case recognized that a cooperative board's broad powers to terminate a tenancy could lead to abuse through arbitrary or malicious decision making, unlawful discrimination or the like. However the court recognized that " the purposes for which the residential community and its governing structures were formed were such that they should protect the interest of the entire community of residents and in an environment managed by the board for the common benefit." The court concluded that the business judgment rule best balances these competing interests and also noted that the limited review afforded by the rule protects the cooperative against judicial second-guessing.
 
It is important to note that a cooperative cannot terminate the tenancy of a tenant-shareholder if the proprietary lease does not specifically grant that power to the cooperative. This is not a termination of lease pursuant to a Resolution of the Board of Directors but a termination of lease pursuant to a vote of the tenant-shareholders by a super majority (a two-thirds vote).
 
Therefore, 40 West 67th Street Corporation was acting within the scope of its authority in that the proprietary lease specifically provided for a tenant-shareholder's termination due to objectionable conduct. The Defendant had notice and an opportunity to be heard in this case, but Mr. Pullman chose not to appear or challenge the basis for his termination at the tenant-shareholder's meeting called for that express purpose.
 
The Court next reviewed a second provision of the Levandusky business judgment rule with regard to the board acting in furtherance of the corporate purpose. Specifically there must be a legitimate relationship between the board's action and the welfare of the cooperative. The purpose of the termination of the tenancy must be closely related to legitimacy of purpose and in good faith.
 
The Levandusky rule further provides that the board must act in the exercise of honest judgment. Levandusky further cautions that the board of a cooperative in its governance carries the potential for abuse when a board singles out a person for harmful treatment or engages in unlawful discrimination, vendetta, arbitrary decision making or favoritism which can be determined to be abuses and are incompatible with good faith and the exercise of honest judgment. The court went on to state that Levandusky, while deferential, should not serve as a rubber stamp for cooperative board actions, particularly those involving tenancy terminations.
 
The court concluded with affirming the right of the cooperative to terminate the tenancy of Mr. Pullman pursuant to the terms and conditions of the proprietary lease wherein his conduct was declared to be objectionable, but cited certain cases where cooperative decisions for termination were not upheld:
 
• A tenant raised genuine issues of material fact as to whether board action was in bad faith in imposing a sublet fee solely to impact one tenant;
 
• An injunction was issued against a board as they acted outside the scope of their authority by prohibiting a tenant from erecting a succah on a balcony (a succah is a tent like-structure erected by persons of the Jewish faith);
 
• Business judgment does not protect the cooperative board from its own breach of contract;
 
• The cooperative was determined to have acted in bad faith in prohibiting a tenant from displaying a religious statue in the yard;
 
• A board vote amending by-laws to declare plaintiff tenant ineligible to sit on a cooperative board was not shielded by the business judgment rule.
 
In closing, while a cooperative would have and does have powers to terminate a tenant-shareholder's tenancy for objectionable conduct, the power to do so must be set forth clearly in the proprietary lease, the tenant-shareholder must be given proper notice of the charges and the basis for the termination that her/his conduct is objectionable, the action must be exercised by the cooperative in good faith and the exercise of honest judgment in furtherance of the corporate purposes must be upheld.