Wednesday, December 12, 2012

Court of Appeals Holds That Condominium Is Not An "Owner" Within The Meaning Of The Labor Law

In Guryev v. Tomchinsky, the Court of Appeals held that a condominium and its related entities were not “owners” or “agents of owners” under Labor Law § 241(6).  By way of brief background, the plaintiff allegedly was injured when renovating an apartment purchased by the Tomchinsky defendants in the condominium building.  The Tomchinsky defendants renovated the apartment before moving in and obtained approval to do so from the condominium’s board of managers as required by the condominium’s by-laws.

Labor Law § 241 (6) provides that “owners and contractors and their agents for such work, except owners of one and two-family dwellings who contract for but do not direct or control the work,” shall provide reasonable and adequate protection and safety for workers and shall comply with the Industrial Code. At issue was whether the condominium defendants are “owners” or “agents of owners” of the Tomchinskys’ apartment because they own the land beneath the building.

In rejecting plaintiff’s argument, the Court of Appeals held that the apartment where the injury occurred was owned in fee by the Tomchinsky defendants.  As such, the apartment was to be treated as separate property from the land beneath the condominium building.  Stated simply, because the ownership interests between the unit and the land were distinct, the analysis as to whether the condominium defendants could be deemed owners or owner’s agents within the meaning of the Labor Law could have ended there.  The Court continued, however, to distinguish the present case from its prior decision in Gordon v. Eastern Ry. Supply (82 NY2d 555 [1993]).

In Gordon, the Court had found that a lessor-lessee relationship between the landowner and the party contracting for the work had created a sufficient nexus between the property and the work being performed to impose liability under the Labor Law.  The Gordon Court indicated that such work was the “direct result” of the landowner’s actions thereby subjecting the landowner to Labor Law liability despite the fact that it did not directly contract for the work.  Here, however, because the unit was owned in fee by the Tomchinsky defendants, no such relationship existed between the condominium defendants and the plaintiff’s work.  Thus, the Court held that even accepting the plaintiff’s argument that the condominium defendants were nevertheless “owners,” since “ownership is a ‘necessary condition’ although ‘not a sufficient one’ for a non-contracting party’s liability” under the Labor Law, because a sufficient nexus between the land and the work was absent here, the condominium defendants could not be held liable under the Labor Law.

The Court also rejected the plaintiff’s argument that an Alteration Agreement between the Tomchinsky defendants and the condominium shows that the condominium was a statutory owner.  Although that Agreement gave the condominium veto power over contractors and the ability to limit the hours of work, the Court held that the Agreement did not change the fact that the Tomchinskys owned the apartment.  Since the Agreement did not confer upon the condominium defendants the ability to control the work and “insist that proper safety practices [be] followed,” the condominium defendants could not be subjected to Labor Law liability.  Critically, the majority found that the individual unit owner, here Tomchinsky, had assumed all responsibility to ensure that safe workplace practices were followed.  Therefore, as noted in FN7 of the decision, the majority observed that “it is quite a leap of logic to conclude that the Board assumed” Tomchinsky's responsibilities under the Agreement merely because the Board had approved Tomchinsky’s alteration plan.

Finally, the majority and the two-Judge dissent commented on the distinction between condominiums and cooperative apartments.  While the plaintiff and dissent argued that the Labor Law should be applied to apartments under both ownership schemes, the majority determined that condominiums are different forms of property ownership in that each individual unit is separately owned, whereas the cooperative owns the building to which the individual residents merely hold stock in the overall cooperative corporation.  The two cannot simply be interchanged.  The dissent, however, would have reinstated the section 241(6) claims on the reasoning that the condominium retained a proprietary interest in each unit like a cooperative apartment.  In that way, Judge Lippman argued, the condominium “reserved to itself in the unit alteration process” the role of “an owner - or at the very least that of the owners’ agent” and so should be a statutorily responsible party.  He concluded with a call to the Legislature to amend the statute “if the statutory scheme is not to be rendered utterly arbitrary in its application and largely inefficacious in meeting its vaunted objectives.”

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