Plaintiff, Board of Managers of the Alfred Condominium (Board), commenced this civil action against the defendants, Grace Wu, a/k/a Grace Huimei Huang Wu, a/k/a Grace Huimei Huang (Wu); Bank of America NA; John Doe No.1 through John Doe No. 10, seeking to foreclose a condominium lien on the real property owned by defendant Wu in plaintiff condominium and for money damages arising from defendant’s failure to abide by the terms of the Declaration and By-laws. Plaintiff alleges that the defendant as a unit owner has failed to make payments as required.By a decision and order of Justice Perry dated June 25, 2018, plaintiff’s motion for a default judgment on the issue of liability was granted. The issue of the amount of common charges, special assessments, late fees and interest as well as costs and reasonable attorney’s fees was referred to a Judicial Hearing Officer/Special Referee to “hear and report.”A hearing was held on February 25, 2019. Plaintiff Board was represented by counsel. Ms. Wu appeared without an attorney although there have been times in a companion action (Index #152684/2017) where legal services have been provided for her from DC 37. That action was brought to gain access to defendant’s Unit to make repairs and end a hoarding condition. It was resolved by a stipulation of settlement.THE HEARING:Plaintiff is the owner of Unit 5C in the Alfred Condominium, 161West 61st Street, New York, New York. She initially acquired title with her husband, Cheng Hsien Wu, by deed dated September 23, 1988. Her husband predeceased on March 19, 2016. By deed dated June 30, 2016, she conveyed title to herself, individually, from herself as surviving tenant by the entirety.A search of court records discloses that there was a prior condominium lien foreclosure proceeding commenced against the defendant which was resolved by a stipulation discontinuing the action without prejudice dated July 13, 2017 (Index # 116966/2009). This current action was commenced with the filing of a summons and complaint on December 6, 2017. Although the 2009 action included the filing of a notice of pendency, one was not filed in the current proceeding. A Notice of Lien as required by the Condominium Law (Real Property Law Article 9-B) was filed with the City Register initially in June 2017. A correction Notice of Lien was filed on November 9, 2017. It alleges that the defendant owed $115,921.30 as of May 1, 2017.The original filing date was while the prior action was still pending.It should also be noted that the Real Property Actions and Proceedings Law (RPAPL) §1303 notice served with the summons and complaint, does not conform to the statutory language. Specifically, the section advising the homeowner of the right to stay in the home was not included in plaintiff’s notice.A representative of the management company testified as to how the account was kept for defendant’s unit. A ledger, kept in the regular course of business by plaintiff, was submitted into evidence showing an itemization of the monthly bills to defendant and the monies received on the account.The ledger lists numerous categories of expenses which it is alleged are owed by the defendant. Plaintiff contends that the unpaid charges total $207,083.98.The first cause of action seeks to foreclose the statutory lien for common charges as permitted by Real Property Law (RPL) §339-aa. The lien is created for “unpaid common charges…together with the interest thereon” [RPL §339-z].The definition of “common charges” is set forth in RPL §339-e. It states:2. “Common charges” means each unit’s proportionate share of the common expenses in accordance with its common interest.The Declaration of the Alfred Condominium at Exhibit C contains a section designated “Definitions.” For the most part this document follows the intent of the language of the RPL §339-e to limit common charges to a proportionate share of the common expenses when if defines “common charges” as:charges allocated and assessed by the Condominium Board to the Unit Owners, pro-rata (except as otherwise provided in the Declaration or the By-laws), the Common Charges include the Residential Common Charges, Special Assessments and…real estate taxes and utility charges.The By-laws label certain other expenses incurred by unit owners as “common charges” even though they are not apportioned on a pro rata basis. They may be common charges for internal billing purposes, but they are not common charges to be included in an amount to be the basis of the foreclosure of the statutory lien. To be used for that purpose the amount incurred by an individual unit owner for legal fees, interest, late charges or repairs to a particular unit would all have to be listed as a common expense of the Condominium and then assigned to each unit on a proportionate basis. This was not done in this matter.A review of the ledger therefore limits the amount of money which is due plaintiff, and which can be the basis of the foreclosure cause of action to those entries designated common charges and special assessments. Plaintiff alleges that through February 2019 common charges are due and owing in the amount of $34,233.13. To this may be added special assessments of $2,575.33 and capital assessment of $839.84. Although the term “capital assessment” is not used in the Declaration, the court is including it in the amount due on the assumption that it too is assessed on a pro-rata basis in the same manner as the common charges and special assessments. These charges are outstanding and form the basis of the statutory lien which may be foreclosed by plaintiff.As set forth below there are other obligations plaintiff seeks to include in the definition of common charges for the purpose of enforcing its lien. The court rejects any charge placed against defendant’s account that is not calculated on a pro-rate basis as qualifying as a “common charge” as the basis of a lien foreclosure.There is another problem in plaintiff’s proof. To properly levy these charges against defendant’s account, plaintiff needed to provide the resolutions of the Board instituting the various charges and establishing that the meetings at which they were implemented were properly called by the Board. These underlying documents are not part of the record. However, the court will permit the inclusion of common charges, special assessments and capital assessments based on the assumption the documentation is available if needed.The ledger also includes a sum of $48,183.30 allegedly a balance due from a “prior management balance.” The ledger on its first line has an entry “prior management balance” of $100,000.00 as of May 31, 2012. There is no explanation as to how this balance was calculated and if it is for common charges or other fees levied against the defendant. As such, it cannot be used to calculate an amount due as part of the lien which is being foreclosed in this action. This amount was reduced on May 19, 2016 by the sum of $51,810.70. Where did this money come from? Further, this matter was commenced on December 6, 2017, therefore all monies due six-years before that date, December 11, 2017, would be time barred under the six-year statute of limitations for contract action [Civil Practice Law & Rules (CPLR) §213] and should not be included in any amount due. The balance of $48,183.30 in this category is not collectible either as the basis of the lien or as current damages for breach of the agreements.Plaintiff is seeking legal fees as damages as well. The By-laws of the Condominium permit the collection of “reasonable attorney’s fees and disbursements and court costs” incurred to collect common charges, interest or late charges or to foreclose the statutory lien [Article 6.4(B)]. Other legal fees incurred for other litigation against this defendant, are not collectible either as part of the foreclosure damages or as contractual damages under the By-laws or Declaration. This category of damages is alleged to be $86,416.08.Plaintiff’s counsel has presented two documents submitted as a summary of the legal fees earned. One is for services rendered in the “access litigation.” The fees billed total $30,719.00 for work on Index #152684/2017 which was settled by a stipulation dated April 17, 2017. The stipulation makes no mention of the legal fees being incurred in that action to be an obligation of the defendant. The complaint in that action does not seek legal fees as part of the relief. It only refers to the cost to cure the conditions. It attempts to classify these expenses as “common charges.” The parties may want to call them “common charges” but they are not “common charges” to qualify as the basis for foreclosure of the statutory lien.Nor can they be common charges under the Declaration and By-laws because they are not assessed on a pro-rata basis. These bills are for the period March 2017 through October 2018, for legal fees are not recoverable. In fact, Article 9.4 of the By-laws which permits the Board to recover expenses incurred in abating a condition caused by a unit owner, does not specifically include legal fees in the costs recoverable. This contrasts with the damages incurred for enforcing unpaid common charges, which does permit them.There is a second ledger from counsel for legal services linked to the collection of arrears. These total $23,061.82 and cover the period October 13, 2017 through January 29, 2019. These fees are recoverable as damages for breach of the condominium agreement but are not includable to calculate the amount due on the statutory lien for common charges as they are not assessed on a pro rata basis.These two invoices from counsel are for a sum ($53,780.82) which is $32,635.26 less than the number on the ledger line claimed due for legal expenses. There is no explanation as to the source of these additional legal fees and they are not recoverable.There is another entry on the defendant’s ledger for “miscellaneous fees r” in the amount $29,455.31. There is no explanation as to what is included in the total. As such they are not recoverable either as part of the foreclosure amount due or for failure to abide by the terms of the Declaration and By-laws.Plaintiff is also seeking to collect late charges because the defendant failed to make payments of common charges is a timely manner. The complaint refers to “Article VI Section 2 of the By-laws” as authority for this charge. The complaint asserts that this charge is $100.00 a month and can be levied along with “interest at the highest legal rate.” A review of the By-laws submitted into evidence as being a certified copy to the Declaration and By-laws recorded with the City Register, leads to the conclusion either the complaint is not correct, or the recorded documents have been amended.Article 6 (not VI) of the By-laws at Section 6.2, not Section 2 deals with the “payment of common charges.” Article 6.4(B) sets forth the Boards rights regarding late payments. It permits a penalty of interest at the highest legal rate or in an amount determined by the Board. Plaintiff has failed to provide any evidence that the Board imposed the $100.00 a month late charge. No Board resolution or minutes have been submitted. Plaintiff cannot collect these amounts either as a basis for the foreclosure lien amount or as breach of contract damages. The ledger had showed $1,900.00 in late charges being assessed. These are not collectible absent documentation as to how it was calculated. There was no attempt to assess a late charge based on interest being charged. Plaintiff is precluded from seeking such a fee now.Plaintiff has produced invoices for the expenses incurred in cleaning defendant’s unit, clearing the hoarding condition, and making repairs. These five invoices total $30,302.16. These amounts are recoverable as damages as provided for in the stipulation which settled the access proceeding.The ledger has listed several other charges against defendant’s account. The only one on that list which is recoverable is the storage fees which were billed monthly and paid in the past by defendant. This totals $1,550.00. All other charges are neither explained nor supported by documentary evidence.RECOMMENDATION:Plaintiff has proven its prima facie case. The credible testimony is that defendant Wu is an owner of Unit 5C in the Alfred Condominium. She has failed to pay common charges and special assessments as defined by the Real Property Law and the Declaration and By-laws. A lien for these amounts is enforceable against the property through the foreclosure alleged as the first cause of action.Plaintiff has also established by credible evidence that defendant has failed to comply with her obligations under the terms of the Declaration, By-laws and a stipulation of settlement of a companion case. There are monies due and owing plaintiff as result of the defendant’s breach. These amounts include obligations over and above those designated as common charges in the first cause of action.On the first cause of action plaintiff has established it is entitled to lien in the amount of $37,648.30 as being due and owing for common charges, special assessments, and capital assessments as set forth in the Real Property Law. This is the amount it may recover in foreclosure of that lien as they are the only expenses which appear to have been assessed on a proportionate basis.On the second cause of action for damages arising from defendant’s breach of the terms of the Declaration, By-laws and other agreements plaintiff has established it is entitled to $92,562.28 which includes the amount of the lien in the first cause of action.Statutory interest is recoverable from June 25, 2018, the date of the finding in plaintiff’s favor on the liability issue.NOTICE:In accordance with CPLR 4403 and 22 NYCRR 202.44(a), following the filing of the report and notice to each party of the fling of the report, plaintiff, shall move with a copy of the transcript of the hearing, to confirm or reject all or part of the of the report within fifteen (15) days after notice of the filing of the report. If plaintiff fails to do so, then defendant shall so move, with a copy of the transcript of the hearing, within thirty (30) days after notice of the filing is given. See Rosen v. Buzz Me, LLC, 2009 NY Misc Lexis 4082, 2009 NY Slip Op 30211(U) (Sup Ct, NY Co. 2009); Gould v. Venus Bridal Gown and Accessories Corp., 148 Misc2d 589 (Sup Ct, NY Co. 1990).All such motions must include a copy of the transcript of the hearing. See Galiber v. Previts, 40 NY2d 822 (1976); see generally Kalfus v. Kalfus, 243 AD2d 324 (1st Dept 1997); Board of Manages of Brightwater Towers Condominium v. Lukashevskaya, 37 Misc3d 1202(A), (Sup Ct, Kings Co. 2012). Should no party move to confirm or reject this report within the time limits herein noted, the court, on its own motion, shall issue its determination, pursuant to 22 NYCRR 202.44.This constitutes the report of the Special Referee/Judicial Hearing Officer.June 24, 2019
