GANFER & SHORE, LLP CLIENT ADVISORY MAY 2011 COOPERATIVE HELD LIABLE FOR CHILD’S INJURIES CAUSED BY LEAD PAINT IN APARTMENT A residential cooperative was held liable for a child’s injuries caused by exposure to lead paint in an apartment, under an appellate court’s decision in Essilfie-Obeng v. Ahyia, 2011 WL 1312551, 2011 N.Y. Slip Op. 2808 (App. Div. 1st Dep’t Apr. 7, 2011). The plaintiff claimed that her child had been injured by exposure to lead paint and that the Cooperative was liable for the child’s injuries under New York City Local Law 1 of 1982, which places the duty of abating lead paint hazards upon “[t]he owner of a multiple dwelling.” The court held that for purposes of this local law, the “owner” of a multiple dwelling refers to the owner of the residential building in its entirety, which in the case of a cooperatively owned building is the apartment corporation. The court ruled that “[a]n owner of shares of a cooperative which entitle [the shareholder-tenant] to possession of a particular unit is distinct from an owner of a multiple dwelling, and Local Law 1 of 1982 only places the duty to abate lead paint upon the latter. Thus, the cooperative corporation was responsible for the lead paint based hazard in the subject apartment.” In light of this decision, cooperatives in buildings old enough to contain potential lead paint hazards should review the history of their lead-paint abatement programs to ensure that proper measures have been taken to avoid the possibility of lead-paint injuries, especially in apartments where children reside. “PROCUREMENT COMPANY” WAS NOT LIABLE UNDER SCAFFOLD LAW, APPEALS COURT AFFIRMS We previously reported on a trial court decision in which summary judgment was granted dismissing a claim against defendant in a case arising under Section 240 of the New York Labor Law. (Please see the July 2010 issue of this Client Advisory.) This statute, sometimes referred to as the Scaffold Law, imposes liability on property owners (including cooperatives, condominiums, and other landlords), general contractors, and certain others when an employee is injured in an elevation-related fall from a ladder, scaffold, or similar device. Summary judgment for defendants in Scaffold Law cases is rare, because the duties imposed are non-delegable and liability will generally apply regardless of whether the owner or contractor exercised “actual” control over the work or was negligent in any fashion. Nonetheless, on appeal, the Appellate Division recently affirmed the lower court’s decision dismissing the claim against this defendant. Fox v. H&M Hennes & Mauritz, L.P., 2011 WL 1500125, 2011 N.Y. Slip Op. 3205 (App. Div. 2nd Dep’t Apr. 19, 2011). The plaintiff in the case was employed by an electrical contractor. He sued the site owner for injuries he allegedly suffered when he accidentally touched a live electrical line while “repairing” a light fixture, which purportedly resulted in his falling off the ladder. The site owner, in turn, brought a third-party action against a “procurement” company that the site owner had retained to identify potential electrical contractors to perform the work. (The plaintiff was legally barred from suing his employer, the electrical contractor, directly because his exclusive remedy against his employer was compensation benefits under the Workers’ Compensation Law.) The “procurement” company submitted evidence that it was not a general contractor, as the plaintiff contended, but simply a middleman that matched contractors with customers. Further, the procurement company had not selected the electrical contractor to work on this project, but was directed by the site owner to use a particular contractor with whom the site owner had worked in the past. The Appellate Division agreed with the trial court and affirmed summary judgment, holding that the procurement company was not a contractor, but merely a “facilitator” that brokered the agreement between the site owner and the electrical contractor, and that “it did not have the authority to supervise or control the work giving rise to the plaintiff’s injuries.” As a result, the third-party complaint was properly dismissed. Ganfer & Shore, LLP represented the successful third-party defendant in this case. AVAILABITY OF “STACKED” EXEMPTIONS UNDER ILSA TO BE DETERMINED AS OF WHEN PURCHASE CONTRACT IS SIGNED The Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701-1720 (“ILSA”), although originally intended to prevent fraud in connection with the sale of undeveloped homesites in subdivisions of vacant land, also applies to contracts for the purchase of condominium units. ILSA’s requirements apply to the sale or lease of any lot, including condominium (and potentially cooperative) units, unless a statutory exemption applies. (For more information on this statute, please see the April 2010 issue of this Client Advisory.) Claims under this statute are being raised increasingly often by purchasers seeking to rescind their purchase contracts. The outcome of many of these cases has turned on courts’ different interpretations of various provisions of this complex statute, including a series of provisions creating exemptions from the Act’s requirements. In Bodansky v. Fifth on the Park Condo, LLC, 635 F.3d 75 (2d Cir. 2011), the U.S. Court of Appeals allowed a purchaser to rescind his purchase contract, because the developer of the new-construction condominium project failed to comply with ILSA’s disclosure requirements and no statutory exemption applied at the time the purchase contract was signed. The developer in this case sought to rely on a combination of two ILSA exemptions: the “100-lot” exemption, and the “improved lot” or “two-year” exemption. The first of these exempts projects containing fewer than 100 units, while the second exempts projects where either construction is already completed or the developer is contractually obliged to complete construction within two years. Here, neither of these exemptions applied individually, but the developer sought to use them together by “stacking” or “piggybacking” them, which is permitted. However, the case raised the question of as of when a project’s eligibility for the stacked exemptions is determined – at the time the purchaser signs the contract, or a later time chosen by the developer? Resolving a split of opinion among lower federal courts, the Second Circuit held that any “piggybacking” or “stacking” of exemptions must be done as of the time the purchaser signs the contract. The court reasoned that any other reading would limit the value of ILSA to purchasers, who might have to wait an indefinite time to learn whether they had the right to rescind their purchase agreements, even though the statute provides for a two-year period in which a purchaser may automatically rescind and a three-year statute of limitations to bring an action generally. In light of this decision, it is even more important that developers be fully advised of, and comply with, all of ILSA’s disclosure requirements unless one of ILSA’s exemptions clearly applies. |
