Adam Leitman Bailey, P.C. was retained by shareholder of an apartment in a prestigious NYC cooperative for help after her apartment allegedly caused leaks into two neighboring units.

A. First Affected Apartment

The first unit was directly below our client’s. That shareholder threatened litigation against our client, claiming that his apartment was suffering from water damage from our client’s apartment (specifically, from a leak in the air conditioning unit in the client’s gym room), which the shareholder claimed significantly affected the market value of his apartment. However, there were two fatal issues to this shareholder’s claim: (1) it was the midst of the Covid-19 pandemic, and market values across the city had plummeted, and (2) the shareholder submitted no evidence whatsoever for his allegations that the water damage to his unit emanated from our client’s unit. It was possible that the shareholder was attempting to use our client as a scapegoat for his unit’s lower market value during the pandemic.

In any event, Adam Leitman Bailey, P.C.’s first step was commissioning its own independent engineering investigation of our client’s apartment, which proved that the air conditioning unit in our client’s gym room was not the cause of any alleged leaks into the apartment below. The engineer noted that the subject air conditioning unit was an all-electric, “through-wall unit” with no plumbing associated with it whatsoever. The report found no evidence of water damage to the unit’s millwork enclosure or the carpet adjacent thereto, which would indicate a leak had occurred from the unit. The report also made clear that the air conditioning unit was properly pitched.

The report did, however, indicate that the three 91 year-old steel windows in the client’s gym room could be a potential source of water infiltration into the Building, given their overall condition and age. Armed with this information, Adam Leitman Bailey, P.C. performed a review of the Board meeting minutes, which revealed a significant history of leaks throughout the Building, including issues with the Building’s windows. In all of those instances, the Board took action to have the leaks addressed. Adam Leitman Bailey, P.C. was therefore able to use this information to hold the Board responsible for all repairs of our client’s windows, as is required under the proprietary lease.

In the end, Adam Leitman Bailey, P.C. successfully avoided a lawsuit from the below shareholder and the client’s windows were repaired.

B. Second Affected Apartment

Another apartment below our client’s alleged that it was suffering from leaks emanating from our client’s apartment. This shareholder claimed that her master dressing room was destroyed from water damage that occurred over a weekend when the shareholder was away. Adam Leitman Bailey, P.C. investigated the facts and it turned out that a certain pipe associated with our client’s unit may have been the cause, but there was no way to know for sure without performing destructive probes in both the shareholder and our client’s apartments. Ultimately, Adam Leitman Bailey, P.C. was able to achieve a favorable settlement for our client with this shareholder, with our client paying for a portion of the cost to restore the dressing room. Adam Leitman Bailey, P.C. recognized there was a risk that the shareholder discussed above in part “A” could resurrect a claim against our client if he learned that our client reimbursed another shareholder for potential leak damages. To avoid this risk, Adam Leitman Bailey, P.C. held the payment in escrow until this shareholder’s statute of limitations period against our client had expired.

Adam Leitman Bailey and Rachel Sigmund McGinley represented the client in this matter.

Read the original case study here.